- (1.) K. L. SHARMA, J. Both these revisions filed under section 11 of the U. P. Sales Tax Act, 1948 (recently designated as U. P. Trade Tax Act and hereinafter referred to as "the Act") involve common questions of law and facts and have been heard together and are being disposed of together by a common judgment. The S. T. R. No. 415 of 1992 relates to the assessment year 1986-87 under the Act and involves sales tax of Rs. 1,09,94,000 and the other S. T. R. No. 448 of 1992 relates to the assessment year 1985-86 under the Act and involves sales tax of Rs. 49,45,929 on the assessed turnover of Rs. 7,66,07,077.
(2.) THE revisionist is a company (Government of India undertaking) controlled and managed by the Department of Fertiliser, Ministry of Agriculture, Government of India. THE majority of the shares of this company are held by the Government of India and the balance shares subscribed by the States Level Co-operative Federation of 17 States of the country. This company has been established to manufacture and supply fertilisers to the agriculture sector of the country. THE company obtained provisional registration under section 8-B of the Act during the assessment year 1985-86 as it intended to establish its business of manufacture and sale of fertiliser in the State of Uttar Pradesh and to set up a plan by choosing its factory site near Bareily. During the assessment year 1985-86 and the assessment year 1986-87 neither any purchase of the raw material was done nor any manufacture of fertiliser was done and consequently no sale of the fertiliser was done during these assessment years. THE construction of the factory buildings and other buildings was undertaken through the contractors under specific agreement and written contracts. Under the terms of the contract the company had agreed to issue supply and had issued cement, iron and street to the contractors for being used in the construction of the factory buildings, etc. , without transferring property in these goods of cement, iron and steel. THE company obtained a licence from the Government of India for purchasing the cement, iron and steel for being used in the construction of the factory buildings and other buildings and after purchasing these goods directly from the manufacturers, the company handed over the same to the contractors subject to the terms of the contract for utilisation in the proposed factory building and other buildings. THE contractors utilised the cement, iron and steel supplied by the company in the construction of the buildings and were made responsible to return the excess and unused cement, iron and steel. However the assessing authority considered the supply of cement, iron and steel to the contracts as a sale under the Act and levied sales tax on the value of these goods. An appeal was filed before the Assistant Commissioner (Judicial) but it was later transferred to the Deputy Commissioner (Appeals), Bareilly, who was pleased to dismiss the same. THE company then filed a second appeal before the Tribunal under section 10 of the Act but Tribunal also dismissed the appeal upholding the transaction as sale. The company filed these under section 11 of the Act raising a common legal question : whether the supply of cement, iron and steel by the company to the contractors for utilising the same in the construction of factory building and other buildings of the company amounted to sale under the terms of the Act and if not, any tax liability was attracted under the Act ? The learned counsel for the revisionist, Mr. Bharat Ji Agrawal, has referred to the various terms and conditions of the contract entered into by the company with the contractors for the construction of the factory building and other buildings of the company and he contended that the supply of cement, iron and steel by the company to the contractors for the specific purpose does not amount to sale and no tax liability was attracted under the Act. In support of his contention he has relied upon a decision of this Court in the case of Oil and Natural Gas Commission v. Commissioner of Sales Tax, 1992 UPTC 170 and another decision of this Court in the case of Modi Xerox v. Commissioner of Sales Tax 1992 UPTC 717. He has also referred to another decision of this Court in the case of Commissioner of Sales Tax v. Ansal Properties and Industries Pvt. Ltd. 1989 UPTC 1366 and a decision of the Calcutta High Court in the case of Cementation Patel (Durgapur) v. Commissioner of Commercial Taxes, West Bengal, Calcutta [1981] 47 STC 385.
(3.) THE learned standing counsel for the opposite party has asserted that the supply of cement, iron and steel by the company to the contractors for being used in the construction of factory building and other buildings amounted to a transaction of sale within the meaning of section 2 (h) of the Act, and sales tax was liable to be paid as rightly assessed by the assessing authorities and confirmed by the appellate authorities. In support of his assertion he has relied upon the judgment of the honourable Supreme Court in the case of N. M. Goel and Co. v. Sales Tax Officer [1989] 72 STC 368; 1990 UPTC 865 and a decision of this Court in the case of Executive Engineer, Electricity Civil Construction Division, UPSEB, Meerut v. Commissioner of Sales Tax 1994 UPTC 438. I have carefully persued these judgments cited by the learned counsel for the parties. Though these judgments are confined to the facts and circumstances of each case and the terms of the contract involved in the transaction, yet the principle of law is not disputed. According to the latest decision of the honourable Supreme Court in the case of N. M. Goel [1989] 72 STC 368; 1990 UPTC 865, a contractor of P. W. D. whose appeal was dismissed, the question depends in each case on the terms and conditions of the agreement between the parties and the intention of the parties which can be inferred not only from terms of the agreement but also from the review of all the attendant circumstances for passing of the title to the goods either as integral part of goods or independent part of goods, could give rise to an inference that the goods were agreed to be sold and the prices were liable to sale tax. Whether a contract for service or for execution of work involved a taxable sale of goods must be decided on the facts and circumstances of each case. The burden in such a case lay upon the taxing authority to show that there was a taxable sale and that burden was not discharged by merely showing that property in the goods which belonged to the parties performing the service or executive the contract stood transferred to the other party. While examining the terms and conditions of the agreement entered by N. M. Goel with the P. W. D. the honourable Supreme Court found clause (10) sufficient to treat the transaction as sale and accordingly agreed with the view of the Full Bench [see [1989] 72 STC 370] and dismissed the appeal of the contractor. But this decision based on clause (10) of that particular agreement cannot constitute a binding precedent to hold that the agreement of work entered with the contractor to make a transaction sale liable to tax.;