2005 (7) TMI 628 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the supply of cement by the Government Department to its contractors constitutes a sale for the purposes of the U.P. Sales Tax Act, 1948.

Analysis:
The judgment pertains to a revision filed under section 11(1) of the U.P. Sales Tax Act, 1948, challenging a decision by the Sales Tax Tribunal regarding the classification of cement supply by the Public Works Department (Government department) to its contractors. The key issue in this case is to determine whether such supply constitutes a sale under the U.P. Sales Tax Act, 1948 for the assessment year 1981-82.

The facts reveal that the Government Department, as the assessee, provides cement to contractors for construction work. The terms of the contract state that the materials supplied become the property of the contractor but cannot be removed until the work is certified as completed. The contractor does not have the right to lift the cement at their discretion, indicating a specific arrangement between the parties.

The court analyzed the definition of "sale" under section 2(h) of the U.P. Sales Tax Act, 1948 and referred to precedents such as Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi and U.P. Awas Vikas Parishad Karyalaya, Bulandshahr v. Commissioner of Sales Tax to establish that the supply of cement by a department to its contractors does not constitute a sale. It was emphasized that in such cases, where the supply is for the department's own work, it does not meet the criteria for a sale transaction under the law.

Consequently, the court found no legal error in the decision of the Sales Tax Tribunal and dismissed the revision in limine, upholding the view that the supply of cement by the Government Department to contractors for its own work does not amount to a sale as defined by the U.P. Sales Tax Act, 1948. The judgment provides clarity on the interpretation of the term "sale" in the context of such transactions involving government departments and contractors, setting a precedent for similar cases in the future.