RAM SINGH AND SONS ENGINEERING WORKS Vs. COMMISSIONER OF SALES TAX U P

JUDGEMENT

(1.) The short question that arises for determination in this appeal by special leave is whether a contract for fabrication and erection of a 3-motion electrical overhead travelling crane is a contract of sale or a contract for work and labour. The question is fortunately not beset with much difficulty since there is a recent decision of this Court in Sentinel Rolling Shutters and Engineering Co. (P.) Ltd. v. Commr. of Sales Tax, Maharashtra, C. A. No. 1001 of 1977, decided on 12-9-1978:(reported in AIR 1978 SC 1747) which affords considerable guidance and almost concludes the determination of the question in favour of the assessee.

(2.) The assessee, who is the appellant before us, is a partnership firm carrying on the business inter alia of manufacturing and erection of cranes. During the assessement year 1965-66, the assessee entered into two contracts for supply and erection of 3-motion electrical overhead travelling cranes, one with M/s. Kamlapat Moti Lal Sugar Mills and the other with M/s. Upper Doab Sugar Mills Ltd. The contract with M/s. Kamlapat Moti Lal Sugar Mills provided for supply and erection of one 3-motion electrical overhead travelling crane at the price of Rs. 1,34,500 and on the terms and conditions set out in a letter addressed by M/s. Kamlapat Moti Lal Sugar Mills to the assessee:

(3.) The question arose in the assessment of the assessee to sales tax for the assessment year 1965-66 whether the amount of Rs. 1,34,500 received by the assessee under the contract with M/s. Kamlapat Moti Lal Sugar Mills and the amount of Rs. 2,38,000 received under the contract with M/s. Upper Doab Sugar Mills Ltd. formed part of the turnover of the assessee liable to sales tax. The answer to this question depended upon whether the contracts with M/s. Kamlapat Moti Lal Sugar Mills and M/s. Upper Doab Sugar Mills Ltd. were contracts of sale or contracts for work and labour. If they were contracts of sale, the amounts of Rs. 1,34,500/- and Rs. 2,38,000/- would be taxable as sale price forming part of the turnover, but not so, if they were contracts for work and labour. The Sales Tax Officer took the view that the contracts were essentially contracts of sale of ready made cranes and the erection of the cranes at the factory site was merely incidental to the sale and the amounts of Rupees 1,34,500/- and Rs. 2,38,000/- received under the contracts were, therefore, taxable. This view was upheld by the Assistant Commissioner in appeal, but on an application for revision being filed by the assessee, the Additional Judge (Revisions) held that each of the two contracts was a works contract not involving any sale of goods and hence the amounts of Rs. 1,34,500 and Rs. 2,38,000 were not exigible to sales tax. The Commissioner of Sales Tax thereupon applied for a reference and on his application, the following two questions of law were referred for the opinion of the High Court.