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TMI Blog1990 (11) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... 042.74 under the Central Sales Tax Act for the same assessment year 1981-82. [All the four proceedings relate to a period prior to the Constitution (Forty-sixth Amendment) Act, 19821. On the abovesaid question, all the authorities below, viz., the assessing officer, the appellate authority and the Tribunal have concurrently held that they were "sales" chargeable to tax under the above referred to respective enactments. 3.. Recently in State of Tamil Nadu v. Aparajitha Rubbers (P.) Ltd.* (Tax Case Nos. 950 to 952 of 1987) (hereinafter referred to as "Aparajitha's case") by judgment dated August 8, 1990, we have held that the transactions of rubber lining done by the assessee therein on the customers' industrial equipments were not "sales", but only works contract, not exigible to sales tax. There, as in the present case, the Revenue relied on the decision of this Court reported as State of Tamil Nadu v. Dunlop India Limited [1981] 48 STC 521, for contending that the abovesaid transactions of rubber lining amounted only to sales and not works contracts. But, we, after considering several other decisions, distinguished the facts in the above referred to [1981] 48 STC 521 (Mad.) (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above case it was also shown that the contract between the parties was only for rubber lining and not for sale of any of the customers' goods as such. It was also further found that the parties did not contemplate any passing of property in the rubber lining. But the customers entrusted the work of rubber lining on their equipment for a particular user necessitated by the industry, in which the equipments are used and that the dominant object or the very essence of the contract was only an agreement to work for a stipulated consideration, and there was no sale of very rubber content of the lining to the customer. 6.. Therefore, it was held that the transactions involved in the abovesaid Aparajitha's case [1991] 82 STC 74 (Mad.) were only works contracts and not sales. In the present cases, even at the very outset, when the assessee gave replies to the pre-assessment notice, it gave out the nature of the transactions of re-rubberising activity, in the form of an affidavit, as follows: The abovesaid activity is highly technical and specialised in nature. The customers engaged in printing and tanning establishments make enquiries for re-rubberising of their worn-out rollers after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd. [1958] 9 STC 353 (SC), which has been followed by many decisions, the Supreme Court has held as follows: "........in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, which of course presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale..........We are accordingly of opinion that on the true interpretation of the expression 'sale of goods' there must be an agreement between the parties for the sale of the very goods in which eventually property passes (underlining* is ours)." So, it is clear from the abovesaid observation, to constitute a sale, the above referred to three ingredients are necessarily required and even if any one of them is absent, the transaction cannot be a sale and it is also emphasised in the abovesaid observation that with reference to the first of the essential requirement, there must be an agreement to transfer property in goods as goods. While so, from the nature of the transaction in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further observed in Union of India v. Central India Machinery Manufacturing Co. Ltd. [1977] 40 STC 246 (SC) relied on by the learned counsel for the Revenue that the question whether a contract is one for sale of goods or for executing works, is largely one of fact, depending upon the terms of the contract, including the nature of the obligations to be discharged thereunder and the surrounding circumstances. Further in Vanguard Rolling Shutters Steel Works v. Commissioner of Sales Tax [1977] 39 STC 372 (SC), the transaction involved was, fabrication of rolling shutters and fixing them to the premises of the customers and it was held that the materials were not merely supplied to the owner so as to pass as chattel simpliciter, but are actually fixed to an immovable property and after the same are fixed and erected they become a permanent fixture so as to become an accretion to the immovable property. In that context, the Supreme Court also observed as follows: "One of the important tests is to find out whether the contract is primarily a contract for supply of materials at a price agreed to between the parties for the materials so supplied and the work or service rendered is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if the bulk of the material used in the construction belonged to the manufacturer, who sold the end-product for a price that would be a strong pointer to the conclusion that the contract is in substance one for sale of goods and not one for work and labour. Thus, even according to the said decision, the abovesaid test is also not conclusive. That apart, when it is found that there was no agreement to sell goods as goods, as stated above, there cannot be a sale. Further, as already stated, in the above referred to [1977] 40 STC 246 (SC) (Union of India v. Central India Machinery Manufacturing Co. Ltd.) itself it was observed that the question whether a transaction is sale or works contract is largely one of fact, depending upon the terms of the contract. 12.. It may also be pointed out that the Commissioner of Commercial Taxes himself, in his clarification dated August 22, 1980, has held that such rubberisation would only be a transaction of works contract. 13.. Taking into account all the abovesaid features and the decisions, we have necessarily to come to the conclusion that the transactions involved in the present cases are not sales exigible to tax and, therefore, we al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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