A contract for the fitting and building of bodies on chassis supplied by the customer is a contract for the sale of goods and not a contract for work and labor.

S.S.Dulat and A.N.Grover JJ.

1. Both these matters shall stand disposed of by this judgment. By an order dated 3rd May, 1961, this Court directed the Financial Commissioner under Section 22(3) of the East Punjab General Sales Tax Act, 1948 (to be referred to as the Act) to state the case and to refer it on the following questions of law :-

(a) Whether in the circumstances of the case, the contract of fitting and building the bodies on the chassis supplied by the customer, and the amount charged therefor could be said to constitute a sale within the definition of the word sale as given in the Punjab General Sales Tax Act, 1948 (Act 46 of 1948) ?

(b) Whether it was necessary to separately mention the items for the material to be used and for the labour involved so as to be entitled to the exemption ?

2. As the points of law involved in both the cases were the same, a single reference has been made.

3. The petitioner-firm deals in repair of motor-cars, trucks and old bodies and manufactures bodies on the chassis supplied by the customers. In the assessment years 1952-53 and 1953-54, the Assessing Authority held the firm liable to sales tax on the sale of such "bodies" fitted on the chassis and did not allow any deductions for labour charges, including them in the sale of the "bodies", on the ground that the dealer had sold complete "bodies" in a finished state and not the material thereof. In these circumstances the Assessing Authority did not allow any deduction on account of labour charges at the rate of 60 per cent. as claimed by the petitioner-firm and as had been allowed to other similar manufacturers before by the department. Aggrieved by the order of the Assessing Authority, the petitioner-firm went up in appeal before the Deputy Excise and Taxation Commissioner on the ground that the buses, trucks or chassis were not owned by the petitioner-firm but all that was done was that bodies were fitted thereon. These appeals were dismissed. Revision petitions were filed before the Excise and Taxation Commissioner, who made an order on 6th March, 1958. According to his order, the petitioner-firm built complete bodies, which are fitted on the chassis of the vehicles belonging to the customers and charged for them and the charges are not made on the basis of the material used and the cost of labour employed. To put it in his own words, "it is, thus, the body and not the material going into it that is sold and as such the entire cost of the body has to be taken into consideration for the purposes of sales tax." He further held that the cost of labour could only be excluded under Section 2(i) of the Act from the turnover in a case of contract as defined by Section 2(c) and as the supply of the body was not covered by this definition, the petitioner-firm was not entitled to any deduction on account of the cost of labour in respect of the bodies. On revisions being filed before the Financial Commissioner, he confirmed the view of the Excise and Taxation Commissioner. According to him, the bodies are charged as a whole and there are no separate agreements, one for the sale of material and the other for work and labour. He held :-

In the present cases before me, as mentioned above already there has been a transfer of title to goods, supported by money consideration; and the bodies were built duly charged for and then transferred to the owners of the chassis. So the sale is complete in the cases.

4. Mr. Viswanatha Sastri, who appears for the petitioner-firm, has mainly argued the first question and with regard to the second question he has quite fairly and properly stated that it does not arise in view of the definition of the word "contract" contained in Section 2(c) of the Act which does not apply to the present cases. His principal contention is that the contract for fitting and building the bodies on the chassis supplied by the customer could not be regarded as a contract for sale of goods but it is a single indivisible contrac