Category: SALE OF GOODS

ISSUE:

Whether contracts entered into and executed by the assessee for manufacture, supply, installation, and commission of elevators and lifts were contracts for work or sale-contracts?

RULE:

In a "contract of sale", the main object is the transfer of property and delivery of possession of the property, whereas the main object in a "contract for work" is not the transfer of the property but it is one for work and labour.

Another test often to be applied to is: when and how the property of the dealer in such a transaction passes to the customer: is it by transfer at the time of delivery of the finished article as a chattel or by accession during the procession of work on fusion to the movable property of the customer? If it is the former, it is a "sale"; if it is the latter, it is a "works- contract".

Therefore, in judging whether the contract is for a "sale" or for "work and labour", the essence of the contract or the reality of the transaction as a whole has to be taken into consideration

ISSUE:

Whether supply of bus body after constructing and fitting the same to chassis provided by the Government is in pursuance of a sale or a works contract?

RULE:

A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where the main object of the work undertaken by the payee for the price is not the transfer of a chattel qua chattel, the contract is one for work and labour.

ISSUE:

Whether sales tax can be levied on the respondent for the goods not accepted by the party?

RULE:

Section 23(1) of the Sale of Goods Act 1930, Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made.

ISSUE:

Whether the property in the 300 tons of newsprint in sheets had passed to the appellants before the resale?

RULE:

Sec. 18 of the Sale of Goods Act says that, when the property in goods is said to pass to the buyer it says that it is only after the goods have been ascertained to the contract that the property in goods is said to pass to the buyer. Moreover, it adds that if the delivery is to be made of a smaller chunk out of whole then it does not connote ascertaining of goods.