Judgment

BHAGWATI, J.:- 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 & 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:

"We confirm all the specifications given in your above referred quotation with the following changes:

1. Structural capacity will be suitable for safe-load of two unloading crabs, i.e. 10 tons.

2. Span of the long gantry which is given 50 will be confirmed shortly.

3. Your supply will also include gantry of 35X50 to make the crane three-motions.

4. We shall not be required to give any material except electric line up to the crane.

5. You will be supplying crane-drivers cabin with automatic control panel free provided its trial is successful.

6. The minimum number of operations will be 30 per hour approx.

7. You will give us working trial of the equipment at least by 30th September, 1965.

8. The price of the above equipment will be Rs. 1,34,500 f.o.r. Khatauli, sales tax, excise duty will be extra, if payable. This price includes erection charges.

9. Terms of payment

40% advance with the order,

10% after one month from the date of the order,

25% after the erection of bridge and columns,

15% after trial,

10% after one months satisfactory performance.

A penalty of 11/2% will be payable per week by you in case of delay per week after 30th September, 1965, and to a maximum of 5% of the total value. You will send your staff for erecting the unloader and we shall be providing you necessary tools and tackles and welding set when required. Available accommodation will also be provided."

The contract between Upper Doab Sugar Mills Ltd. was for supply and erection of two 3-motion electrical overhead travelling cranes with two crabs each at the price of Rs. 1,19,000 for each crane and it was on the following terms and conditions:

"That the contractor will supply the company two cranes with two crabs each as under:-

(i) Crane bridge: The structural design of the crane bridge will be in accordance with the structural specifications of B.S.S. 466 for electric overhead travelling crane. The structural parts will be fabricated from good quality Tata tested steel sections. The girders for the main bridge will be of lattice construction type heavy duty.

(ii) Drivers cabin: The drivers cabin will be of weather proof outdoor construction. It will be with material in a position that the operators view is not obstructed during the load handling and will travel along with the crane crab.

(iii) Electrical equipment for drivers cabin: The drivers cabin will be provided with the following electrical equipment and other necessary fittings:-

1. One protective paner for electrical equipment.

2. Drum controllers for all the motors.

3. Plug and sockets for hand lamp.

4. One electric light point.

5. One alarm bell and all other necessary fittings.

Steps ladders will be pr