B V HANUMANTHA RAO Vs. STATE OF ANDHRA

JUDGEMENT

(1.) This is a revision against the order of the Andhra Sales-tax Appellate Tribunal confirming that of the Commercial Tax Officer, East Godavari District.

(2.) The petitioner carries on the business of baling and pressing palmyra fibre. He purchases gunny cloth and iron hoops for the purpose of using them in the baling process. For the year 1951-52, the sales-tax authorities assessed him to sales-tax on a turnover of Rs. 22,865-7-6 being the value of gunny cloth and iron hoops. It was contended before the Tribunals that the contracts entered into between the petitioner and his constituents were work contracts and that the gunny cloth and the iron hoops became an integral part of the product entrusted to him for baling and pressing. Both the Tribunals negatived the contention and held that the petitioner is a 'dealer' and that the transactions relating to gunny cloth and iron hoops were 'sales' within the meaning of the Act.

(3.) Learned counsel raised before us the same points, which his client unsuccessfully raised before the Tribunals. He relies strongly upon the decision of a Division Bench of the Madras High Court in Gannon Dunkerley & Co. v. State of Madras1, in support of his contention that the contracts in question were not 'sales' within the meaning of the definition of sale in the Act but only work contracts. There, Messrs. Gannon Dunkerley & Co., entered into a contract with third parties. They purchased some materials which were made part of the building. One of the questions that arose for consideration was whether the materials supplied and made part of the building were sold by the assessee to the employer. The Division Bench held that there was no transaction of sale between the assessee and the employer and that the materials supplied became an 'integral part of the building constructed by them, under the contract. This view was dissented from by the Nagpur High Court in Pandit Banarsi Das v. State of Madhya Pradesh., 6 S.T.C. 93. Hidayatullah, J., who delivered the judgment on behalf of the Bench, after noticing the decision of the Division Bench of the Madras High Court, observed at page 105 thus :