Works contract treatment for rubber lining job receipts excludes sales tax where no transfer of goods was contemplated.

Receipts from rubber lining of customers' industrial equipment were treated as consideration for work and labour, not as taxable sales. The court applied the settled distinction between a sale and a works contract, finding that the customer entrusted its own equipment for rubber lining to suit a specific industrial use and that rubber, chemicals and adhesive materials were used only incidentally in performing the job. Because the parties did not contemplate a transfer of property in the rubber lining as goods, the dominant object of the arrangement was execution of work rather than sale of a chattel. The turnover was therefore not exigible to sales tax.

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Issues: Whether the receipts from rubber lining of customers' industrial equipment constituted sales exigible to tax or were amounts received under a works contract not liable to sales tax.

Analysis: The transaction was found to be one where the customer entrusted its own equipment for rubber lining to suit a particular industrial use. The rubber, chemicals and adhesive materials were used only incidentally in executing the job, and the contract was for a consolidated consideration for the work as a whole. The crucial test was whether the parties contemplated a sale of the very rubber content as goods; on the facts, no such transfer of property in goods was contemplated. Applying the settled distinction between a sale and a contract for work and labour, the dominant object of the arrangement was the execution of work and not the sale of rubber lining as a chattel.

Conclusion: The receipts were not taxable sales but formed part of a works contract, and the turnover was not exigible to sales tax.

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