The main legal point established in the judgment is that the nature of a contract as a works contract or a sale depends on the dominant object of the contract and the intention of the parties, as well as the passing of property in the goods.

ABDUL HADI, J.

These tax revision cases are against the common order of the Sales Tax Appellate Tribunal Main Bench, Madras-104, dated December 9, 1986, in the Tribunal Appeal Nos. 463, 461 and 462 of 1985, respectively, relating to the same assessment year 1982-83. The first of the three relates to sales tax under the Tamil Nadu General Sales Tax Act, 1959, and the other two relate to consequent surcharge and additional sales tax therein under the Tamil Nadu Sales Tax (Surcharge) Act, 1971 and Tamil Nadu Additional Sales Tax Act, 1970, respectively.

2. The question involved in all these cases relates to the disputed turnover of Rs. 6, 52, 851 representing receipts towards rubber lining contract, which was brought to tax by the assessing officer as representing sales made by the respondent-assessee in all the three cases. The assessing officer rejected the claim of the assessee that it was only a works contract and resulted in so sales exigible to tax under the abovesaid enactments [prior to the amendment made to the Tamil Nadu General Sales Tax Act, 1959, with effect from May 29, 1984, by Tamil Nadu Act 28 of 1984, consequent upon the Constitution (Forty-sixth Amendment) Act, 1982]. In the assessee's appeal, the Appellate Assistant Commissioner only confirmed the assessment made. In its second appeal to the Tribunal, the latter set aside the assessment order relating to the said disputed turnover on the ground that the transaction was only a works contract and there were no sales. Hence, the State has filed these tax revision cases.

3. The assessee-company is a manufacturer of rubber goods and it also undertakes rubber lining of industrial equipments. The Tribunal set out in its order the nature of the business of the assessee and the process involved in the abovesaid rubber lining (as per the affidavit of the assessee's Director, Mr. Gangwal) which, as the Tribunal itself states, "are undisputed by the State".

"(a) The appellant effects outright sales of rubber components for which the components are manufactured according to specific drawings. On those sales, sales tax is charged and paid.

(b) The appellant-company undertakes rubber lining on the customers' industrial equipments like, pipes, vessels, storage tanks and other equipments which use corrosive chemical materials and to protect that costly equipment from such corrosion, rubber lining is done .......

(c) As soon as the enquiry is received, the matter is discussed with customers regarding the type of corrosive substance which the equipment is going to be put use of. Thereafter, the type of rubber lining is mutually discussed and agreed. For each category of job, the rubber linings have different properties having the suitable mix of rubber, input chemicals, which are suitably blended and compounded before preparing the rubber lining. The equipments are received at the factory of the appellant and always the rubber lining is blended, compounded and prepared only after the order is received. In other words, the rubber lining compound or sheet is not kept ready for use in the equipment from time to time but specifically prepared for each job then there as per the customers' specification;

(d) The raw rubber is suitably blended with rubber chemicals, in the rolling mixing mill to prepare appropriate lining sheets. Simultaneously the customers equipments surface is treated first by sand blasting (cleaning the surface of the metal to remove the dust and other foreign particles). Thereafter the surface is subjected to adhesive chemical coating and then the rubber lining is munually affixed on the surface of the metal and pressed by small hand roller to have a bonding with the metal. This is highly technical and skilled job, since any minor error makes the surface defective, with loose binding, air bubbles, pin-holes, etc., in lining sheet, which totally make the equipment useless for its purpose. After rubber lining sheet is put on the equipment it is thoroughly chec