Composite service transactions can include sale of goods where supply is severable and forms part of business consideration.

Supply of hessian and iron hoops in cotton ginning and pressing was treated as a severable part of the composite transaction for consideration, not merely incidental labour or service. That supply therefore constituted a sale of goods in the course of business, bringing the applicants within the definition of dealers under section 2(6) of the Bombay Sales Tax Act, 1953 and making them liable to registration on the relevant turnover. The contrary Supreme Court authority was distinguished because it concerned an indivisible building contract and did not establish that every service contract is outside the scope of sale.

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Issues: Whether the applicants, engaged in ginning and pressing cotton, were dealers within section 2(6) of the Bombay Sales Tax Act, 1953 and liable to registration on the footing that the hessian and iron hoops used in the process and supplied to customers constituted sales in the course of business.

Analysis: The applicants' business was not confined to rendering labour or service. In the transactions with customers, the supply of hessian and iron hoops formed a severable part of the composite arrangement for consideration. Such supply was treated as a sale of goods, and the prior decision of the Court on an identical business activity was held to govern the matter. The Supreme Court decision relied upon was distinguished because it dealt with an indivisible building contract and did not lay down that every service contract is necessarily indivisible or outside the ambit of sale.

Conclusion: The applicants were dealers within section 2(6) of the Bombay Sales Tax Act, 1953 and were liable to registration on the turnover of the hessian and iron hoops.

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