MAN INDUSTRIAL CORPORATION Vs. STATE

JUDGEMENT

(1.) THE Board of Revenue for Rajasthan has made this reference under Section 15 (1) of the Rajasthan Sales Tax Act, 1954 (Act XXIX of 1954) for the opinion of this court whether on a true construction of the terms of the contract entered in between the Man Industrial Corporation Ltd. , Jaipur (hereinafter called 'the assessee') and the President of India the transaction amounted to a sale liable to sales tax.

(2.) FACTS necessary for the disposal of this reference briefly stated are these: The assessee, which is a public limited company, carries on the business of fabricating steel doors, windows, sashes and works of allied nature at Jaipur. It entered into a contract with the President of India through the Central Public Works Department, ajmer, for providing and fixing windows of four different specifications in the building constructed to house the office of the Accountant General at Jaipur. While offering to execute the work the assessee indicated as one of its conditions that besides the costs of the work he will charge sales tax extra. The Executive engineer disputed this saying that no liability of sales tax arose where the goods were purchased for the use of the Government and insisted on the exclusion of this term from the agreement. We are unable to say whether this term was excluded from the agreement or not as the copy of the agreement is not on record. However, the Sales Tax Officer. Jaipur City, Circle 'b' while assessing the assessee for the year 1957-58 taxed it on Rs. 23,408 representing the amount received by it on this contract between the assessee and the Central Government despite objection. An appeal was preferred by the assessee before the Deputy commissioner, Excise and Taxation who held that the Sales Tax Officer should reexamine the case of the assessee because the agreement in question consisted of two separable parts of (a) providing, and (b) fixing the windows, and the assessee was only liable for the amount covered by the first part of the contract. The assessee preferred a revision against this order before the Board of Revenue for rajasthan, Ajmer, challenging the decision of the Deputy Commissioner. The board by its order dated the 25th July, 1962, upheld the order of the Deputy commissioner and dismissed the assessee's application. Thereupon the assessee made an application under Section 15 (1) of the Sales Tax Act praying that a question of law arose out of the contentions raised by the assessee which deserved to be referred to this Court for its opinion. The Board in its order incidentally expressed the opinion that the contract of the assessee was indivisible and, therefore, the amount received by the assessee pursuant to it was not liable to tax and referred the following question for our decision. "whether of the proper interpretation of the contract between the applicant and the Executive Engineer, c. P. W. D. , Ajmer, regarding the providing and fixing of the Steel Windows to the accountant General's office at Jaipur and looking to the terms of the transaction of the type undertaken by the applicant, the Board were justified in holding that the contract was one for the sale of windows and taxable under the Rajasthan Sales tax Act, 1954?"

(3.) BEFORE proceeding to consider the contentions raised before us it is necessary to recall that the Board of Revenue while dismissing the revision application of the assesses observed that the assessee with a view to evade the payment of the sales tax did not separately quote the labour charges for fixing the windows which would be but a small proportion of the value of the total transaction and, therefore, it held that the Deputy Commissioner was right in directing the Sales tax Officer to ascertain the labour charges for fixing the windows and deduct this amount from the total amount received for the contract of providing and fixing windows for the purpose of determining the taxable turn-over of the applicant. In view of these observations we are inclined to observe that the question as referred to us by the Board is larger in scope than the circumstances of the case require. Strictly speaking the question which arises for consideration is: