Sale versus works contract distinction: ex-works supply with incidental fixing charges was treated as a sale, denying exemption.

Manufacture and supply of rolling shutters, collapsible gates and grills under the contract was held to be a sale, not a works contract, because the documents showed ex-godown and ex-works delivery, the purchaser bore transport arrangements and risk after delivery, and fitting charges were separately recovered. The labour involved in fixing the goods at the customer's site was only incidental to the main supply of manufactured goods, so the transaction was not an indivisible contract for work and labour. Applying the statutory definition of works contract and the settled distinction between sale and work contract, the assessee was not entitled to exemption on the disputed turnover.

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Issues: Whether the manufacture and supply of rolling shutters, collapsible gates and grills under the contract amounted to a works contract or a sale.

Analysis: The contract forms, invoices and debit vouchers showed delivery on an ex-godown and ex-works basis, with the purchaser bearing the transport arrangements and the risk passing after delivery. The fitting charges were separately charged, and the labour for fixing the goods at the customer's site was only ancillary to the main supply of the goods. On these terms, the transaction was not an indivisible contract for work and labour. Applying the statutory definition of works contract under section 2(t) and the settled distinction between a contract for sale and a contract for work, the dominant character of the transaction was supply of manufactured goods.

Conclusion: The transaction was a sale and not a works contract, and the assessee was not entitled to exemption on the disputed turnover.

Ratio Decidendi: Where manufactured goods are delivered ex-godown or ex-works, the purchaser bears the risk after delivery, and erection or fixing charges are separately recoverable and merely incidental, the contract is a sale and not an indivisible works contract.

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