STATE OF GUJARAT (COMMISSIONER OF SALES TAX, AHMEDABAD) vs M/S. VARIETY BODY BUILDERS

The Supreme Court ruled that the contracts between the respondents and the Railways for constructing railway coaches were works contracts rather than sales of goods. The Court emphasized that the predominant aspect of the contract was the provision of work and labor, with the supply of materials being ancillary. It was held that upon the contractor's death, the unfinished work became the property of the Railways, and the legal representatives were entitled only to claim payment for work done and the return of the security deposit. The appeals were dismissed, affirming the High Court's decision that the contracts were works contracts under the Bombay Sales Tax Act.