Job work for corrugated box conversion was not a taxable works contract where customer specifications controlled the process.

An arrangement for converting paper and board into corrugated boxes was treated as job work rather than a works contract for sales tax purposes. The customer fixed the raw material, dimensions and specifications, and the converted boxes had to be returned to it for a fixed conversion charge per box. Because the material used in the process was incidental and there was no transfer of property in the finished boxes to the assessee, the transaction did not satisfy the elements of a taxable works contract. The sales tax levy was therefore unsustainable.

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Issues: Whether the arrangement for conversion of paper and board into corrugated boxes was a works contract liable to sales tax or a job work not exigible to sales tax.

Analysis: The agreement showed that the raw material, dimensions and specifications were fixed by the customer, the converted boxes were to be returned to it, and the payment was a fixed conversion charge per box. The material used in the process was only incidental, and there was no transfer of property in the finished boxes to the assessee. Applying the dominant object test and the statutory distinction between sale and works contract, the transaction lacked the elements necessary to be treated as a taxable works contract.

Conclusion: The arrangement was job work and not a works contract, so the sales tax levy could not be sustained and the assessee succeeded.

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