Judgement

SHAH, J.: The respondent carries on the business of fabricating "steel doors, windows, sashes and other goods". On April 20, 1957, the respondent submitted in pursuance of an invitation by the Executive Engineer, Ajmer Central Division, its tender for providing and fixing "S. H. Windows W Type", "S. H. Windows W1" type, "T. H. Windows" & "Composite Windows" of certain sizes "in accordance with the specifications, designs, drawing and instructions". The tender was accepted and the respondent carried out the contract.

2. The Sales Tax Officer B Circle, Jaipur City-, included in the taxable turnover of the respondent Rs. 23480 received under the contract. He held that the contract with the Executive Engineer was one of sale of goods and the respondent had with a view to promote sales of foods manufactured by it "voluntarily offered to fit" the goods and had made no separate charge for that service. The Deputy Commissioner Excise and Taxation in appeal held that from the acceptance of the tender, two contracts resulted: one for providing doors and windows and another for "fixing" those doors and windows in a specified building, and that the price of the goods supplied, but not the charge for service, was taxable. He accordingly remanded the case with a direction to assess tax on the price for sale of materials only. The Board of Revenue exercising revisional power confirmed the order passed by the Deputy Commissioner observing that the contract undertaken by the respondent was not a contract of service.

3. The following question was referred by the Board of Revenue to the High Court of Rajasthan:

"Whether on the proper interpretation of the contract between the applicant and the Executive Engineer, C.P.W.D., Ajmer, regarding the providing and fixing of the steel windows to the Accountant General s Office, Jaipur, and looking to the terms of the transaction of the type undertaken by the applicant the Board were justified in holding that the contract was divisible between two parts, representing the sale of the windows and the labour charges in fixing the same and thus partly liable to sales-tax?"

The High Court held that the contract between the respondent and the Executive. Engineer was a "building contract and the amount received by the respondent was not taxable.

4. The relevant terms of the tender which was accepted by the Executive Engineer were:

"Item Rate-tender for Works

I/we hereby tender for the execution for the President of India of the work specified in the under-written memorandum within the time specified in such memorandum at the rates specified therein, and in accordance in all respects with the specifications, designs, drawing, and instructions in writing referred to in Rule 1 hereof and in Class II of the conditions of contract and with such materials as are provided for, by and in all other respects in accordance with such conditions so far as applicable."

This recital was followed by a memorandum setting out the "general description" of the building in respect of which the window-leaves were to be supplied, the estimated cost of the contract and the description and the number of items of work offered to be done. The items of work offered to be done were providing and fixing" four different types of windows. The relevant conditions were:

"1. The work shall be executed as per the specifications attached.

2. The work is to be completed in 6 months from the date of award of works.

3. * * * * * * *

4. The windows are to be fitted with rawl plugs in cut stone works.

5. Work will be executed either by plain glass or ground glass as may be decided by the Engineer in Charge.

"Note:

1. * * * * * * *

2. We are offering windows which will be glazed with plain glass only. If at a later date it is desired to have windows glazed with ground glass, the difference in cost of glass will have to be paid by you.

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4 * * * * * *

5. The quotation is based on the current prices of mild steel billets fixed by the Go