TaxTMI 
TaxTMI 
1992 (9) TMI 347
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.... 157 of 1983 has been filed. Since the issues involved are common, and submissions have been made in common. they are dealt with together. 2.. The respondents-assessees were said to be ship repairers and engaged in doing repair works to ships at harbour and also supplying necessary materials in effecting such repairs. On March 18, 1980, the place of business of the assessees appears to have been inspected, as a result of which, action was taken to assess the respondents for the assessment year 1974-75. After giving due notice and opportunity, the assessing officer, by his order dated October 21, 1980, determined the total and taxable turnover of the respondents at Rs. 1,94,551 and levied a tax of Rs. 11,120. Penalty under section 12(3) to the tune of Rs. 16,680 was also levied at 1½ times the tax due. 3.. Aggrieved, the respondents-assessees pursued the matter before the Appellate Assistant Commissioner. The said appellate authority, while noticing the facts that the assessees are the ship repairers, that they have produced parts and accessories of the ships and used them while carrying out repairs and reconditioning them, that they have not maintained any agreements i....
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....contended that in the absence of any written agreement, governing the transactions in question and having regard to the details furnished or made available in the accounts maintained, the only conclusion possible was that the spare parts supplied constituted sale of goods inasmuch as the contract itself was a divisible one. It is the contention of the learned counsel that the predominant object was supply of materials and the assessees have effected supplies of materials, while executing the works, making out separately the charges for labour and consequently the Tribunal erred in holding that the assessees were mainly repairers and the amounts received were only for services rendered. 6.. Mr. Inbarajan, learned counsel appearing for the respondents-assessees adopted the reasoning of the Tribunal and supported the findings arrived at, referring to the consideration made by the Tribunal with reference to the nature of the transaction. It is also contended for the respondents that the Tribunal, as a final fact-finding authority, on appreciation of the nature of the transaction as disclosed from the materials made available, rendered a categorical finding that the transactions in q....
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....actions amounted to sale. On the other hand, the Tribunal after noticing the judgment of the apex Court, as well as that of the Andhra Pradesh High Court, came to the conclusion that the transactions in question are essentially contracts to do repair works in ships and that the separate value for materials shown in the bills is only to determine the reasonableness of the total work of the contract and that the supply of material was incidental to the contract which according to the Tribunal was primarily a works contract. 8.. Further from the order of the Tribunal we find that it adverted to some of the bills and their contents and relied upon them to come to the conclusion that the transactions in question were primarily works contracts. The materials noticed in paragraph 6 of the Tribunal, in our view, would squarely justify the factual findings rendered by the Tribunal that the primary nature of the contract is that of works contract and not a contract for supply of material. In Vanguard Rolling Shutters & Steel Works v. Commissioner of Sales Tax [1977] 39 STC 372, the apex Court had an occasion to consider the principles relating to a works contract in the context of an agre....
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.... was not the transfer of chattel qua chattel, the contract is one of work and labour. The test is, whether or not the work and labour bestowed end in anything that can properly become the subject of sale; neither the ownership of the materials nor the value of the skill and labour as compared with the value of the materials is conclusive, although such matters may be taken into consideration in determining, in the circumstances of a particular case, whether the contract was in substance one for work and labour and one for the sale of a chattel." 9.. After considering the relevant decisions on the subject, the apex Court quoted with approval the principles to be borne in mind as enunciated in Benjamin's Treatise on the Law of Sale of Personal Property with reference to the French Code and Civil Law, Eighth Edition (1950) at pages 167-168, where the learned editor has deduced the principles that would be applicable in deciding the controversy before us. These principles are: "1. A contract whereby a chattel is to be made and affixed by the workman to land or to another chattel before the property therein is to pass, is not a contract of sale, but a contract for work, labour and....