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1971 (3) TMI 103 - HC - VAT and Sales Tax
Issues:
Assessment of turnover based on transactions between the petitioner and a company for quarrying operations. Determination of whether the transactions constitute sales or a contract for services. Analysis: The petitioner, a registered dealer, entered into an agreement with a company for quarrying coral limestones from a mine. The agreement specified the terms of quarrying, transportation, and delivery of the limestone, with the petitioner being remunerated for the services rendered. The assessing authority reopened assessments for the years 1964-65, 1965-66, and 1966-67, claiming an escapement in turnover related to the transactions with the company. The authority found that the petitioner supplied limestone from sources other than the designated mine, leading to assessable turnover for sales made outside the agreement. The main contention revolved around whether the transactions between the petitioner and the company constituted sales or a contract for services. The court analyzed the terms of the agreement and concluded that the petitioner's role was that of a contractor providing quarrying services to the company. The agreement clearly outlined the obligations of the petitioner to quarry, transport, and deliver limestone to the company as a service, rather than a sale of goods. The court rejected the argument that the transactions should be treated as sales, emphasizing the contractual nature of the services provided by the petitioner. The court ruled in favor of the petitioner, stating that the transactions covered by the agreement for quarrying operations should not be included in the assessable turnover. However, sales of limestone from sources other than the designated mine were deemed as sales transactions and required separate treatment. The court directed the assessing authority to reexamine the assessable turnover, excluding the transactions related to the contract for quarrying services. The writ petitions were allowed, with no costs imposed on either party.
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