1970 (4) TMI 145 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the supplies of material to contractors under written agreements amount to sales and are liable to sales tax.
2. Whether the supply of building material to contractors without written agreements constitutes sales.
3. Whether the assessee-company is considered a 'dealer' under the Sales Tax Act.

Analysis:

Issue 1:
The case involved supplies of material by a company to contractors under written agreements. The taxing authorities determined that the company was not engaged in selling building material, and the ownership of the material did not pass to the contractors. The company charged 10% over the cost price for supervision and storage. The High Court held that there was no sale of material under the written contract or the supplies made beyond the contracted quantity. The charge of 10% was for supervision purposes and was adjusted in the accounts. The clause stating the materials remain the company's property further supported the conclusion that no sale occurred.

Issue 2:
Regarding supplies made without written agreements, the court considered a clause stating that any unused materials would be returned to the company. This clause did not indicate a transfer of ownership to the contractor. The provision aimed to prevent disputes over unused materials and did not affect the passing of material ownership. Consequently, the court found that the supply of building material without written agreements did not constitute sales under the Sales Tax Act.

Issue 3:
The court also addressed whether the assessee-company qualified as a 'dealer' under the Sales Tax Act. Given the findings that no sales occurred, and the ownership of materials did not transfer to contractors, the court concluded that the company was not a dealer in this context. Therefore, the company was not liable for sales tax on the supplies made to contractors.

In conclusion, the High Court ruled in favor of the assessee-company, determining that the supplies of material under both written agreements and without written agreements did not amount to sales. The company was not considered a 'dealer' under the Sales Tax Act. As a result, the company was entitled to its costs in both references.