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TMI Blog1991 (12) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1983-84 it is alleged that the assessee-Commission sold certain number of motor vehicles in the specified amount on which the assessment order was passed on December 19, 1985. The aforesaid assessment order was later on rectified twice under section 22 of the Act vide orders dated September 22, 1986 and November 5, 1986. Subsequently it was also discovered that at certain stage the assessee-Commission had made purchases of steel and cement, etc., in large quantity and had given the same to the various contractors which were utilized in the construction of different buildings of the Commission and while making payments to such contractors the price of such supplies of steel and cement, etc., was deducted or adjusted in terms of the agreement between the Commission and such contractors. The assessment order passed under rule 41(7) of the Rules framed under the Act did not include such supplies of cement and steel, etc., to the contractors. Consequently upon the information so received, the Deputy Commissioner (Executive), Sales Tax, Saharanpur, issued a notice to the assessee-Commission under section 10-B of the Act and directed to submit a written statement on the points covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission and the contractors regarding the supply of materials which will ultimately be of paramount help in determining the nature of transaction as to whether the said transaction can be termed as business. Secondly whether it is a sale and the same can be eligible to sales tax. In these connection clauses 10, 11 and 33 of the contract appear to be relevant which are mentioned below. 5. Under clause 10 of the said agreement/contract the materials and stores are to be supplied by the Commission to the contractors. The relevant part of the clause 10 reads as follows: "All materials as supplied to the contractors shall remain the absolute property of the Commission and shall not be removed on any account from the site of the work, and shall be at all times open to inspection by the engineer-in-charge. Any such material remaining unused and in perfectly good condition at the time of the completion or determination of the contract shall be returned to the engineer-in-charge at a place directed by him...." 6. Clause 11 of the said contract under the heading "special conditions of contract" provides as follows: "The contractor at his own cost shall constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Commission shall generally be to plan, promote, organize and implement programmes for the development of petroleum resources and the production and sale of petroleum and petroleum products produced by it and to perform such functions as the Central Government may, from time to time, assign to the Commission. (2) In particular and without prejudice to the generality of foregoing provisions the Commission may take such steps as it thinks fit- (a) for the carrying out of geological and geo-physical surveys for exploration of petroleum; (b) for the carrying out of drilling and other prospective operations to prove and estimate the reserves of petroleum; (c) to undertake, encourage and promote such other activities as may lead to the establishment of such reserves; (d) to undertake, assist or encourage and promote the production of petroleum from such reserves and its refining; (e) for the transport and disposal of natural gas and refinery gases produced by the Commission: Provided that no industry which will use any of these gases as a raw material, shall be set up by the Commission without the previous approval of the Central Government; (f) to undertake, encoura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractor. In case it was so, there was no question of its being returned by the contractor and on not being returned the unused material the contractor was liable for penal consequences for payment of the amount at double rate than the rate on which it was purchased by the assessee as provided in clause 33 of the contract. It was further contended that the value of the cement and steel supplied by the assessee to the contractor was deducted from the running bill of the contractor only for the purpose of accounting with a view to reduce the contract value. 12. On the basis of the submissions made above counsel summed up his first argument and contended that from the terms of the contract and from the aims and object of the Commission as prescribed under the Gas Act it is abundantly clear that the nature of the transfer entered into between the Commission and the contractor does not amount to sale and also cannot be termed "business" as defined in section 2(aa) of the Act. In support of his above contention he has placed reliance on a decision of this Court in Hindustan Housing Factory v. Commissioner of Sales Tax [1989] 75 STC 233 : 1989 UPTC 468. I have carefully perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the view taken by this Court in the case of Hindustan Housing Factory [1989] 75 STC 233 : 1989 UPTC 468 was followed. The ratio laid down by this Court in the case of Hindustan Housing Factory [1989] 75 STC 233 : 1989 UPTC 468 appears to be that in case the ownership and title in respect of the material supplied by the assessee-Commission to the contractor always remained with the assessee-Commission and the same was supplied for carrying on the construction and if after the completion of the construction the unused material was returned to the assessee then the same would not amount to sale and the said transaction would not be eligible to sales tax. 14. Learned counsel for the assessee further contended that the counsel for the assessee at the time of hearing of the second appeal before the Tribunal specifically invited the attention of the Tribunal to the aforesaid two decisions of this Court but the Tribunal did not even care to notice the same and has also not cared to mention them in its judgment. The said contention has sufficient force and I am constrained to observe that if the cases decided by this Court or by the apex Court on the controversy involved in the cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral part of or independent of goods, it could not be inferred that the goods were agreed to be sold, and the price was liable to sales tax. Whether a contract for service or for execution of work involved a taxable sale of goods must be decided on the facts and circumstances of each case. The burden in such a case lay upon the taxing authorities to show that there was a taxable sale, and that burden was not discharged by merely showing that property in the goods which belonged to the party performing service or executing the contract stood transferred to the other party." 16. For the facts stated above I am of the definite view that the ratio laid down in N.M. Goel & Co.[1989] 72 STC 368 (SC) : STI 1988 SC 140 is clearly distinguishable from the present case and is wholly inapplicable. 17. On the basis of the law laid down by this Court in Hindustan Housing Factory [1989] 75 STC 233 : 1989 UPTC 468 and also on the basis of the agreement entered into between the parties and the language used therein, learned counsel for the assessee has serious objection to the last observations made by the Tribunal in its judgment before the operative portion, i.e. "We are of the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amine 'the record' of the 'proceeding'............in order to consider in his revision jurisdiction as to whether the order in question by the Income-tax officer 'is erroneous' in order to consider whether on the basis of the materials which were before the Income-tax Officer and formed part of that record the order passed by the Income-tax Officer is 'erroneous' and prejudicial to the interests of the revenue." 20. The next submission made on behalf of the assessee by the counsel is that once the Tribunal allowed the appeal, had acted arbitrarily and illegally in directing the Deputy Commissioner (Executive) for deciding the case again after perusal of pages 42 to 47, 54 and 55 and 67 of the annual report and account 1983-84 in determining the nature of the transaction and the feasibility of subjecting the aforesaid transaction to payment of sales tax. It has been urged that the appeal was heard by the Tribunal first on July 18, 1991, when the arguments of the counsel for the assessee were heard. It was adjourned to July 19, 1991, for the reply of the department. Learned counsel submitted that on that date neither any written reply nor any wri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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