SENTINEL ROLLING SHUTTERS AND ENGINEERING COMPANY PRIVATE LIMITED Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) This appeal by special leave raises the vexed question whether a particular contract is a contract of sale or a contract of work and labour. This has always been a difficult question, because most of the cases which come before the courts are border-line cases and the decisions given by courts are by no means uniform. But so far as the present case is concerned, it does not present any serious difficulty and is comparatively free from complexity or doubt, for there is a decision of this Court which is directly applicable and is determinative of the controversy between the parties.

(2.) The assessee who is the appellant before us is a private limited company carrying on business as engineers, contractors, manufacturers and fabricators and in the course of its business, it entered into a contract dated 28th June, 1972 with M/s C. M. Shah 7 Co. (P) Ltd. (hereinafter referred to as the Company) for fabrication, supply, erection and installation of Sentinel"s Pull Push type and reduction Gear Type Rolling Shutters in sheds Nos. 3 and 4 of the Sidheshwar Sahakari Sakar Karkhana belonging to the Company. The detailed specifications of the Rolling Shutters were given in the contract and the price was stipulated to be Rs. 7/- per sq. ft. and rft. for Pull and Push Type Rolling Shutters and Rs. 9/- per sq. ft. and rft. for the Reduction Gear Type Rolling Shutters, the price in both cases being inclusive of "erection at site". The contract was expressed to be subject to the terms and conditions set out in a printed form and there were also certain special terms and conditions which were specifically written out in the contract. Since considerable reliance was placed on behalf of the Revenue on some of the printed terms and conditions of the contract, we shall set them out in extenso:

(3.) Now the question whether a particular contract is a contract for sale or for work and labour is always a difficult question and it is not surprising to find the taxing authorities divided on it. The difficulty, however, lies not in the formulation of the tests for determining when a contract can be said to be a contract for sale or a contract for work and labour, but in the application of the tests to the facts of the case before the Court. The distinction between a contract for sale and a contract for work and labour has been pointed out by this Court in a number of decisions and some tests have also been indicated by this Court, but it is necessary to point out that these tests are not exhaustive and do not lay down any rigid or inflexible rule applicable alike to all transactions. They do not give any magic formula by the application of which we can say in every case whether a contract is a contract for sale or a contract for work and labour. They merely focus on one or the other aspect of the transaction and afford some guidance in determining the question, but basically and primarily, whether a particular contract is one for sale of goods or for work and labour depends upon the main object of the parties gathered from the terms of the contract, the circumstances of the transaction and the custom of the trade.