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TMI Blog1996 (8) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... age of coal from Bikaner-Lalgarh/Project Stores at Lalgarh to the kiln situated near RD 766 of the Rajasthan Canal, transportation of heavy clay/soil from Khajuwala to kiln site near RD 766 of RMC. The petitioner completed the contract in the year 1979 and delivered the material to the State Government. A notice under section 10(2) of the Rajasthan Sales Tax Act, 1954 (for short, "the Act") was issued to the petitioner by the Assistant Commercial Taxes Officer, B-I, Bikaner on April 29, 1982 calling upon him to file the return. The appellant-petitioner filed the return under protest challenging the jurisdiction of the Assistant Sales Tax Officer, B-1, Bikaner, to assess the petitioner for sales tax for these transactions of manufacture and supply of bricks to the Rajasthan Canal Project and, also, submitted before it a copy of the decision of the Deputy Commissioner of Sales Tax (Appeals), Bikaner, showing that these transactions are not exigible to sales tax and further requested the assessing authority to drop the proceedings and not to proceed further in the matter. The assessing authority, however, refused to drop the proceedings without considering the reply filed by the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned counsel for the parties. 7.. The controversy involved in the present case, which requires adjudication, is: whether the contract in question is a "contract for sale" of bricks and the tiles or it is a "contract for performance of work and services or labour" to which the supply of bricks and the tiles is incidental? The answer to this question depends upon the construction of the contract in the light of the surrounding circumstances, the object of the transaction and the intention of the parties while entering into the contract. The intention of the parties in entering into the contract can be ascertained taking into consideration the transaction as a whole in its true perspective. If the passing of the property is ancillary to the performance of the work then it will not render the transaction to a transaction of "sale". Even in a contract purely for the work or services, the property may pass to the other party. But, however, the transfer of property for a price, in which the transferee has no previous right, will render the transaction as a transaction for sale. In a contract for work, the property produced or manufactured is not the property of the contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Property with reference to the French Code and Civil Law", at page 190, laid down the following proposition to differentiate between a "contract for sale" and a "contract for work": "(1) A contract whereby a chattel is to be made and affixed by the workman to land or to another chattel before the property therein is to pass, is not a contract of sale, but a contract for work, labour and materials, for the contract does not contemplate the delivery of a chattel as such. (2) When a chattel is to be made and ultimately delivered by a workman to his employer, the question whether the contract is one of sale or of a bailment for work to be done depends upon whether previous to the completion of the chattel, the property in its materials was vested in the workman or in his employer. (3) Accordingly, (i) Where the employer delivers to a workman either all or the principal materials of chattel on which the workman agrees to do work, there is a bailment by the employer, and a contract for work and labour, or for work, labour and materials (as the case may be), by the workman. Materials added by the workman, on being affixed to or blended with the employer's materials, thereu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the intention of the parties while entering into the transaction and the attending circumstances. The ultimate decision of the case turns upon the construction of the terms and conditions of the transaction in the light of the attending circumstances. 15.. The appellant entered into a contract for manufacture and supply of the bricks and the tiles by mixing heavy soil with the local soil at kiln No. 766 RD of RMC. 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 coal is 15 per cent more then the department was to supply coal at Rs. 175 per metric tonne including all the taxes and charges, the recovery of which was to be made from the running bills; and (vi) the mixing charges of heavy soil with the local soil was to be paid at the rate of Rs. 8 per hundred tiles and Rs. 7 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractor and, therefore, the transfer of the bricks and tiles were considered as the transfer for price which amounts to "sale". While in the present case the property throughout remained the property of the Government and even the raw materials which were supplied free of cost by the Government, remained the property of the Government. The ownership either of the raw material or of the manufactured goods never vested in the contractor. The terms and conditions of the contract in Sunder Das Jindal and Company's case [1984] 56 STC 89 (Raj) are different from those in the present case and, therefore, the ratio of Jindal's case [1984] 56 STC 89 (Raj) is not applicable to the present case. The learned single Judge was, therefore, not justified in applying the ratio of the decision in Sunder Das Jindal and Company's case [1984] 56 STC 89 (Raj) to the present case. 18.. In Chandra Bhan Gosain v. State of Orissa [1963] 14 STC 766 (SC) and in Commissioner of Sales tax, Gujarat v. Sabarmati Reti Udyog Sahakari Mandali Ltd. [1976] 38 STC 203 (SC), the assessee entered into the contracts for the manufacture and supply of the bricks. In both these cases the land was given free of charges to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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