Dipak Kumar Sen, J. - (1.) This reference arises out of levy of sales tax on Cementation Patel (Durgapur), Burdwan, in the accounting periods being the four quarters ending respectively on 31st March, 1958, 31st March, 1959, and 31st March, 1960.
(2.) Cementation Patel (Durgapur), the applicant, carrying on business as a con- tractor was at the material time registered as a dealer under the Bengal Finance (Sales Tax) Act, 1941. It was contended by the applicant in the various assessments to sales tax before different Commercial Tax Officers, inter alia, that it was not exigible to sales tax because its transactions consisted only of transfer of materials to its member-contractors and its own sub-contractors in connection with one particular work, namely, the construction of a steel plant at Durgapur. It was contended that such transactions were not sales and, in any event, the same had not been entered into in the course of any transaction of sale. The Commercial Tax Officers noted that payments received by the applicant in the said work during the relevant period had been excluded in computing its turnover. But they held that none the less the transactions between the applicant and its member-contractors and sub-contractors amounted to taxable sales inasmuch as the activities of the applicant therein amounted to a business of selling goods. It was noted that the goods which had been made over to member-contractors and the sub-contractors had been duly purchased by the applicant and that the transfers thereof were treated as sales and the entries in the books of the applicant in respect thereof were recorded as sales. It was noted further that such transactions which were large in number were effected systematically, fairly and regularly over a considerable period. It was also found that the applicant had disposed of its surplus, used and worked out stores, equipment and materials during the relevant period. These were also held to be taxable sales. Accordingly, the turnover of such taxable sales were computed by the Commercial Tax Officers on the basis of the applicant's books and tax was levied accordingly.
(3.) Being aggrieved by the aforesaid levies the applicant preferred appeals to the Assistant Commissioner of Commercial taxes, asansol Circle. The said appeals were consolidated and disposed of together. It was submitted in the appeals that the applicant came into existence by an agreement between Cementation Co. Ltd., a company incorporated in England, and Patel Engineering Co. Ltd., a company incorporated in India, for the sole and exclusive purpose of executing a part of the parent contract between a consortium of contractors with the Government of India for construction of a steel works at Durgapur. This joint venture was carried on under the name and style of Cementation Patel (Durgapur). The applicant did not carry on any other business. It was submitted further that in the course of execution of the said work certain materials had been made available by the applicant to its sub-contractors and other member-contractors with a view to assist them in carrying out the construction. Clause 8 of the specifications of the parent contract provided, inter alia, as follows: (a) All site work materials supplied pursuant to the contract would become the property of the Government on delivery to the site; (b) the contractors would remove from the site any site work materials when they would no longer be required for the purpose of site work without causing any damage to the site and property in such materials would revest in the contractors on such removal.;