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1958 (7) TMI 35

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..... ard European port, cost of technical drawings, technical advice and the placing at the owner's disposal of the services of German specialists for certain period. The total consideration for the German section was assessed at Rs. 1,31,50,000. The Indian section consisted of deliveries and services to be rendered in India, sea freight, landing and clearing charges and transport of materials to the site, Indian import customs duty and the cost of boarding and lodging of German specialists. The cost of the Indian section was assessed at Rs. 1,00,00,000. On the 20th of March, 1956, the Superintendent of Sales Tax issued a notice under section 13(5) of the Bihar Sales Tax Act requiring the petitioner to pay sales tax for the years 1952 to 1956 and also to produce books of account and records of sales. The case of the petitioner is that the Superintendent of Sales Tax has no jurisdiction to impose sales tax on the supply of goods in execution of a contract and that the definitions of "dealer" in section 2(c), of "goods" in section 2(d), of "sale" in section 2(g) and of "sale-price" in section 2(h) of the Bihar Sales Tax Act are unconstitutional and beyond the competence of the Bihar Legis .....

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..... building contract for a lump sum for setting up of a coke oven battery at Sindri, and the Sales Tax Authorities had no jurisdiction to impose sales tax on a contract of this description. In this connection learned counsel referred to the definition of the expression "contract" in section 2(b) of the Bihar Sales Tax Act and the definitions of the expressions "dealer" in section 2(c), "goods" in section 2(d), "sale" in section 2(g) and "sale price" in section 2(h). It was contended that these definitions were unconstitutional and beyond the competence of the Bihar Legislature in so far as it seeks to impose a tax on building contract for a lump sum. In support of his argument learned counsel referred to a recent decision of the Supreme Court in State of Madras v. Gannon Dunkerley and Company (Madras) Limited[1958] 9 S.T.C. 353., where it was held that the expression "sale of goods" in Entry 48 in List II of Schedule VII of the Government of India Act, 1935, cannot be construed in its popular sense but must be interpreted in its legal sense and should be given the same meaning which it has in the Sale of Goods Act, 1930. It was also held by the Supreme Court that in the case of buildi .....

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..... f 1956 or Miscellaneous Judicial Case No. 819 of 1956 have made out a case for grant of a writ of certiorari to quash the proceedings taken by the respondent under section 13 of the Bihar Sales Tax Act. The reason is that there is a vital distinction between the contract which was the subject-matter of consideration in the Supreme Court case, State of Madras v. Gannon Dunkerley Co. (Madras) Ltd.(1) and the contract between the owner and the German Company in the present case. In the Supreme Court case it was held that the title to the materials used in execution of the contract did not pass to the other party by virtue of any clause in the contract but the title to the materials passed to the other party to the contract on the theory of accretion. In the present case there is an express provision in the contract to the effect that all materials and plant brought by the contractor on the site under the German and Indian sections would immediately they are brought upon the site become the owner's property. The material clause in the contract states as follows: "All materials and plant brought by the contractor upon the site under the German and Indian sections in connection with th .....

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..... of contract but the authorities can look to other documents like the account books and invoices to find out if the goods were paid for and if the prices were fixed in the course of dealings between the parties. In this connection the Government Advocate referred to a letter of the petitioner dated the 19th March, 1956 (annexure B), reproduced at page 102 of the paper book in Miscellaneous Judicial Case No. 819 of 1956, and pointed out that the petitioner in that case had admitted in that letter that the price of goods sold was Rs. 36,44,012. The relevant portion of the letter is to the following effect: "Permit me to explain the position in little greater detail. The total receipts from Messrs Sindri Fertilisers and Chemicals Ltd. work out to Rs. 1,24,50,009-15-0. The entire receipts are not turnover or payments towards sales of any commodities effected by my client at all. Of this, according to our clients' accounts and documentary evidence available to them in support thereof, Rs. 36,44,012 represents consideration and price of goods sold, supplied or delivered to Messrs Sindris; about half of the rest are entirely for labour and of the other half for rendering services and/or .....

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