- (1.) THIS appeal is directed against the judgment dated 17. 4. 84 passed by the learned Single Judge, by which the learned Single Judge, relying upon the Division Bench Judgment of this Court rendered in : M/s. Sunder Das Jindal & Co. vs. State of Raj. & Ors. (1), dismissed the writ petition filed by the petitioner-appellant.
(2.) THE appellant-petitioner is a partnership firm and `a' Class Contractor registered with the Rajasthan Canal Project. THE petitioner-appellant entered into a contract with the State Government through the Executive Engineer, 17th Division, Rajasthan Canal Project, Bikaner, for manufacturer and supply of twenty-five lacs of titles of 3 cmx15cmx6cm and fifty-one lacs of bricks of the size 22 cm x 1 cm x 7 cm by mixing heavy clay/soil with the local soil of kiln No. 766 of RMC and, also, of carriage of coal from Bikaner-Lalgarh/project Stores at Lalgarh to the kiln situated near RD 766 of the Rajasthan Canal, transportation of heavy clay/soil from Khajuwala to kiln site near RD 766 of RMC. THE petitioner completed the contract in the year 1979 and delivered the material to the State Government. A notice under Section 10 (2) of the Rajasthan Sales Tax Act (for short `the Act') was issued to the petitioner by the Assistant Commercial Taxes Officer, B-I, Bikaner on 29. 4. 82 calling upon him to file the Return. THE appellant-petitioner filed the return under protest challenging the jurisdiction of the Assistant Sales Tax Officer, B-1, Bikaner to assess the petitioner for sales tax for these transactions of manufacture and supply of bri- cks to the Rajasthan Canal Project and, also, submitted before it a copy of the decision of the Deputy Commissioner of Sales Tax (Appeals), Bikaner showing that these transactions are not exisible to sales tax and further requested the assessing authority to drop the proceedings and not to proceed further in the matter. THE Assessing Authority, however, refused to drop the proceedings without considering the reply filed by the petitioner. THE petitioner- appellant, being aggrieved with the action of the Assistant Commercial Taxes Officer, B-1, Bikaner and the proceedings initiated against him for the assessment of the tax relating to the transaction of manufacture and supply of bricks, filed the writ petition and prayed that the respondent No. 4, i. e. , the Assistant Commercial Taxes Officer. B-1, Bikaner may be restrained to assess the petitioner for its sales tax liability in respect of the agreement with the Rajasthan Canal Project and the notice dated 24. 1. 83 (Annex. P. 15) issued by the Commercial Taxes Officer, Bikaner may be quashed and set-aside. The writ petition was opposed by the Commercial Taxes Department. The case of the State and the Department in reply is that the contract entered into bet- ween the petitioner and the Rajasthan Canal Project was a contract for sale and exigible to tax. The learned Single Judge relying upon the judgment of the Division Bench of this Court rendered in M/s. Sunder Das Jindal & Company's case, dismissed the writ petition filed by the petitioner. It is against this judgment dated 17. 4. 84 that the appellant has preferred this appeal. It is contended by the learned counsel for the appellant- petitioner that (i) the terms and conditions of the agreement, in the case of the appellant, are entirely different from the terms and conditions in M/s. Sunder Das Jindal & Co. 's case and, therefore, the ratio of the judgment given in Jindal's case is not applicable to the present case; (ii) the transaction in the present case is purely a `contract for work' and not a `contract for sale' and the learned Single Judge was, therefore, not justified in dismissing the writ petition filed by the petitioner appellant. Learned counsel for the respondents, on the other hand, supported the judgment passed by the learned Single Judge and submitted that the terms and conditions of the agreement in the case of the appellant are the same as they were in the case of M/s. Sunder Das Jindal & Co. and, therefore, the learned Single Judge was justified in dismissing the writ petition filed by the petitioner-appellant on the basis of the judgment in M/s. Sunder Das Jindal & Company's case. We have considered the submissions made by the learned counsel for the parties.
(3.) THE controversy involved in the present case, which requires adjudication, is : whether the contract in question is a `contract for sale' of bricks and the tiles or it is a `contract for performance of work and services or labour' to which the supply of bricks and the tiles is incidental? THE answer to this question depends upon the construction of the contract in the light of the surrounding circumstances, the object of the transaction and the intention of the parties while entering into the contract. THE intention of the parties in entering into the contact can be ascertained taking into consideration the transaction as a whole in its true perspective. If the passing of th property is ancillary to the performance of the work then it will not render the transaction to a transaction of `sale'. Even in a contract purely for the work or services, the property may pass to the other party. But, however, the transfer of property for a price, in which the transferee has no previous right, will render the transaction as a transaction for sale. In a contract for work, the property produced or manufactured is not the property of the contractor though the whole materials may be used by him. In a contract for work though the property passes but it does not pass for a price and as such the transaction does not amount to `sale'; while a contract for sale is a contract, the main object of which is to transfer a property in and delivery of the possession of a chattel as a chattel to the buyer. In a contract for sale, the property manufactured or produced is the property of the manufacturer till he transfers the same for a price under a contract. Mere transfer in such a matter is not sufficient to constitute `sale' but the property must pass for a price. `sale' has been defined under Section 2 (o) of the Rajasthan Sales Tax Act. `sale' according to Section 2 (o) of the Act, means every transfer of property by one person to another for cash or deferred payment or other valuable consideration other than by way of mortgage, hypothecation, charge or pledge. To constitute a `sale' under the Act, there must be (i) transfer of title and possession in the property which is the sole property of the transferor : (ii) the transfer should be supported by money consideration ; and (iii) the transferee has no previous title in that property. The distinction between the `contract for work and labour' and the `contact for sale' has been pointed-out in Halsbury's Law of England, Fourth Edition, the following words : "a contract of sale of goods must be distinguished from a contract for work and labour. The distinction is often a fine one. A contract of sale is a contract the main object of which is the transfer of the property in, and the delivery of the possession of, a chattel as such to the buyer. Where the main object of work undertaken by the payee of the price is not not the transfer of a chattel as such, the contract is one for work and labour. The test is whether or not the work and the Labour bestowed end in anything that can properly become the subject of sale. Neither the ownership of the materials nor the value of the skill and labour as compared with the value of the materials, is conclusive, although such matters may be taken into consideration in determining in the circumstances of a particular case whether the contract is in substance one for work and labour or one for the sale of a chattel. " ;