COMMERCIAL TAXES OFFICER CIRCLE B UDAIPUR Vs. EXECUTIVE ENGINEER IRRIGATION KANKROLI DISTRICT UDAIPUR

JUDGEMENT

(1.) THIS Court vide its order dated October 21,1976 passed in D. B. Sales Tax Case No. 183/74 (Commercial Taxes Officer, Circle 'b', Udaipur Vs. Executive Engineer, Irrigation, Kankroli) directed the Board of Revenue for Rajasthan, Ajmer ('the Board' herein) to state the case and refer the following question of law for opinion under Section 15 (2) (b) of the Rajasthan Sales Tax Act, 1954 (No. XXIX of 1954) ('the Act' herein):- "whether in the facts and circumstances of the case supply of cement bags by the Executive Engineer to the Contractor for price for utilisation in the execution of contract constituted sale and this turn-over attracted levy of tax. " The Board has accordingly submitted the statement of the case and referred the aforesaid question. During the pendency of this reference the Rajasthan Sales Tax Amendment Act, 1984 (No. XX of 1984) ('the Amendment Act' herein) was promulgated. Sub-sec. (2) of sec. 1 of the Amendment Act provided that the Amendment Act shall come into force on such date as the State Government may, by notification in the Official Gazette, appoint. By notification No. F. 4 (2) FD/gr IV /79 dated May 1, 1985 published in the Rajasthan Gazette (Extraordinary part IVC-2 dated May 1, 1985. Sec. 13 of the Amendment Act deals with transitory provision. Sub-sec. (11) of Sec. 13 of the Amendment Act provides that every reference made by the Board before May 1, 1985 pending before the High Court shall be deemed to be an application for revision under Section 15 of the principal Act as substituted by the Amendment Act and shall be disposed of accordingly. It may be stated here that under Section 15 of the Act, as substituted by the Amendment Act, the revision lies on the ground that the case involves a question of law. The question of law that arises in this case has already been stated hereinabove.

(2.) WE may recall a few facts : The non-petitioner (Executive Engineer, Irrigation, Kankroli, District Udaipur) supplied cement bags to the contractor under the terms of the agreement for execution of the contract works on behalf of the Government between the period from June, 1957 to August 1957. It appears from the Assessment order Annexure 'a' dated May 1, 1985 that the Irrigation Department was brought on G. I. R. with effect from July, 1962 on its application under S. 6-A of the Act and prior to that it was not on the record as a registered dealer. The A. C. T. O. , Ward 'b' Udaipur passed an assessment order Annexure 'a' dated May 1, 1964 and held that the supply of cement by the non-petitioner to the Contractor was a 'sale' within the meaning of the Act and assessed the transaction of supplying of cement to the contractor during the assessment year 1957-58. The non-petitioner lodged an appeal and the Deputy Commissioner (Appeals), Commercial Taxes, Udaipur by his order Annexure 'b' dated July 31,1965 accepted the appeal observing that the Assessing Authority erred in levying tax on the supply of cement made to the contractor for execution of Government contract by treating such supplies as sales. He, therefore, set aside that order and remanded the case back to the Assessing Authority for making re-assessment in the light of the observations made therein. Being dis-satisfied, a revision under Section 14 (1) of the Act was filed against the appellate order dated July 31, 1964, passed by the Deputy Commissioner, (Appeals), Commercial Taxes. Udaipur. The Board by its order dated December 3, 1971 rejected the revision after noticing clause (11) of the Agreement between the State of Rajasthan and the Contractor and in particular noticing the words "shall remain the absolute property of the Government and shall not on any occasion be removed from the site of the work". The learned Member of the Board observed as under:- "the determination of the point whether sale took place or not will depend upon the terms of the agreement between the parties. Where the agreement shows that property in the goods has not passed, sale cannot be said to have been effected. In the present case the terms of the agreement clearly shows that the property in goods had not been transferred and hence the learned Dy. Commissioner was justified in reaching the conclusion that this supply of cement bags under the terms of contract by the Government to its contractor, was not a sale and not assessable to tax. " A special appeal was filed before the Division Bench of the Board. The Division Bench rejected the Special appeal holding that no regular sale was involved in the transaction in dispute and that the Executive Engineer would not be considered as a 'dealer' in terms of the Sale Tax Act. A reference application was filed under S. 15 of the Act. That was rejected as according to the learned Member of the Board, no question of law arose out of the Board's order. An application under Section 15 (2) was filed in this Court In view of the decision reported in M/s Hindustan Steel Ltd. Vs. The State oforissa (1), this Court opined that a question of law does arise from the Board's order. It, therefore, directed the Board to make the reference on the aforesaid question which we have, now heard as a revision under Section 13 (11) of the Amendment Act.

(3.) WE may state that the definition of the word 'dealer' was amended by Act No. XVIII of 1960 so as to include the State Government in respect of any business. Before a Division Bench of this Court in Commercial Taxes Officer, Survey, Investigation, Jodhpur Vs. The Divisional Superintendent, Northern Railway, Jodhpur (2), a question arose whether in the definition of 'dealer' as it stood prior to amendment in the year 1958 the State Government and the Central Government were excluded or not. In that connection it was observed that the State Government was not included in the definition of term 'dealer' prior to April 1, 1958 and that the State Government initially and the Central Government subsequently were explicitly included within the term 'dealer' only by way of clarification, in order to remove doubts, if any. It was opined that that does not mean that the State Government and the Central Government were exempted from the operation of the Act by necessary intendment. It was held in that case that when department of the State Government or the Central Government carries on business activity, it is a 'dealer' within the meaning of Section 2 (f) of the Act.