Composite vehicle body fabrication treated as a sale, not a works contract, because property passed only on delivery.

A transaction for fabricating and mounting a body on a customer-supplied chassis was treated as a sale, not a works contract, under the Gujarat Sales Tax Act, 1969. The quotation and acceptance showed a composite consideration for labour and materials, and the materials used in the body did not pass to the customer progressively during construction. Property in the finished body passed only on delivery of the completed vehicle, so the body builder was supplying a completed product. The transaction was therefore held liable to sales tax, with the revenue succeeding and the assessee failing.

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Issues: Whether the transaction of fabricating and mounting a body on a customer-supplied chassis, evidenced by the bill in question, was a sale liable to tax under the Gujarat Sales Tax Act, 1969 or a works contract.

Analysis: The quotation and acceptance showed that the assessee undertook to supply a built vehicle for a composite consideration covering labour and materials. The materials used in constructing the body did not pass to the customer progressively during construction; property in the finished body passed only when the complete vehicle with the fitted body was delivered. The controlling principle was that such a transaction is treated as a sale of the completed body and not as a works contract.

Conclusion: The transaction was a sale and was liable to tax under the Gujarat Sales Tax Act, 1969. The answer was therefore against the assessee and in favour of the revenue.

Ratio Decidendi: Where a body builder supplies and delivers a completed vehicle body constructed with its own materials for a composite price, property in the materials passes only on delivery of the finished vehicle and the transaction is a sale, not a works contract.

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