CHAUTHMAL CHAMPALAL OF NAGPUR Vs. STATE

JUDGEMENT

(1.) THE facts are not in dispute. The applicant "is a manufacturer and does the business of dyeing and colouring yarn of his customers" (Commissioner's appellate order). "He does not dye and colour his own yarn as he has no licence" (Assistant Commissioner's assessment order). Of the yarn brought to him for dyeing by his customers - registered and unregistered dealers - some was of 25 counts and below and the rest of over 25 counts. Sales of "yarn of counts of 25 and below" were tax-free during the period of assessment (1-6-47 to 12-11-47), by virtue of item 18 of the old unamended Schedule II. The departmental officers have held that the applicant effected "sales," when he handed back to his customers the yarn that they had brought to him, after dyeing it according to their instructions. In the "sale price" has been included the amounts recovered by the applicant (a) as dyeing charges, (b) as "sales tax," and (c) as packing charges. The gross turnover thus determined is Rs. 1,24,881 out of which (b) accounts for Rs. 1,068 and (c) for Rs. 3,645. The gross turnover is thus made up very largely of "dyeing charges." Out of these dyeing charges, exemption has been given only in respect of a small sum of Rs. 3,720 representing the charges recovered from registered dealers in respect of dyeing yarn of over 25 counts. This is on the ground that the tax in respect of this yarn, which is not tax-free, will be recoverable ultimately from those registered dealers themselves.

(2.) THE main question for decision in this case is whether a sale has taken place when a dyer, like the applicant, dyes the yarn brought to him by a customer and hands it back to him on payment of certain charges. The case prima facie is not different from what happens, when a job printer carries out a printing job on paper supplied to him by a customer and hands it back to him on payment of his charges. That, strictly in point of principle, the cases are not dissimilar has not been seriously denied by the learned counsel for the State. In support of the department's view, however, he has urged that there is an important distinction between the two cases, which cannot be ignored in practice. In the job printer's case, the cost of the printer's ink was of negligible value, the bulk of the printing charges representing the cost of the skill, technique and labour employed by the printer. In the case of the dyer, however, the actual cost of the dyeing materials used represents the bulk of the dyeing charges. (According to the Assessing Officer, this is about 88 per cent. of the total dyeing charges, and accordingly to the State learned counsel it is about 80 per cent. - the comparatively small balance representing the cost of the dyer's skill, technique and labour).

(3.) THE conclusion reached above is supported by the discussion on the subject in Benjamin's standard work (pages 166 to 168 - Eighth Edition) to which the applicant's learned counsel has called attention. I would quote the following from page 168 :- "Where the employer delivers to a workman either all or the principal materials of a 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, thereupon vest in the employer by accession, and not under any contract of sale."