Composite works contract for GRP pipe supply and commissioning was held not to be a sale.

A contract covering manufacture, transport, laying, jointing, hydro testing and commissioning of GRP pipes was treated as a composite works contract, not a sale. The court accepted the earlier appellate view that the predominant nature of the arrangement was execution of an integrated works obligation, with supply of materials only one element of the contract. Reassessment failed because it rested on no real material beyond a bare assertion that the contract involved only supply, and the view that sale was complete on unloading was held inconsistent with the contractual terms. The revision was allowed in favour of the assessee.

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Issues: Whether the reassessed turnover arising from the contract for manufacture, supply, laying, jointing and commissioning of GRP pipes was liable to be treated as a sale or as a composite works contract.

Analysis: The scope of work showed that the undertaking was not confined to supply of materials but included manufacture, transport, laying, jointing, hydro testing and commissioning. On that footing, the transaction was a composite works contract and the earlier appellate view treating the predominant nature of the contract as manufacture, supply and erection was accepted. The reassessment was also found to rest on no real material beyond a bald statement that the contract was one for supply of materials, and the Tribunal's reasoning that sale was complete on unloading was held to be inconsistent with the contractual terms.

Conclusion: The transaction could not be treated as a sale and had to be treated as a composite contract involving supply of materials; the revision was allowed in favour of the assessee.

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