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Report No. 61

Tests Adopted

1A.19. Tests for distinguishing between works contracts and sale.-

It may sometimes be difficult to decide whether a contract is of works or of sale. Several tests are adopted1 for the purpose-e.g. one test is whether primarily the transfer of the movable article is taken as such, or whether the transfer is only ancillary to another contract. Another test is whether the article supplied has itself a general market. A contract to produce photographs of a particular person is, for example, one of works,2 because the photographs would have no general market. The production is really of a work of art requiring ski11.3-4

1. See also para. 1A.7, supra.

2. B.C. Kame v. Assistant S.T.O., (1971) 28 STC 1 (3) (MP).

3. C.S.T. v. Patel India Ltd., (1971) 28 STC 516 (Born) (Mody, C.J. and Chandrachud, J.)

4. Camera House v. State of Maharashtra, AIR 1956 Born 437 (Abhyankar & Vimadalal JJ.) (Reviews cases).

1A.20. States faced with problem.-

It has been stated that states are faced with several problems1 owing to the extension of the principle to other cases involving "body building".

1. Notes in the Ministry of Finance.

Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back

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