Indivisible works contract: incidental use of tins did not amount to a taxable sale absent any agreement to sell.

Where tins were procured under directions of the contracting corporation, billed in its name and used only to fill and transport palm oil for a consolidated price, their value was held not to be a separate taxable sale. The court treated the arrangement as an indivisible works contract and found no express or implied agreement to sell the tins. On that footing, the incidental use or supply of materials in executing the contract did not create a sales tax liability, and the assessee succeeded on the tin value issue.

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Issues: Whether the value of tins procured and used in filling palm oil under the contract was liable to sales tax as a sale transaction, or whether the arrangement was an indivisible works contract.

Analysis: The contract required the assessee to procure tins, fill them with oil, and transport the tinned oil to the State Trading Corporation's customers for a consolidated payment. The materials and attendant circumstances showed that the tins were purchased pursuant to the Corporation's directions, the bills stood in the Corporation's name, and there was no separate payment to the assessee for the tins. In the absence of evidence of an express or implied agreement to sell the tins, the mere use of tins in execution of the contract did not convert the arrangement into a taxable sale. The value of the tins was only incidental to the execution of the works contract.

Conclusion: The sale value of the tins was not taxable, and the assessee succeeded on this issue.

Ratio Decidendi: In an indivisible works contract, the incidental supply or use of materials does not amount to a taxable sale unless an express or implied agreement to sell is established.

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