Works contract classification prevails where specialised re-rubberising is performed without agreement to sell materials as goods.

Re-rubberising of customers' rollers was held to be a works contract rather than a sale liable to sales tax. The Court looked at the surrounding materials, including quotations and bills, and found that the customers had entrusted worn-out rollers for specialised work, with no agreement to transfer rubber or other materials as goods. The essence of the arrangement was execution of work for consideration, and the mere use of materials in the process, or any passing of property in them on delivery, did not convert the transaction into a sale absent an agreement to sell goods as goods. The authorities' contrary finding was set aside.

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Issues: Whether the re-rubberising transactions carried out by the assessee amounted to sales liable to sales tax or were works contracts not exigible to tax.

Analysis: The transactions were examined on their true character from the surrounding materials, including the quotations, bills and the nature of the work done on customers' rollers. The Court found that the customers entrusted worn-out rollers for specialised re-rubberising work, that there was no agreement to transfer rubber or other materials as goods, and that the essence of the arrangement was to execute work for consideration. The mere fact that materials were used in the process or that property in the materials might pass on delivery did not make the transaction a sale in the absence of an agreement to sell the goods as goods.

Conclusion: The transactions were works contracts and not sales liable to tax; the finding of the authorities treating them as sales was set aside.

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