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TMI Blog1973 (6) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid period for limestones with an option of renewal for a further period not exceeding the duration of the original lease. The company instead of extracting limestone materials from the quarries entered into an agreement with M/s. Palanji Shapoorji Co. (hereinafter referred to as "the contractors") for excavating, collecting and transporting limestone chips to the company from the leased land or from other sources. The contractors entered into a sub-contract in this behalf with the applicant-company (hereinafter referred to as "the sub-contractors "). It appears that this applicant-company has been assessed for the period from 1st November, 1960, to 30th June, 1963, as an unregistered dealer liable to pay tax on the materials excav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court laid down the following test for answering the above question: "In C.B. Gosain v. State of Orissa[1963] 14 S.T.C. 766 (S.C.). , this court ruled that for finding out whether a contract is one of work done and materials found or one for sale of goods depends on its essence. If not of its essence that a chattel should be produced and transferred as a chattel, then it may be a contract for work done and materials found and not a contract for sale of goods. The primary difference between a contract for work or service and a contract for sale of goods is that in the former there is in the person performing work or rendering service no property in the thing produced as a whole notwithstanding that a part or even the whole of the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk to the subcontractors; (4) the sub-contractors were to break the stones so excavated into required sizes and thereafter to load in wagons so as to carry them to the factory site of the company; (5) the royalty for mining those materials was to be paid by the company and for purposes of the work entrusted, the company has to pay a rate of 6.65 per ton to the contractors; (6) the contractors and, therefore, the sub-contractors were under an obligation to remove and clear the site of the rejected materials found by the company as not according to the specifications as agreed; (7) if the quantity finally rejected in a month exceeds 5 per cent of the receipt, the freight and the handling charges of the rejected materials were to be deducted f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractors or sub-contractors. Neither the mining lease was assigned nor the rights and interest of the company was transferred so as to urge that the property in the "thing produced as a whole" was in the contractors or sub-contractors. Therefore, it was for all intents and purposes a contract for work done and materials found. It should also be noted that in the case of rejected materials neither the contractors nor the sub-contractors had any right or interest therein. They were at liberty to dispose of these materials with the consent of the company, provided they were in a position to find out the purchasers who might be prepared to pay the royalty for those materials. In our opinion, therefore, the Tribunal has not properly considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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