Works contract characterization of site-fabricated auditorium chairs defeats sale-based tax levy and upholds assessee's position.

Supply, fabrication and fixing of auditorium chairs at site was treated as a works contract because the contractor brought materials to the premises, fabricated the chairs there, and completed the job in coordination with the architect, owners and civil contractor. The absence of a formal written contract did not negate the works contract character, as the nature of the transaction could be gathered from the evidence and surrounding circumstances. The earlier authority relied on by the revenue was factually different. The levy based on treating the transaction as a sale could not be sustained, and the assessee succeeded.

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Issues: Whether the transaction for supply, fabrication and fixing of auditorium chairs amounted to a works contract and not a sale transaction liable to tax as such.

Analysis: The contract, on the facts found, required the assessee to bring materials to the site, fabricate the chairs there, and complete the work in co-ordination with the architect, owners and civil contractor. The work was not the delivery of chairs as movable goods, but the execution of a single integrated job in the auditorium premises. The absence of a formal written contract did not by itself negative the existence of a works contract, because the nature of such transactions may be gathered from the evidence and surrounding circumstances. The authorities below had applied an earlier decision on facts materially different from the present case.

Conclusion: The transaction was a works contract pure and simple, and the levy sustained on the footing of a sale could not be upheld; the assessee succeeds.

Ratio Decidendi: Where the substance of the agreement is fabrication and fixing of goods at site as an integrated contractual obligation, the transaction is a works contract and not a sale merely because materials are supplied and property ultimately passes on completion.

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