Summarize the following court judgment. Appeal No. 945 of 1965. Appeal by special leave from the judgment and order dated December 14	 1962 of the Gujarat High Court in Sales Tax Re ference No. 16 of 1961. N. section Bindra and R. H. Dhebar	 for the appellant. M. V. Goswami	 for the respondent. The Judgment of the Court was delivered by Bhargava	 J. This appeal under special leave granted by this Court arises out of proceedings for assessment of sales tax under the Bombay Sales Tax Act III of 1953. Messrs. Kailash Engineering Co. (hereinafter referred to as "the respondent") was an engineering concern having their workshop at Morvi on the meter gauge section of the Western Railway. They obtained a contract from the Western Railway Administration for construction of III class passenger coaches on certain conditions described as the conditions of tender. Under that contract which was reduced to writing and was described as an agreement	 the respondent constructed three coaches and submitted a bill which was properly certified in accordance with the agreement by the Railway Administration on October 4	 1958. The net value of the work done by the respondent was certified at Rs. 1	22	035/ . After receipt of this money	 the respondent wrote to the Additional Collector of Sales Tax requesting him under section 27 of the Bombay Sales Tax Act	 1953	 to hold that this was a works contract	 and that the transaction	 in respect of which the respondent received the money	 did not amount to a sale	 so that no sales tax was payable under that Act. The Additional Collector held that two questions fell for determination before him: (1) Whether the transaction covered by the bill dated 4th October	 1958	 is a sale; and (2) if it is a sale	 whether any tax is payable in respect of the same. The Additional Collector answered both the questions in the affirmative against the respondent. The appeal before the Gujarat Sales Tax Tribunal failed; and thereupon	 the respondent sought a reference to the High Court of Gujarat. The Tribunal referred the following question for the opinion of the High Court: "Whether on a proper construction of the agreement as a whole and its general conditions and specification	 the work done and covered by Contract Certificates No. M/60(1)/B PRTN	 dated 4th October	 1958	 for the perfor 545 mance of the works of building	 erecting and furnishing 3 B. G. Coaches over the chassis supplied by the Railway is a works contract not amounting to sale	 or whether it is a transaction of sale. " The High Court answered the question in favour of the respondent	 holding that the transaction was a works contract carried out by the respondent and did not amount to a sale. Consequently	 this appeal has been brought up by the State of Gujarat challenging the correctness of the decision of the High Court. The Tribunal	 when dealing with the case	 mentioned a few of the terms of the contract entered into between the respondent and the Western Railway Administration	 and	 though there was a provision in one of the clauses of the agreement that as soon as the plant and materials were brought on the site where the coaches were to be constructed	 the ownership in them would vest in the Railway	 the Tribunal held that the ownership in those materials never passed to the Railway because of the indication given by another clause which provided that on removal of contractor or on rescission of contract	 the Railway Authorities would be entitled to take possession and retain all materials	 tools	 implements	 machinery and buildings. On this basis	 the Tribunal held that	 from the general conditions of the contract	 it appeared that the ownership of the coach bodies only passed to the Railway when completed and handed over to the Railway	 so that the contract was for supply of coach bodies. It was on supply of these coach bodies that the respondent received the price of those bodies	 and thus received the amount subjected to sales tax as sale consideration for those bodies. The High Court	 however	 in its judgment	 reproduced the preamble of the contract as well as a large number of clauses of it to show that in the contract	 at every stage	 it was clearly mentioned that the contract was for performance of work of building	 erecting and furnishing coach bodies on Broad Gauge underframes which already belonged to the Railway. The terms of the contract showed that as soon as the materials were taken by the respondent to the site of construction of the coaches	 the ownership in those materials vested in the Railway and all that the respondent had to do was to carry out the work of erecting and furnishing the coach bodies. When the coach bodies were ready	 the property in them vested in the Railway automatically without any further transfer of rights in it to the Railway. In fact	 the ownership in the ready coach bodies did not vest in the respondent at all. No doubt	 the materials for building the ' coach bodies had to be obtained by the respondent and brought to the site of construction	 but the provision that the ownership in those materials would vest in the Railway as soon as those materials were brought to the site clearly indicated that the respondent	 in purchasing those materials	 was 546 acting more or less in the capacity of an agent for the Railway. While the materials were at site	 the effect of vesting of their ownership in the Railway was that if they were destroyed or damaged	 the risk had to be borne by the Railway	 even though the Railway might have been entitled to reimburse itself	 because those materials and goods were in the custody of the respondent on behalf of the Railway. In fact	 under clause 29	 there was a specific provision for the contingency that the materials or plant may be lost	 stolen	 injured or destroyed by fire	 tempest or otherwise. This special provision was to the effect that the liability of the contractor was not to be diminished in any way	 nor was the Railway to be in any way answerable for loss or damage on the happening of such contingency. This special provision had to be made	 because the ownership in the materials vested in the Railway	 though the contractor was in actual physical possession of the materials and plant in order to carry out the works contract. It was for this reason that a specific provision had to be made that the contractor would be liable to the Railway if any such loss occurred. Taking into account all the terms of the contract as a whole	 the High Court came to the finding that the contract between the parties was one entire and indivisible contract for carrying out the works specified in full details in the agreement	 and that it did not envisage either the sale of materials by the respondent to the Railway	 or of the coach bodies as such. In this connection	 learned counsel for the appellant relied on the decision of this Court in Patnaik & Company vs State of Orissa.(1) In that particular case	 the contract in question was for the supply of bus bodies	 and it was held that when the bus bodies were supplied by the contractor and money received by him	 it amounted to a sale. It	 however	 appears that the facts and circumstances	 on the basis of which the Court gave that opinion	 do not find place in the case	 Three main circumstances were relied upon in that case for holding that the transaction amounted to a sale and not to a works contract. The first circumstance was that the bus bodies were	 throughout the contract	 spoken of as a unit or as a composite thing to be put on the chassis	 and this composite body consisted not only of things actually fixed on the chassis but movable things like seat cushions	 and other things which could be very easily detached. In the contract	 with which we are concerned	 the coach bodies are not separately described as units or components to be supplied by the respondent to the Railway. The language used in the contract everywhere describes the duty of the respondent to be that of constructing	 erecting and furnishing coach bodies on the underframes supplied. At no stage does the contract mention that ready coach (1) ; 547 bodies were to be delivered by the respondent to the Railway. In fact	 even during the process of construction of the coach bodies	 the unfinished bodies in process of erection were treated	 under the terms of the contract	 as the property of the Railway. The second circumstance found in that case was that if some work was not satisfactorily done and the body builder	 on receipt of a written order	 did not dismantle or replace the defective work or material at his own cost within seven days	 the Controller was entitled to get the balance of the work done by another agency and recover the difference in cost from the body builder; and for this	 purpose	 the Controller was entitled to take delivery of the unfinished body. In the contract before us	 as we have already mentioned in the preceding paragraph	 the unfinished bodies of the coaches were from the earliest stage treated as the property of the Railway	 and there was no question of ownership of the unfinished body passing to the Railway only after its seizure by it as was the case in the other contract in which the property in the unfinished body did. not pass to the Government till the unfinished body was seized. The third circumstance taken into account in that case was the liability for the loss	 if a fire took place and the bus bodies were destroyed or spoiled. In that case	 there was a provision for insurance of the chassis	 but there was no such provision regarding. insurance of bus bodies	 and the Court inferred that till delivery was made	 the bus bodies remained the property of the appellant on whom the loss would fall. On the other hand	 in the contract with which we are concerned	 the terms envisaged the property in the unfinished bodies vesting in the Railway	 and since those unfinished bodies were to be in charge of the respondent during construction	 a special provision had to be made making the respondent responsible for the loss and throwing upon the respondent the liability to reimburse the Railway for loss by fire	 etc. Thus	 the terms of the contract in this case are markedly different from those which came up for consideration in that case. Here	 we find that all the terms of the contract lead to the only inference that the respondent was not to be the owner of the ready coach bodies and that the property in those bodies vested in the Railway even during the process of construction. This was	 therefore	 clearly a works contract which did not involve any sale. The decision given by the High Court was correct. The appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed.

The respondent company	 which was an engineering concern with a workshop at Morvi	 obtained a contract from the Western Railway Administration for construction of third class coaches. Under the contract the respondent constructed three coaches and submitted a bill which was properly certified on October 4	 1958	 in accordance with the agreement as to the work done by the respondent. After the bill had been paid	 the respondent wrote to the Additional Collector of Sales tax requesting him under Section 27 of the Bombay Sales tax Act	 1953 to hold that the transaction was a works contract and not a sale	 so that no sales tax was payable under the Act. The Additional Collector held however that the transaction was a sale on which tax was payable. Dismissing an appeal from this decision	 the Sales tax Tribunal took the view that the general conditions of the contract showed the ownership of the coach bodies only passed to the Rail when they were completed and handed over to the Railway	 so that way contract was for supply of coach bodies. Sales tax was therefore payable on the price of these coach bodies. Upon a reference made to it	 the High Court held however that the contract clearly mentioned that the contract was for performance of work of building	 erecting and furnishing coach bodies on Broad Gauge under frames which already be longed to the Railway. The terms of the contract further showed that as soon as the materials were taken by the respondent to the site of the construction of coaches	 the ownership in those materials vested in the Railway and all that the respondent had to do was to carry out the work of erecting and furnishing the coach bodies. When the coach bodies .were ready	 the property in them vested in the Railway automatically without any further transfer of rights in it to the Railway. The ownership in the ready coach bodies never vested in the respondent company at all and although materials for their construction had to be obtained by it and brought to the site	 in purchasing those materials it was acting more or less in the capacity of an agent !or the Railway. Accordingly the High Court came to the finding that the contract between the parties was one entire and indivisible contract for carrying out the works specifi ed in the agreement and that it did not envisage either the sale of the materials by the respondent to the Railway	 or of the coach bodies as such; no sales tax was therefore held leviable on the transaction. On appeal to this Court. HELD : The terms of the contract led to the only inference that the respondent was not to be the owner of the ready coach bodies and that the property in those bodies vested in the Railway even during the process of construction. The transaction was therefore clearly a works contract which did not involve any sale. [547 G] 544 Patnaik & Company vs State of Orissa	 ; distinguished.