In a contract for work and labour, the main object is not the transfer of property but one for work and labour.

SEETHARAM REDDY, J.

( 1 ) THE question involved herein, which is of frequent occurrence, is whether a particular transaction is a contract for work and labour or outright sale.

( 2 ) THESE two cases involving common point and the assessee being common, could be disposed of by a common order. T. R. C. No. 47 of 1981 pertains to the assessment year 1975-76 and T. R. C. No. 46 of 1981 is for the assessment year 1976-77. The findings of the Appellate Tribunal are :"that on the facts and in the circumstances of the case, transaction of the assessee-appellants, i. e. , acting as sub-contractor of the main contractor M/s. Rodio Hazarat, who had entered originally in contract with Visakhapatnam Port Trust for the construction of the Fishing Harbour, Visakhapatnam, amounted to a contract for execution of work and not for sale of goods. "the question is whether the Tribunals decision while placing reliance on decisions in the cases reported in (i) Sentinel Rolling Shutters and Engineering Company Pvt. Ltd. v. Commissioner of Sales Tax [1978] 42 STC 409 (SC), (ii) Arun Electrics v. Commissioner of Sales Tax, Maharashtra State [1966] 17 STC 576 (SC), (iii) Commissioner of Sales Tax, M. P. v. Purushottam Premji [1970] 26 STC 38 (SC), (iv) State of Rajasthan v. Man Industrial Corporation Ltd. [1969] 24 STC 349 (SC) and (v) M. Ponnuswamy Udayar v. Government of Madras [1968] 22 STC 208 is proper or not ? Before deciding, the relevant facts may be set out. The respondent herein was a sub-contractor of M/s. Rodio Hazarat, who had entered into a contract with Visakhapatnam Port Trust for the construction of the Fishing Harbour at Visakhapatnam. The respondent having completed the work, as per the agreement entered into between himself and the main contractor, received certain payments during the assessment year in question. However, he did not file any return in respect of the amount received from M/s. Rodio Hazarat. But, the assessing authority treated the agreement as one for the supply of materials and so, assessed the respondent to tax. The defence was that the agreement was not for the supply of boulders, etc. , but related only to the works executed by him, which was, however, negatived by the original assessing authority as well as the first appellate authority. But, on further appeal to the Tribunal, it was held after careful scrutiny of the details of the contract, that :"there was overwhelming indication in the contract to speak and show that it is a composite and indivisible one and that what has been agreed and intended between the appellant and M/s. Rodio Hazarat, was not to supply materials in the course of the contract, but as and when such materials were imbedded in the contractual work involved, they became the property of the company, and as such, the question of sale of such materials by the appellant (respondent herein), does not arise. "

( 3 ) IT was further held that :"on a consideration of the intention of the parties taken as a whole, one has to irresistibly conclude that it is a works contract, in which, use of materials is incidental to the execution of the work and it is not a contract involving sale of goods. The contract is an entire and indivisible contract as the consideration for the entire work of breaking and producing prescribed different grades and sizes of boulders, transporting goods to the work-spot and placing them in lines and levels as shown in the drawing and as directed by the contractor, is the payment of all inclusive lump sum at the agreed rates and as such, it cannot be considered by any stretch of imagination that it is a contract for supply of goods. "

( 4 ) THE contention of the learned Government Pleader is that the contract entered into between the respondent and M/s. Rodio Hazarat is for the supply of boulders for the execution of the work, and therefore, the main object behind the contract is the supply of goods. We apprehend the contention is not well-founded. We may set out for the purpose

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