S BAKTHAVATSALU Vs. STATE OF MADRAS

JUDGEMENT

(1.) DURING the year 1958-59, the assessee supplied blue granite jelly (building or road material) to the Neyveli Lignite Corporation. The value thereof was computed at Rs. 2, 06, 195. The inclusion of this amount in the other turnover of the assessee as a dealer in hardware was objected to on the ground that he had quarried the jelly in his own lands and the supply thereof to the Lignite Corporation did not involve a sale but was in the execution of a works contract which he had entered into. This contention was rejected, it being held that the contract which the assessee had with the Corporation called for the supply of material and was not a works contract.

(2.) IN the appeal against this assessment before the Appellate Assistant Commissioner, the case of the assessee was advanced on the basis that the contract called for the performance of certain services by the assessee, that is to say, the quarrying and the conveyance of the material, that there was no supply of material for any stipulated price and that there was no element of sale in the transaction. The Appellate Assistant Commissioner examined the contract and some further correspondence with the officials of the Corporation. He came to the conclusion that the transaction should be viewed in its entirety and should not be broken up into its component parts such as labour involved for quarrying, the transport of the material to the spot, etc. In his view, in so far as the purchaser, the Lignite Corporation is concerned, it was not interested in the break-up of the contract into such component parts. Though the assessee might have to perform these functions in order to enable him to supply the material, that was not relevant for the purpose of construing the contract in question. He accordingly rejected the appeal.The further appeal to the Tribunal shared the same fate. The Tribunal however took note of a Government notification which exempted from the levy of sales tax gravel, even though it involved a sale, and to that extent, the assessment of the assessee was directed to be re-examined.

(3.) "A list of materials proposed to be supplied ....... and the places where and the prices at which they are proposed to be supplied is given at the end of the schedule accompanying the tender notice ...... Tenderers must accept these materials at the specified prices and quote for finished work accordingly. Notwithstanding any subsequent change in the market value for those materials, the charge to the party executing the work will remain so originally entered in the agreement ........"