T. Ramaprasada Rao, J.
1. The appellants are licensed plumber and Sanitary Engineers. The Deputy Commercial Tax Officer, Nagercoil, brought in turnover of Rs. 63,591-30 as exigible to tax. On appeal the Appellate Assistant Commissioner, deleted from the above a turnover of Rs. 41,257-99 on the ground that there was no passing of property in the goods supplied by the appellants until the work involved was completed in accordance with the specification of the other party The Board of Revenue, in revision disagreed with the reasoning of the Appellate Assistant Commissioner and brought to tax the turnover deleted by him and rested its conclusion on the decision in Udani Engineering Co. v. State of Madras T.C. No. 55 of 1960.
2. Aggrieved by the order of the Board of Revenue, the assesses have filed this, appeal. Mr. S. Swaminathan contends that by reason of the subsequent pronouncements of the Supreme Court and in particular the decision of this Court in General Electric Co. of India Private Ltd. v. Government of Madras T.C. 28 of 1964, the Board has not applied the principles whereby tax is exigible in works contracts and that the deletion of the turnover by the Appellate Assistant Commissioner is in order In order to appreciate the course of dealings of the appellants, certain sample bills made available before the hierarchy of tribunals below have been referred to once again before us. One such bill is made under the caption ' Bill for providing sanitary arrangements.' Almost each item connotes that the amount indicated as against it, covers both the price of the articles supplied and the charges for fitting the same It appears to be a consolidated bill. It cannot prima facie be equated to a sale note of materials, as the Board appears to have done. It has been pointed out by the Supreme Court in Aruan Electrics v. Commissioner of Sales Tax (1966) 17 S.T.C. 576 that the invoice alone ought not to be the sole guide to interpret the arrangement between the parties. The Supreme Court has said:
The question whether in respect of a transaction sales tax is exigible may be determined only on the terms of the contract and not from the invoice issued by the person entitled to receive money under the contract.
3. Therefore, the Board of Revenue has committed an error in deciding the material issue resting its conclusion on the details quoted in the bills without considering what possibly could be the terms of arrangement between the parties when the work was in progress.
4. The Court in a recent judgment in Mckenzies Ltd. v. Board of Revenue T.C. No. 101 & 102 of 1964 summa-raised the legal position as follows as regards the liability or otherwise to tax transactions involving work and labour:
Whether a given transaction is a works contract or a sale of goods is a mixed question of law and fact, and will have to be answered invariably in relation to the terms of a particular contract. The test will be the intention of the parties as gathered from the entirety of the contract, whether on a fair reading of the contract the parties agreed to sell and purchase a finished or a completed article of commodity or meant to treat the transaction as one for labour to be bestowed on an article or commodity serving as the base. It may also be useful and necessary to keep in mind whether the transaction relates to a movable or an immovable. In the case of the latter the question will be whether the entire construction or product in the nature of immovable property is meant to be sold or where a construction or works are to be carried out on immovable property, the property in materials, by what is done on or to immovable property pass by affixture in the process of the works, In other words, if the contract is a composite one, it is to be found out whether it can be split up and a part of it can be regarded as an agreement to sell specific goods incorporated to immovable property. The same test may also to some extent apply to works relating to a movable.
5. Again the Supreme Court has reiterated the above principle, in a slightly different form in Andhra Pradesh v. Gundur Tobaccos Ltd. : 2SCR167 , where their Lordships say that if the contract for work is one in which the use of materials is necessary or incidental to the execution of the work, it is one for execution of work not involving sale of goods. Again in later case this well set ratio has been couched in different language by the Supreme Court in John Mowlem & Co. v. Commissioner of Sales-Tax (1967) 19 S..T.C. 59, and State of Gujarat v. Kailash Engineering Co. (P.) Ltd. : 1SCR543 . The following passages (therein make the position reasonably clear:
In a works contract, the agreement between the parties is that the contractor should construct the works according to the specifications contained in the agreement and in consideration therefor receive payment, and as provided therein and in such an agreement there is neither a contract to sell the materials used in the construction, nor does property pass therein as movables. John Mowlem & Co. v. Commissioner of Sales Tax (1967) 19 S..T.C. 59. If the terms of the contract indicate that the contractee is not to be the owner of the product contracted or built upon by the contractor and if the property in the finished product vests in the contractee even during the process of construction, the transaction is clearly a works contract and does not involve any sale.
6. In the light of the above, it is unnecessary to multiply references. The Board relies on the decision in Udani Engineering Co. V. State of Madras' T.C. No. 55 of 1960. There it was a case where there was no stipulation for labour made even though it was a works contract. This weighed with the learned Judges who decided the case. The march of law thereafter and the defined view of the Supreme Court as above cited as also the principles laid down by this Court do not lend support to the conclusion arrived at by the Board that since the bill contains a disclosure as to the price of the articles supplied, they should be deemed to have been sold for such a price. Even the amount indicated in the bill does not represent the price of goods alone. It includes charges for work and labour. The Board has not considered whether the amount disclosed can be severed and separated, so that distinctly a reckoning can be made analytically as to how much of it constitutes the price of articles and how much represented the charges for work and labour. It is no doubt true that if the particulars in a given contract is so separable, then it could be separately considered and the correct law applied to the same so as to bring such a turnover to tax or not. The Board has not considered the turnover in question in this perspective either. In our opinion, the ratio decidendi in Udani Engineering Co. v. State of Madras T.C. No. 55 of 1960, is not applicable to the facts of this case. As the merits of the appeal have to be re-assessed and examined, it is necessary that the case should be remanded to the Board for fresh disposal in the light of our observations as above and in the peculiar circumstances and facts of this appeal. Accordingly the order of the Board is set aside and the appeal remitted to the Board for a fresh consideration in the light of the law as set out above and after full examination of the facts. There will be no order as to costs.