Works contract classification for machinery supply and installation turns on the dominant object and integrated commissioning process.

A contract for supply, erection and installation of plastic machinery is treated as a works contract when the machinery is not a completed commercial article until assembled, installed, tested and commissioned at the customer's site. The decisive test is the true nature of the bargain from its terms and surrounding circumstances, with the dominant object being execution of work rather than an independent sale of goods. Clauses relating to insurance or sales tax do not change that essential character. On this analysis, the transaction is not exigible as a sale of goods.

---

---

Issues: Whether the transaction for supply, erection and installation of plastic machinery was a works contract or a sale within the meaning of the Bombay Sales Tax Act, 1959.

Analysis: The decisive inquiry was the true nature of the contract as gathered from its terms and the surrounding circumstances. The price was inclusive of erection and commissioning, and the machinery could not be treated as a completed commercial article until the component parts were assembled, installed, tested and commissioned at the customer's site. The Court applied the settled distinction between a contract for sale and a contract for work, holding that where the dominant object is execution of work and installation, and the materials supplied are only part of that integrated process, the transaction is a works contract. The presence of clauses relating to insurance or sales tax was held not to alter the essential character of the bargain.

Conclusion: The transaction was a works contract and not a sale.

Final Conclusion: The reference was answered by holding that the contract was not exigible as a sale of goods, and the Revenue's contention failed.

Ratio Decidendi: A contract for supply, erection and installation is a works contract where the installation and commissioning are integral to the completion of the subject-matter and no independent sale of goods as chattels can be identified.

---