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TMI Blog1976 (4) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court was delivered by GOSWAMI, J. -This is an appeal by special leave against the judgment of the Gujarat High Court dated 8th/9th December, 1970. The respondent (hereinafter to be described as the assessee) entered into a contract with the Public Works Department of the Government of Gujarat on September 6, 1965, for manufacture and supply of kiln-burnt bricks to the said department for the construction of the Capital Project, Gandhinagar. Large quantities of bricks were manufactured and supplied under the contract and the applicant received payment for the same in accordance with the agreed rates. The assessee made an application under section 52 of the Bombay Sales Tax Act, 1959, on November 19, 1967, to the Deputy Commissioner of Sales Tax, to determine the question whether the said supplies of bricks by the assessee to the Public Works Department were sales or works contract. The Deputy Commissioner held the supplies of bricks by the assessee as sales. The assessee then appealed to the Tribunal against that order. The Tribunal following the ratio of the decision of this court in Chandra Bhan Gosain v. State of Orissa [1963] 14 S.T.C. 766 (S.C.)., came to the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d labour. The question is not always easy and has for all time vexed jurists all over. The distinction between a contract of sale of goods and a contract for work and labour is often a fine one. A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of the possession of, a chattel as a chattel to the buyer (Halsbury's Laws of England, Third Edition, Volume 34, page 6). The contract with which we are concerned in this appeal is found in a tender "for the supply of materials" containing a memorandum of the conditions. The nature of work is described as "manufacturing and supplying kiln-burnt bricks for construction of Gandhinagar". The question will depend upon the true construction of the tender which, on acceptance, is treated here as the contract containing all the terms and conditions agreed upon between the two parties. In the tender the assessee stated "I/We, Chairman, Sabarmati Reti Udyog Sahakari Mandli Ltd., the undersigned do hereby tender for the supply of the materials described in the schedule attached herewith subject to the conditions annexed". The schedule described materials as bricks and also stated "quantities to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecutive Engineer or his Assistant. Clause 13: This contract shall not be sublet without the written permission of the Executive Engineer. In the event of the contractor subletting his contract without such permission he shall be considered to have thereby committed a breach of the contract and shall forfeit his security deposit, and shall have no claim for any compensation for any loss that may accrue on account of the collection of the materials or engagements entered into. Clause 16: No guarantee can be given that the total number of quantities of material indicated in the schedule of the contract will be ordered during the period of the contract. But, the Executive Engineer shall purchase from the contractor all such materials as are detailed in the schedule which he may require to purchase during the period of the contract. Clause 17: No claim or claims made by the contractor for increased rates on the grounds that the market or other rates included in the contract, have risen during the period of his contract, will be recognised, that is to say, the contractor is bound to complete the work and/or to supply materials at the rates mentioned in the contract. Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties. If, however, it is found that the materials have been sold by him to private parties or other bodies, he shall have to pay to the department at the rate of 10 per cent of the value of the materials at the tender rates." While giving the specifications item No. 1 herein refers to "manufacturing and supplying of I Class kiln-burnt bricks of standard size including stacking in regular consignments, etc., camp. as directed". Mr. V.S. Desai brings to our notice the common as well as the distinguishing features of this case and of Chandra Bhan Gosain's case [1963] 14 S.T.C. 766 (S.C.). According to him the common features are the following: The land was given free for manufacture of bricks in both the cases. The materials shall remain at the contractor's risk till the date of final delivery. In Chandra Bhan Gosain's case[1963] 14 S.T.C. 766 (S.C.)., the contractor could not sell the bricks to third parties without previous permission of the company. Here also the contractor has no right to sell the bricks, etc., but if he does sell, he will have to pay 10 per cent of the value of the materials at the tender rates. Both the clauses are, therefore, permissive clauses and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment; restriction on employment of children under 12 years labour welfare provisions regarding wages; workmen's compensation, etc. provisions in relation to prevention of cruelty to animals; non-payment of royalty for excavating earth; use of tube-wells standing on the Government site; manner of execution of the work regarding moulding and drying and provision against subletting, which shall constitute-a breach of the contract resulting in forfeiture of security deposit. All the above terms relate to a stage in the process of proper and efficient manufacturing of bricks and are not inconsistent in a contract of sale. These terms do not appear to impinge on the character of the contract as one for sale of the bricks manufactured. The Government in its overall interest and anxiety for general welfare could insist on compliance with certain beneficial legal measures. It could also insist on certain terms which will ensure efficient production of the material. Provision against subletting when the land was given free by the Government is also understandable. All the above features do not negate the concept of a contract of sale of the bricks that are ultimately manufactured. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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