In Brief
The Supreme Court held that a single works contract for supply and laying of pipelines can be legally divided into a goods component (subject to sales tax) and a services component. The Forty-Sixth Constitutional Amendment permits this bifurcation by legal fiction. Following careful factual examination by lower courts and the High Court, the supply of PSC pipes, jointing materials, valves, and anchor blocks constituted a substantial part of the contract and qualified as 'sale of goods' exigible to tax under the Rajasthan Sales Tax Act. The Kone Elevator principle (treating all composite contracts as indivisible) did not apply where the contract was factually found divisible. The appeals were dismissed, upholding the tax and penalty imposed.
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