Works contract classification requires scrutiny of the agreement and actual work before denying composition or revising tax liability.

The nature of a transaction under an agreement must be determined by examining the agreement's terms and the factual character of the work before treating it as a works contract or a contract for sale. Where composition is claimed, authorities cannot deny it or revise tax liability without a proper appreciation of the contractual contents and the work actually executed. Because the impugned orders were passed without such examination, the matter required reconsideration on the existing record. The issue was answered in favour of the assessee, and the case was remanded to the assessing officer for fresh consideration after giving a reasonable opportunity of hearing.

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Issues: Whether the transaction under the agreement constituted a works contract or a contract for sale, and whether the orders denying composition and revising the tax demand could stand without examining the agreement.

Analysis: The authorities were required to examine the terms and conditions of the agreement and the nature of the work executed before determining whether the assessee's activity was a works contract or a contract for sale. Since the agreement itself was the basis of the claim for composition, the character of the transaction could not be decided without a proper appreciation of its contents. The impugned orders were passed without such examination, and the matter therefore required reconsideration on the basis of all contentions and the agreement placed on record.

Conclusion: The issue was answered in favour of the assessee. The matter was remanded to the assessing officer for fresh consideration in accordance with law after giving the assessee a reasonable opportunity to be heard.

Ratio Decidendi: The nature of a transaction as a works contract or a contract for sale must be determined by examining the terms of the agreement and the factual nature of the work before denying composition or enhancing tax liability.

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