Severable ship repair contracts treated as taxable sale turnover where invoices separately showed goods and service charges.

Where no written contract or purchase order was produced, invoices and bills were treated as the best evidence of the parties' arrangement. Because those documents separately showed the value of materials supplied and the service charges for repair work, the transaction was treated as severable rather than an indivisible works contract. The supply of goods was held to be the primary element, with repair activity merely incidental, so the turnover attributable to materials was taxable as sale turnover. The claim that the entire transaction was an exempt works contract was rejected, and the lower assessment was upheld.

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Issues: Whether the turnover arising from ship repair transactions represented a taxable sale of goods or an indivisible works contract.

Analysis: In the absence of a written contract or purchase order, the invoices and bills were treated as the best available evidence of the arrangement between the parties. Those documents separately reflected the value of materials supplied and the service charges for repair work. On that basis, the transaction was held to be severable, with the supply of goods constituting the primary element and the repair activity being incidental. The claim that the entire transaction was a works contract was not accepted, particularly since the assessment year preceded the constitutional amendment bringing works contracts within the taxing field.

Conclusion: The turnover relating to the materials supplied in the ship repair transactions was rightly treated as taxable sale turnover and not as an exempt works contract.

Final Conclusion: The revision failed, and the assessment made by the lower authorities was upheld.

Ratio Decidendi: Where no written contract or work order is produced, invoices separately showing the price of goods supplied and the charges for services rendered may evidence a divisible contract and an implied agreement for sale, making the value of the goods exigible to tax.

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