A contract for the laying of mosaic tiles is a "works contract" and not a sale of tiles.

VENKATASWAMI, J.

These two tax appeals are directed against the proceedings of the former Board of Revenue in B.P. RT. No. 3831 of 1979 dated November 28, 1979. The appellant is the same, the question of law is the same, and only the assessment years are different, namely, 1975-76 and 1976-77.

2. The facts leading to the filing of these two appeals may now be noted. The appellant is the proprietor of a concern by name New Mercury Mosaic Tiles. He manufactures mosaic floor tiles and also undertakes the laying of mosaic flooring. For the assessment year 1975-76, no return of turnover relating to the business was filed. The Assistant Commercial Tax Officer, Thanjavur-II, found that on the orders placed by the customers, the appellant has undertaken the work of laying mosaic floors. He further found that as per the terms of the agreement between the assessee and the customer, for supplying, laying and polishing of mosaic floor, the customer has to pay by way of advance 30 per cent of the value of the work, on delivery of the mosaic tiles and chips 35 per cent of the value of the work, after laying of the tiles or chips 20 per cent of the value of the work, and after completion of polishing, the balance amount. The further terms of the agreement were, that the customer has to bear transport charges for all materials such as tiles, polishing machine and accessories from the business place of the assessee to the place of the customer. The customer has to make available cement, sand and labour force required for laying the tiles. In addition to the above, he has to make available the following as well : (1) Support labour for the work of laying of mosaic tiles; (2) required quantity of wax polish and turpentine for final finish; (3) electricity to run the polishing machine; (4) if the work spot happens to be out of station, an allowance at a particular rate per day per head. From the above terms and conditions of the contract, the Assistant Commercial Tax Officer found that the cost of the tiles approximately worked out to 65 per cent of the total value of the work and the balance 35 per cent approximately represented the labour charges. On that footing, the Assistant Commercial Tax Officer arrived at the total contract amount at Rs. 1, 33, 430 for the year 1975-76, and out of which he subjected to tax a sum of Rs. 86, 730 representing 65 per cent of the value of the mosaic tiles supplied. Likewise, for the assessment year 1976-77, he fixed the total amount of the contracts at Rs. 1, 27, 636 out of which he brought into the net of taxation a sum of Rs. 82, 638.

3. The contention of the assessee that the entire turnover represented works contract, and as such not liable for tax, was not accepted by the assessing officer. Aggrieved by the assessment orders, the appellant preferred appeals to the Appellate Assistant Commissioner.

4. The first appellate authority accepted the submission made by the assessee and consequently found that the contract between the assessee and the customer was an indivisible one. On that basis, he allowed the appeals and set aside the assessments.

5. The then Board of Revenue, on an examination of the orders of the Appellate Assistant Commissioner, was of the view that the appellate authority went wrong in concluding that there was no sale of mosaic tiles. A notice was issued to the appellant to show cause why the orders of the Appellate Assistant Commissioner should not be set aside and the orders of the assessing officer restored. The appellant sent his replies supporting the orders of the Appellate Assistant Commissioner. According to the appellant, the supply portion of the contract cannot be separated from the work portion, and hence the contract was one for laying of mosaic flooring and polishing, and the same cannot be bifurcated into two, one for the supply and the other for the work.

6. The then Board of Revenue, after perusing the form of contract, took the following view :

"........... The work