JAIKISHAN GOPIKISHAN Vs. COMMISSIONER SALES-TAX

JUDGEMENT

(1.) IN this reference under Section 13 of the Madhya Bharat Sales-tax Act, 1950, by the Commissioner of Sales-tax, the question that arises for determination is of the liability of the assessee to pay sales-tax on the value of hessian cloth and iron hoops used in the baling process. Messrs. Jai-kishan Gopikishan are owners of a cotton Ginning and Pressing Factory at Sanawad. They press cotton supplied by their clients and deliver it to them in bales covered with gunny cloth and secured by iron hoops. They charged an inclusive rate for both the gunny coverings, the iron hoops and also for the pressing. For the year 1950-51, the sales-tax authorities assessed the firm to sales-tax on the value of hessian cloth and iron hoops. The assessee claimed that the contract between him and his client was a contract of labour and work: that when he delivered the bales of pressed cotton wrapped in hessian cloth and fastened by iron hoops, there was no sale of the cloth and hoops within the meaning of Sales-tax Act. This contention was rejected by the assessing authority. It, however, found favour with the appellate Judge in an appeal preferred by the assessee. The assessing authority then went up in revision before the Commissioner, Sales-tax. The learned Commissioner agreeing with the view of the assessing authority held that

(2.) THE question has to be answered with reference to the definitions of "dealer", "goods" and "sale" given in the Act. Under Section 3 (1) every dealer is liable to pay tax on his taxable turnover subject to the provisions of the Act. Section 2 (f)defines "dealer" as meaning any person or association of persons carrying on the business of selling or supplying of goods, whether for commission, remuneration or otherwise. We are not concerned with that part of the definition which includes in it a Hindu undivided family, society and club etc. "goods" have been defined by Section 2 (g)as meaning all kinds of movable property other than actionable claims, stocks, shares and securities, and includes electrical energy and all materials, articles and commodities, whether or not to be used in construction, fitting out, improvement or repair of movable or immovable property". Section 2 (o) defines "sale" thus ;

(3.) THE matter is plain enough. But Mr. Waghmare, learned counsel for the assessee, relying on -- 'poppatlal Shah v. State of Madras', AIR 1953 SC 274 (A)-' sales-tax Officer Pilibhit v. Budh Frakash Jai Prakash', AIR 1954 SC 459 (B) and -' gannan Dunkerley v. State of -Madras', AIR 1954 Mad 1130 (C), urged that the assessee firm was not doing the business of selling or supplying any hessian cloth and iron hoops; that, there was no contract between the firm and its constituents as to the price of the gunny cloth and the iron hoops; that tne contract beween the parties was one of work and labour; and that there was no sale of the cloth and the hoops which were an integral part of the baling process. I am unable to accede to this contention. The decisions of the Supreme Court cited by the learned counsel do not at all support the contention that in a case such as this, when an inclusive price is charged both for the labour involved in pressing and baling of cotton and for tne hessian cloth and the hoops, there is no sale of the cloth and the hoops unless the price of the cloth and the hoops is specifically agreed to between the parties. Those cases also do not support the contention that a person cannot be said to be carrying on the business of selling or supplying any particular goods unless the business is confined to the sale of those goods or is unconnected with any work and labour contract. In AIR 1953 SC 274 (A), while dealing with the meaning of the word "sale" as used in the Madras General Sales-tax Act, their Lordships of the supreme Court pointed out that in the definition of the word "sale" in Section 2 (h)of the Madras Act stress was laid on the element of transfer of property in a sale and no other. In AIR 1954 SC 459 (B), the Supreme Court considered the validity of certain provisions of U. P. Sales-tax Act, 1948, in so far as it imposed a tax on forward contracts. In connection with that question it was observed that a liability to be assessed to sales-tax can arise only if there is a completed sale under which price is paid or is payable and not when there is only an agreement to sell, which can only result in a claim for damages. These cases do not in any way assist the assessee. The Madras case reported in air 1954 Mad 1130 (C), was cited to support the contention that the contract between the assessee firm and its clients for pressing cotton supplied by the clients and delivered to them in bales was only a work contract. In that case, messrs, Gannari Dunkerley and Company, entered into a building contract and purchased some materials which were used in the construction. One of the questions that was considered wag whether the material supplied and made part of the building were sold by the assessee to the employer. The Madras high Court held that them 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. The-Madras view was, however, not accepted by this Court in the case of --'banarasi Das v. State of Madhya pradesh', (1955) 6 STC 93 (D), where the learned Chief Justice made the following observations at pages 105-106 :