Research › Browse › Judgment

Gujarat High Court · body

1991 DIGILAW 191 (GUJ)

DUTT MOTOR BODY BUILDERS v. STATE OF GUJARAT.

1991-06-21

A.P.RAVANI, SHARAD D.DAVE

body1991
JUDGMENT S. D. Dave, J. - The question referred to this Court runs thus : "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the transaction evidenced by Bill No. 1/3, dated October 27, 1979 issued in favour of M/s. Jivanbhai N. Patel of Gozariya was a transaction of sale and that it was liable to tax under the Gujarat Sales Tax Act, 1969 ?" The above said question of law came to be referred to the High Court at the instance of the assessee by the Gujarat Sales Tax Tribunal, Ahmedabad, while acting under section 69 of the Gujarat Sales Tax Act, 1969. The facts and circumstances under which the reference came to be made to this Court may be put as under : The assessee was engaged at the relevant time in the business of fabricating and mounting the bodies on the chassis of public carriers, etc., belonging to the customers. On March 13, 1980, the assessee had sent an application under section 62 of the Act to the Deputy Commissioner, Sales Tax, Ahmedabad, seeking determination as to whether the fabricating and mounting of the body on the chassis supplied by a particular purchaser, namely M/s. Jivanbhai N. Patel, according to the design furnished by him and evidenced by Bill No. 1/3 of October 27, 1979 as issued by the assessee in favour of the above said purchaser amounted to a sale or not. While determining the above said question, the learned Deputy Commissioner came to the conclusion that it was a case in which the goods were utilised by the assessee purchased by him and had built the body by the labour put in and that, therefore it cannot be said to be a case of works contract. It was also the view of the learned Deputy Commissioner that looking to the facts and circumstances of the case there was a sale of the body built on the chassis. The learned Deputy Commissioner had passed above said orders while acting under section 62 of the Act of 1969 on February 19, 1981. The above said orders pronounced by the learned. Deputy Commissioner, Sales Tax were challenged before the Gujarat Sales Tax Tribunal by filing appeal No. 4 of 1981. The above said appeal also came to be dismissed by the orders dated January 8, 1982. The above said orders pronounced by the learned. Deputy Commissioner, Sales Tax were challenged before the Gujarat Sales Tax Tribunal by filing appeal No. 4 of 1981. The above said appeal also came to be dismissed by the orders dated January 8, 1982. Later on the assessee had submitted the necessary application for making a reference to this Court and accordingly the above said question has been referred to this Court for our decision and answer. It appears that the authorities below had taken into consideration two case law, one in case of T.V. Sundram Iyengar & Sons v. State of Madras and Commissioner of Commercial Taxes, Mysore, Bangalore v. M.G. Brothers [1975] 35 STC 24 (SC). The other decision which was taken into consideration by the authorities below is the decision in case of Variety Body Builders [1976] 38 STC 176 (SC). After having compared the principles laid down in the above said cases the authorities below had come to the above said conclusion. Mr. Rawal the learned counsel who appears on behalf of the assessee before us has urged that looking to the facts and circumstances of the case the instant transaction would be a transaction of a works contract and would not amount to a sale of the built body. On the other hand the learned counsel Ms. Doshit appearing on behalf of the revenue has urged that the facts and circumstances of the case would go to show that this is a transaction of pure sale. The learned counsel Mr. Rawal who appears on behalf of the assessee has invited our attention to the Mysore High Court decision in Shankar Vittal Motor Co. Ltd. v. State of Mysore [1964] 15 STC 771. In the above said case before the High Court of Mysore at Bangalore, the identical question had arisen for the consideration of the Division Bench of the Mysore High Court. The view taken by the Mysore High Court has been succinctly put at para 17 at page 779 of the above said decision. On the facts and circumstances of the case the Mysore High Court had taken a view that what the assessee had done was "to fix up the body on the chassis, plank by plank, screw by screw, nut by nut, etc., directly on the chassis". On the facts and circumstances of the case the Mysore High Court had taken a view that what the assessee had done was "to fix up the body on the chassis, plank by plank, screw by screw, nut by nut, etc., directly on the chassis". It was also observed that the moment the plank was fixed to the chassis, that plank became the property of the owner of the chassis by accession. It is also the same case, according to Mysore High Court, for the nuts and bolts and for that matter any other part that may have gone into the building of the body. Taking shelter beneath the above said decision rendered by the Mysore High Court, Mr. Rawal has tried to urge that in the instant case also when the body was in the process of building the property in plank, in screw and in nuts and bolts, etc., was passing to the purchaser at every moment when the above said work was being done by the builder. But now we have got a Supreme Court decision on this point which lays down the law. In T.V. Sundram Iyengar & Sons v. State of Madras and Commissioner of Commercial Taxes, Mysore [1975] 35 STC 24 (SC) it has been held that in such case the property in the materials used by the assessee in constructing the body never passed to the customer during the course of construction. It is also laid down that it was only when the complete bus with the body fitted to the chassis was delivered to the customer that the property in the bus body would pass to the customer. It is therefore clearly laid down by the Supreme Court that, thus the supply of the bodies constituted a sale and the assessee were liable to the sales tax. It appears clearly that the facts of the case on hand are akin to the facts of the above said Supreme Court decision. This position become eloquently clear when a reference is made to two documents on record which have been referred to in the orders pronounced by the learned Deputy Commissioner of Sales Tax. Firstly there is a quotation in form of a letter addressed to the intending purchaser by the assessee. In this letter an amount of Rs. This position become eloquently clear when a reference is made to two documents on record which have been referred to in the orders pronounced by the learned Deputy Commissioner of Sales Tax. Firstly there is a quotation in form of a letter addressed to the intending purchaser by the assessee. In this letter an amount of Rs. 28,000 has been quoted as the charges for labour and materials to be used at the works. It is also stated that "built vehicle" will be delivered to the purchaser within a period of thirty working days after the receipt of vehicle at the works. Therefore the above said quotation which has been reproduced in the orders of determination by the learned Deputy Commissioner shows very clearly that the quotation was for the labour and the materials which were to be utilised while building the body. The delivery which was to be given to the purchaser within a period of 30 working days was of a "built vehicle". The above said quotation came to be accepted by the letter of the purchaser addressed to the assessee. It therefore becomes clear that the quotation was for not only the labour charges but also for the materials which were to be used by the assessee in building the body. Reverting back to the Supreme Court decision in T.V. Sundram Iyengar & Sons [1975] 35 STC 24, it becomes clear that in that case also the materials were used by the assessee while constructing the bus bodies. In facts of this case it has been laid down by the Supreme Court that the property in the bus bodies never passed to the customers at the time of building of the bodies but it would only pass when the complete bus with fitted body to the chassis was delivered to the customer. In view of this position the Supreme Court has reached the conclusion that the supply of bodies constitute a sale and the assessees were liable to sales tax. It is true that Mysore High Court in the decision of Shankar Vittal Motor Co. Ltd. [1964] 15 STC 771 has taken a different view but the law seems to be settled by the Supreme Court decision. It is true that Mysore High Court in the decision of Shankar Vittal Motor Co. Ltd. [1964] 15 STC 771 has taken a different view but the law seems to be settled by the Supreme Court decision. In view of this position it becomes clear that the sales tax authorities, including the Tribunal were perfectly justified in coming to the conclusion that the transaction was liable to tax under the Gujarat Sales Tax Act, 1969. In view of this position the question referred to this Court requires to be decided in affirmative and against the assessee and in favour of the revenue. We accordingly reply and answer the above said question with no order as to costs. Reference answered in the affirmative.