Judgment:
Kanakaraj, J.
1. The petitioner had reported a total and taxable turnover of Rs. 20,44,683 and Rs. 5,10,790, respectively. Subsequently they wrote a letter on July 12, 1979, claiming exemption on a turnover of Rs. 14,35,770 representing the value of supply of machinery to M/s. Bharat Heavy Electrical Ltd., Trichy, as being a works contract. This claim was rejected by the assessing authority, the appellate authority as well as by the Tribunal. It is against such concurrent findings that the present revision has been filed.
2. Before us Mr. Janarthana Raja, learned counsel for the petitioner produces the contract for the manufacture and supply of handling facilities for stainless steel tube project. The supply in this case relevant to an equipment called as stopper for lead crops and length cuts, he relies on clause III and XVI of the contract in support of his contention, that the contract was one for creation and not supply of goods. We will therefore do well to extract clauses III and XVI of the contract :
'III. SCOPE OF CONTRACT :
The contract is for material, fabrication, sand blasting, machining, assembly, trial run and painting of handling facilities to seamless steel tube project as in para IV in accordance with the drawings, to be supplied by the contractor out of components to be supplied as free issue by the contractee.
XVI. INSPECTION :
The inspection of the components will be carried out by contractee's inspector or by contractee's authorised inspection agency at contractor's works. All facilities, equipments and instruments required for inspection shall be provided by the contractor free of cost. Contractee's representative shall have free access to the contractor's works during the currency of the contract. For detailed inspection procedure refer annexure'.
3. He lays emphasis on the free supply of certain components by the contractee. The second aspect of the case which is projected by the learned counsel for the petitioner is the one relating to the inspection of components by the contractee's inspector at the contractor's works. We do not think either of these aspects lend support to the claim that there was no bargain for the sale of goods and that the only bargain between the parties was for the work to be done, the passing of title in the goods being only incidental. Before adverting to the decision cited by the learned counsel for the petitioner, it is worthwhile to refer to certain other clauses of the contract. Clause XII says that all the raw materials required as per the part list and drawings, will be procured by the contractor at the contractor's cost including five items of special raw material except supply of certain free items by the contractee. There is clear indication as to the value of the items to be supplied free of cost by the contractee. This is seen from the letter dated October 28, 1977, addressed by the assessee to BHEL. While the price of the machinery f.o.r. Madras is quoted as Rs. 13,67,400 the total value of free issue of materials is given as Rs. 3,00,000. In this letter there is one another clause, being clause XVII of the contract which cuts off the rest of the petitioner's case. That clause reads as follows :
'After assembly and trial run at our works, as mentioned above under scope of supply, we shall make suitable match marks before dismantling the equipment into sub-assemblies for packing.'
4. When we draw the attention of the learned counsel for the petitioner to these clauses, he frankly concedes that the materials were supplied as sub-assemblies in packing. We have no hesitation therefore in holding that the transaction in question cannot be characterised as a works contract. It is clearly a sale of goods attracting liability to tax under the Tamil Nadu General Sales Tax Act.
5. To make matters worse for the assessee the judgment of the Supreme Court in Union of India v. Central India Machinery . [1977] 40 STC 246, deals with an identical case of free supply of small portion of component by the railways. The following observations of the Apex Court are apposite :
'In other words, with the exception of a relatively small proportion of the components supplied under Special Condition 6, the entire wagon including the material at the time of its completion for delivery is the property of the company. This means that the general test suggested by Pollock and Chalmers has been substantially, albeit not absolutely, satisfied so as to indicate that the contract in question was one for the sale of wagons for a price, the company being the seller and the President/Railway Board being the buyer.'
6. The decision relied on by the petitioner in State of Tamil Nadu v. Anandam Viswanathan : [1989]1SCR301 , dealt with a totally different set of facts. In that case, the contract of the University was for the printing of question papers. It was found on the facts of the case that printing of question papers was an extremely confidential matter and such printing could not be entrusted to any and every press. The value paid for such printing includes the paper, technical and professional work as well as the confidence and faith reposed on the assessee. In our view that decision does not help the petitioner in this case.
7. For what we have stated above it is clear that the concurrent findings of the assessing authority, the appellate authority and the Tribunal that the transaction in question amounts to a sale of goods, cannot be called into question. The revision fails and it is accordingly dismissed. There will, however, be no order as to costs.
8. Petition dismissed.