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1983 Supreme(AP) 7
Andhra Pradesh High Court
Judges : B.P.JEEVAN REDDY, PUNNAIAH
United Mosaics - Appellant
Versus
State OF A.P. - Respondent
Decided On : 01-17-83
The supply of mosaic tiles and their laying and polishing at the site of the consumer by the assessee amounted to a works contract and not a sale.
Headnote:
SALES TAX - SUPPLY OF MOSAIC TILES AND THEIR LAYING AND POLISHING - WORKS CONTRACT OR SALE - TRANSACTION HELD TO BE A WORKS CONTRACT AND NOT A SALE.
Fact of the Case:
The assessee, M/s. United Mosaics, was engaged in the manufacture of mosaic tiles and in fixing and polishing of the same at the site specified by the consumer. The assessee claimed exemption for its total turnover on the ground that all the transactions entered into by it are works contracts. The Commercial Tax Officer accepted this plea, but the Deputy Commissioner revised the orders and held that all the transactions of the assessee are exigible to tax.
Finding of the Court:
The Tribunal held that the in situ work amounts to works contract, but the works relating to supply of tiles, their laying and polishing at the site specified by the consumer are sales and not works contracts.
Issues: Whether the supply of mosaic tiles and their laying and polishing by the assessee at the site of the consumer amounts to a sale or a works contract.
Ratio Decidendi: The court held that the transaction in question was a works contract and not a sale. The court relied on the following factors: * The bill issued by the assessee charged the consumer for the work done at the site per 100 sq. ft. or per running foot, irrespective of whether the work was done using the tiles manufactured at the assessee's factory or whether the work was carried out in situ. * The consumer was not concerned with the number of tiles used by the assessee for covering the required area. * The consumer was only concerned with the work done at the site and paid according to measurements. * The mere fact that the consumer was obliged to supply water and electricity did not detract from the nature of the work. * The bill expressly stated that the charges were inclusive of laying and polishing.
Final Decision: The court allowed the tax revision cases and held that the transactions entered into by the assessee for the assessment years 1971-72 and 1972-73 represent works contracts and are not exigible to sales tax.
( 1 ) THESE two tax revision cases are preferred by the assessee against the orders of the Sales Tax Appellate Tribunal in so far as the Tribunal held that the supply of mosaic tiles and their laying and polishing by the assessee at the site of the consumer amounts to a sale and not to a works contract. We shall briefly note the relevant facts T. R. C. No. 12 of 1979 pertains to the assessment year 1971-72, while T. R. C. No. 13 of 1979 pertains to the assessment year 1972-73. The assessee is M/s. United Mosaics, Trunk Road, Nellore, engaged in manufacture of mosaic tiles and in fixing and polishing of the same at the site specified by the consumer. It also undertakes in situ work. The assessee claimed exemption for its total turnover on the ground that all the transactions entered into by it are works contracts. This plea was accepted by the Commercial Tax Officer by his order dated 28th July, 1973 (1971-72), and 2nd March, 1974 (1972-73 ). These orders were however revised by the Deputy Commissioner in exercise of his power under section 20 (2) of the Andhra Pradesh General Sales Tax Act. He was of the opinion that all the transactions entered into by the assessee amount only to sales and are not works contracts. Accordingly he held that all the transactions of the assessee are exigible to tax. The two appeals preferred by the assessee were heard and disposed of together by the Tribunal. In so far as the in situ work is concerned, the Tribunal held that it amounts to works contract. But in so far as the works relating to supply of tiles, their laying and polishing at the site specified by the consumer is concerned, the Tribunal held that they are sales and not works contracts.
( 2 ) FOR deciding this question, it is necessary to first ascertain the actual nature of the transaction. The only evidence on this question is the bill which is issued by the assessee. The bill, which is extracted in the order of the Tribunal, may be extracted :"bill No. 117. Dated : 12-3-1973 UNITED MOSAICS Factory, Trunk Road Nellore-2. NELLORE.------------------------------------------------------------------------ Particulars Rate per Amount ------------------------------------------------------------------------ White with M. W. 4 size. Chips (1) Hall 421. 4 sq. ft. 192. 00 100 sft. 808. 96 Skirting 85. 4 R. ft. 1. 50 R. ft. 128. 00 (2) Cast in situ work white : Batch rooms, latrines, including Dadda work total area 455. 4 sft. 180. 00 100 sft. 819. 60 II. Ramp. Grey cement. Chequered. 166 sft. 158. 00 100 sft. 262. 28 ------- Total 2018. 84 ------- 2018. 84 Amounts received : 2. 11. 72 400. 00 13. 11. 72 1100. 00 ------- 1500. 00 Labour charges 551. 50 ------- 2051. 50 Expenditure 2051. 50 Amount returned on 22. 3. 73 32. 66 ------- 2018. 84 ------- Sd/- ------------------------------------------------------------------------ Bill No. 117, Dt. 12. 3. 1973 : 9. 11. 19 Sri I. Venku Reddy, To : M/s. United Mosaics, Gudur. 17/56, Trunk Road, Works at Naidupet. Nellore-1. Dear Sirs, Please supply me/us the following goods at the rates noted below and I/we agree to the conditions overleaf. I herewith pay an advance of Rs. and request you to collect the balance through 1. White with marble white No. 4 size chip : Floor area - 550 sft. @ Rs. 192 per sft. Skirting 105. 90 Rft. @ 1. 50 per Rft. 2. Bath rooms : White with marble white : 50 sft. cost in situ 180 per 100 sft. 3. Ramp : Grey chequered cement tiles. 200 sft. @ 158 per 100 sft. The above rates are inclusive of Central excise, laying and polishing. The indentor has to supply base mortar, water and electricity free of cost. F. O. R. Factory Nellore. Yours faithfully, Sd/- Signature of Indentor. Sd/- Representatives signature. CONDITIONS OF SALE 1. All orders are subject to confirmation and prior sale. Orders once given and accepted cannot be cancelled. 2. Goods once sold shall not be taken back. 3. Packing and forwarding charges shall be extra unless specifically mentioned in th
