Supply of track ballast treated as sale of goods; delivery-related charges included in taxable turnover.

Supply of track ballast under a railway purchase order was treated as a sale of goods, not a civil work or works contract, because the order was essentially for supply and delivery, with stacking only incidental to verification and delivery. On that basis, the claim for compounded taxation under section 7(7) of the Kerala General Sales Tax Act failed. The amount charged for stacking and delivery was included in turnover, because sums incurred in respect of the goods before delivery formed part of the sale price under the statutory definition of turnover. The revision therefore failed on the principal contention that the transaction was a works contract.

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Issues: (i) Whether the supply of track ballast to the railways under the purchase order was a civil work or works contract eligible for tax at the compounded rate under section 7(7) of the Kerala General Sales Tax Act, 1963. (ii) Whether the amount charged towards stacking and delivery of the ballast formed part of turnover liable to sales tax.

Issue (i): Whether the supply of track ballast to the railways under the purchase order was a civil work or works contract eligible for tax at the compounded rate under section 7(7) of the Kerala General Sales Tax Act, 1963.

Analysis: The order was found to be essentially a supply order for stone ballast, with stacking at the railway station only for verification of quantity and the remaining movement being delivery of goods to specified points along the railway line. The work of laying or training the ballast, if any, was not treated as part of the petitioner's obligation. The contract was therefore treated as one for supply of goods and not as an indivisible civil works contract for railway track maintenance.

Conclusion: The supply was not a civil work or works contract within section 7(7); the claim for compounded taxation on that basis failed.

Issue (ii): Whether the amount charged towards stacking and delivery of the ballast formed part of turnover liable to sales tax.

Analysis: The statutory definition of turnover under Explanation 2(i) to section 2(xxvii) was applied to sums charged for anything done by the dealer in respect of the goods sold before delivery. Since the charges included labour and other expenditure incurred up to delivery at the specified place, those amounts were treated as part of the sale price and hence turnover.

Conclusion: The stacking and delivery charges formed part of turnover and were liable to sales tax.

Final Conclusion: The revision failed on the principal contention that the transaction was a civil works contract, and the transaction was treated as a sale of goods with delivery-related charges forming part of turnover.

Ratio Decidendi: Where a purchase order is in substance for supply and delivery of goods at specified points, with any stacking or movement only incidental to delivery, the transaction is a sale of goods and the related delivery charges form part of turnover.

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