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TMI Blog1996 (11) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... held to be a contract for work and labour and not for sale. The constitutional validity of the various provisions of the Rajasthan Sales Tax Act, 1954 (in short, "the Act") and the Rules framed thereunder has also been challenged but at the commencement of the argument, this prayer was not pressed by the learned counsel for the petitioner. 3.. In the second writ petition, it has been prayed that the notice, annexure 5, issued under rule 54 of the Rajasthan Sales Tax Rules, 1955 (in short, "the Rules") in respect of the assessment year 1990-91 to show cause as to why tax be not imposed on the amount of Rs. 18,81,744 received by the petitioner from the PHED towards the supply of PCC blocks be not quashed, the respondents be restrained from taking any proceedings in pursuance thereof and the contract entered into between the petitioner and the PHED for manufacturing and supply of pre-cast cement concrete blocks be declared as a contract for work and labour and not for sale. 4.. It has been averred in the writ petitions, in short, as follows. The petitioner was awarded works contract for manufacturing and supply of pre-cast cement concrete blocks [M-100] of 30 cm x 15 cm x 4 cm (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actual cost came to 4.63 paise for the year 1989-90 and 4 paise for the year 1990-91, per PCC block. In other words, the cost of a PCC block was much below 15 per cent of the amounts received from the PHED. It was not exigible to tax as per Government Notification No. 88 of 1973 dated November 7, 1988. When the price of the materials employed by the petitioner was less than 10 per cent, it could not be imagined that he had at any point of time property in the manufactured P.C.C. blocks. He had a right as that of a bailee under the law of bailment. For sometime, the PHED illegally deducted tax at source. The amount deducted was not released without submitting no due certificate from the Sales Tax Department and in order to get released the same, petitioner had to deposit tax. Quarterly returns were filed before the Sales Tax Officer disclosing the turnover of works contract received. In the revised yearly consolidated return, the legal position as to the liability for payment of tax was duly explained. Important raw materials, i.e., cement and water were supplied by the department free of cost for manufacturing the PCC blocks and the cost of the materials purchased by the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 51,72,590 was paid as price of 58,64,616 PCC blocks, the petitioner was owner of the PCC blocks till their delivery was made to the PHED, there was no question of contract for work and labour, the decisions given in Sunder Das Jindal and Company v. State of Rajasthan [1984] 56 STC 89 (Raj), Civil Writ Petition No. 650 of 1987 (Verma Construction v. State of Rajasthan) and in writ petition of Ganpat Ram Co. v. State of Rajasthan [1997] 105 STC 305 (Raj) are fully applicable in this case and the petitioner submitted returns and deposited tax for 2-3 years. It has further been averred that Act has been amended by the Rajasthan Sales Tax (Amendment) Act, 1994 with effect from 1st April, 1987 and sub-section (3) has been added to section 5 and the petitioner has an alternative remedy by way of filing appeal and second appeal. 6.. In the rejoinder, the petitioner has averred that the present contract is a works contract, transfer of property in the process of manufacturing and supply of blocks was never involved, the manufactured blocks were never the property of the petitioner, no sale was involved, the petitioner's job was completed after taking out the PCC blocks from curing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anpat Ram Co. with the terms and conditions of the contract, annexures 1 to 3 involved, in these cases. 9.. Para No. 7 of the writ petitions, enumerates the material terms and conditions of the contract. They are as follows: (i) Cement and water would be provided free of cost by the PHED and the tax of the cement supplied is to be paid by it. (ii) Land for manufacturing PCC blocks will be provided by the PHED free of cost. (iii) The work will be carried out strictly as per specifications provided in the tender documents and IGNP practices. (iv) All materials supplied by the PHED will remain the absolute property of the Government and shall be open for inspection. (v) All materials, e.g., stone and other materials obtainable in the work by dismantling, etc., will be the property of Government and will be disposed of to its best advantage as per direction of the engineer-in-charge. (vi) Crusher broken stone grit of specified size obtainable from Kho quarry and sand available from Rajwa P.W.D. quarry will be used and all taxes and royalty, will be paid by the petitioner. These materials of any other quarry will not be used. (vii) Form oil and specification as decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no doubt that it was simply a works contract. Sunder Das Jindal and Company v. State of Rajasthan [1984] 56 STC 89 (Raj), relied upon by the assessing authority, is clearly distinguishable. The terms and conditions of this contract were quite different. The PHED furnished information in form ST-47 under rule 46 of the Rules as an awarder of a contract at no point of time this contract was treated as a contract for sale. 11.. Para 14, page 9, of the judgment dated August 14, 1996 given in D.B. Civil Special Appeal No. 160 of 1984 Ganpat Ram Co. v. State of Rajasthan [1997] 105 STC 305 (Raj) gives the terms and conditions of the contract. It would be best to quote the relevant portions of the same. They run as under: "...........The terms and conditions of the contract, which are relevant to resolve the present controversy, are: (i) royalty was to be paid by the department; (ii) water in moulding area was to be supplied free of cost by the department; (iii) the fresh stack coal from Bikaner-Lalgarh store site was to be supplied free of cost at the site; (iv) the payment of carriage of coal and clay was to be made immediately twice in a month; (v) if the consumption of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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