SENTINEL ROLLING SHUTTERS & ENGINEERJNG CO. (P) LTD. versus COMMISSIONER OF SALES TAX, MAHARASHTRA

Citation: [1979] 1 S.C.R. 644 · Decided: 12-09-1978 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
II 
644 
SENTINEL ROLLING SHUTTERS & 
ENGINEERJNG CO. (P) LTD. 
~. 
COMMISSIONER OF SALES TAX, MAHARASHTRA. 
September 12, 1978 
[P. N. BHAGWATI AND V. D. TULZAPURKAR, JJ.J 
Contract of Work and Labour and Contract of Sale t€sts for guidance. 
The appellant assessee entered into a contract dated 28th June, 1972 for 
fabrication, supply erection and installation of Sentinel's Pull and Push type 
aud 
Reduction Gear 
type 
rolling shutters in sheds Nos. 3 and 4 of the 
Sidheshwar Sahakari Sakar Karkhana belonging to Mis. C. M. Shah & Co. 
(P) Ltd. as per the terms and conditions of the contract. 
The special terms 
and conditions· provided that the actual transportation charges would be in 
addition to the price stipulated in the contract and the delivery would be 
6/8 weeks, ex·works from the date of receipt of the final confinnation of the 
order. 
The terms of payme,nt also formed part of the special terms and 
conditions and they provided 25% advance, 65% against delivery and re-
maining 10% after completion of erection and handing over of shutters to 
the satisfaction of the company. 
The assessee carried out its part of the 
contract by erecting and installing the rolling shutters. 
Since the assessee 
entertained doubt as to whether the contract was a contract for sale or a con-
tract for work and labour, the assessee made an application dated 16-9-72 
to the Conimissioner of Sales Tax for determining this question. The Deputy 
Commissioiler of Sales Tax took the view that the contract was a contract 
for sale of rolling shutters and thei work of erection and installation was 
merely incidental to the sale and the assessee was therefore liable to pay 
sales tax on 95% of the amount receivable; by it under the contract. 
In 
appeal the Sales Tax Tribunal held the contract to be a composite contract 
consisting of two parts, one for sale of the rolling shutters and the other for 
execution of the work of erection and installation. 
The High Court on a 
reference agreed with the tribunal and answered! it in favour of the Reve-
nue. 
Allowing the appeal by special leave the Court 
HELD : ( 1) The contract was a contract for work and la.hour and not 
a contract of sale. The contract is one single and indivisible contract and 
the erection and installation of the ·.rolling shutter is as much a fundamental 
part of the contract as the fabrication and supply. [655 D-E] 
Vanguard Rolling Shutters & Steel Works v. Commissioner of Safes Tax, 
U.P. 39 STC 3?2 applied. 
Various component parts do not constitute· a rolling 
shutter until 
they 
are fixed and erected on the premises. 
It is only when the component parts 
are fixed on the premises and fitted into one another that they constitute a 
rolling shutter as a commercial article and till then they are merely component 
parts and cannot be said to constitute a rolling shutter. 
The erectioD and 
installation of the rolling shutter cannot, therefore, be said to be incidental 
to· its manufacture and supply. 
It is a fundamental and integral part of the 
contract because without it the rolling shutter does not come into being. 
The manufacturer would undoubtedly be the owner of the component parts 
when he fabricates them, but at no stage does he become the owner of the 
) 
• 
r 
< ' 
• 
y 
• 
SENTINEL SHUTTERS co. v. c.s.T. 
645 
rolling shutter as a unit so as to transfer the property in it to the customer. 
A 
The rolling shutter comes into existence as a Unit when the component parts 
ar.e . fixed in position on the premises and it, becomes the property of the 
customer as soon as it comes into being. 
There is no, transfer of property 
in the rolling shutter by the manufacturer to the customer as a chattel. 
It 
is essentia1Iy a transaction for fabricating cOmf:<>nent parts and fixing them 
on the premises so as to constitute a rolling shutter. 
The contract is thus 
clearly and indisputably a contract for work and labour and not a contract 
B 
for sale. [653 H, 654 A] 
(2) Whether a particular contract is one for sale of goods or for work 
and labour depends upon the main object of the parties gathered from the 
terms of the contract, the circumstances of the transaction and the custom 
of the trade. (649 D-E] 
(3) A contract v.·here not only work is to be done but the execution of 
such \Vork requires goods to be used may take one of three forms. 
The 
contract may be for work to be done for remuneration and for supply of 
materials used in the

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