DWARKA PRASAD, J. - (1.) THE parties in these four writ petitions are the same and as common questions of law and fact arise in these cases, it would be convenient to dispose them of by a common order.
(2.) THE petitioner, M/s. Rajputana Cotton Press Public Limited Company, Beawar (hereinafter referred to as "the company"), is a public limited company engaged in the operation of pressing and baling cotton and wool with the aid of hessian cloth and iron hoops. THE company was registered as a dealer under the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as "the Act"), and was assessed to tax under the Act, for the assessment years 1957-58, 1958-59, 1959-60 and 1960-61 by the Assistant Sales Tax Officer, Beawar (hereinafter referred to as "the assessing authority" ). THE assessing authority held the view that the packing material, namely, the hessian cloth and iron hoops, used for wrapping wool and cotton by the company, was part of the goods sold and that the pressing and baling charges recovered by the company from its customers included not only the labour charges for the work done but also the price of the packing materials, which was estimated by the assessing authority at Rs. 8 per bale. He, therefore, proceeded to charge sales tax on the estimated price of the packing materials. THE order of the assessing authority authority was challenged by the company before the Deputy Commissioner, Commercial Taxes (Appeals), Ajmer and Kota Divisions, Jaipur, who, by a common order, accepted the appeals filed by the company for all the aforesaid years. THE appellate authority was of the view that the transfer of the packing materials did not constitute a sale of property but formed an integral part of the contract for work and, as such, sales tax could not be charged on the estimated price of the goods used by the company as packing materials. THE State of Rajasthan preferred revision petitions before the Board of Revenue, which were accepted, and the Board, by its order dated 11th June, 1968, set aside the orders passed by the appellate authority and restored the order passed by the assessing authority. THEreafter, the company preferred rectification applications under section 17 of the Act before the Board of Revenue, which were dismissed by the order dated 25th September, 1968. THE company then came up before this Court under article 226 of the Constitution of India. Initially, the company filed one consolidated writ petition, which is D. B. Civil Writ Petition No. 315 of 1969, but when an objection was taken, the company filed separate writ petitions for each distinct assessment year. The principal argument advanced by Mr. Agarwal, the learned counsel for the company, in these writ petitions, is that the use of the packing materials formed an integral part of the contract of work and there was no sale of materials or goods by the company to its customers and, as such, sales tax could not be charged from it on the estimated price of the packing materials, consisting of hessian cloth and iron hoops. According to the learned counsel of the company, the wool or cotton could not be kept in the pressed condition unless the same is wrapped in the hessian cloth, which, in turn, was kept in position by the use of iron hoops. Mr. Pathak, appearing for the assessing authority and the State of Rajasthan, contested the submission of the learned counsel for the company and urged that as the price of the packing materials constituted substantial portion of the charges collected by the company from its customers, it must be held that the packing materials were sold by the company to its customers and, as such, the cost of the packing materials was liable to payment of sales tax under the Act. In our view, the submission of the learned counsel for the company in these cases deserves to be upheld on he basis of the principles enunciated in a long series of decisions of this Court and Supreme Court of India. In Nenu Ram v. State of Rajasthan ([1967] 20 S. T. C. 551; 1967 R. L. W. 39.), a Division Bench of this Court held in a case, where a contract for supplying and fixing wooden windows and doors was entered into, that there was no sale of goods within the meaning of the Act, as the contract was not merely no make certain materials but to fix them and until they were so fixed, the property in the goods would not pass to the buyer. It was also held in the aforesaid case that, after the windows and doors were fixed, they became an accretion to the building and the ownership thereof vested in the owner and as such also there was no sale of goods. The decision of this Court in the aforesaid case was upheld by their Lordships of the Supreme Court in State of Rajasthan v. Nenu Ram ([1970] 26 S. T. C. 268 (S. C. ).) and their Lordships held that the contract for supply and fixing of wooden windows and doors wa one and indivisible and goods were not sold as movables and the property was to pass only when the wooden windows and doors were fixed at the site. Their Lordships also held that the amount charged by the contractor for the supplying and fixing of the wooden windows and door at the site was not liable to payment of sales tax. Their Lordships referred to their earlier decision in State of Rajasthan v. Man Industrial Corporation Ltd. ([1969] 24 S. T. C. 349 (S. C. ).), wherein also a similar view was taken. In that case, their Lordships laid down the following tests : " The test in each case is whether the object of the party sought to be taxed is that the chattel as chattel passes to the other party and the services rendered in connection with the installation are under a separate contract or are incidental to the execution of the contract of sale. " The same view was again taken by this Court in the case of Mahalaxmi Cotton Ginning and Pressing Factory (I. L. R. (1969) 19 Raj. 246.) decided along with the case of Mewar Sugar Mills Limited v. State of Rajasthan (I. L. R. (1969) 19 Raj. 246.), where a similar question, as has been raised before us, was raised before another Division Bench of this Court. Mahalaxmi Cotton Ginning and Pressing Factory was carrying on the business of pressing raw cotton and the Assistant Commissioner, Excise and Taxation, Bhilwara, who assessed the aforesaid factory in respect of sales tax, held it liable to sales tax on the value of the gunny bags and iron hoops used by the assessee for packing the cotton bales. It was held by this Court in the aforesaid case : " The work of packing is not only incidental to the work of pressing, but under the statute it is obligatory. Under these circumstances, in our opinion, packing is an integral part of pressing of cotton undertaken by the factory. In cannot refuse to do so. Nor can the constituent of the factory who has brought the cotton to it for pressing claim that the factory should not pack the pressed bale. The law regulates the method and the manner in which the job of pressing is to be performed and when packing has been made incumbent by law on the part of the factory, it becomes integral part of the job undertaken by it to be performed. It order that a process may become an integral part of the work undertaken to be performed, it is not necessary that the materials used by the person who has undertaken the performance of that work should be transformed in any other material. "
(3.) THIS Court further held that there was no sale of the packing material involved in the work of pressing and packing cotton bales. In Commissioner of Sales Tax, Madhya Pradesh v. Purshottam Premji ([1970] 26 S. T. C. 38 (S. C. ).), it was held by their Lordships of the Supreme Court that mere transfer of property in goods used in the performance of a contract is not sufficient to constitute a sale thereof, but in order that the transaction may be a "sale", there must be an agreement, either express or implied, relating to the sale of goods and completion of such agreement by passing of the title in the very goods contracted to be sold. The same view was also taken by their Lordships of the Supreme Court in Ram Singh and Sons Engineering Works v. Commissioner of Sales Tax, Uttar Pradesh ([1979] 43 S. T. C. 195 (S. C.); A. I. R. 1979 S. C. 545.), where there was a contract for fabrication and erection of a 3-motion electrical overhead travelling crane and it was held that it was a contract for work and labour and not a contract for sale. Their Lordships laid down the test in the following words : " The primary test is whether the contract is one whose main object is transfer of property in a chattel as a chattel to the buyer, though some work may be required to be done under the contract as ancillary or incidental to the sale or it is carrying out of work by bestowal of labour and service and materials are used in execution of such work. " Their Lordships of the Supreme Court also quoted with approval the following observations made by them earlier in Commissioner of Sales Tax, Madhya Pradesh v. Purshottam Premji ([1970] 26 S. T. C. 38 (S. C. ).) : " The primary difference between a contract for work or service and a contract for sale of goods is that in the former there is in the person performing work or rendering service no property in the thing produced as a whole. . . . . . . . In the case of a contract for sale, the thing produced as a whole has individual existence as the sole property of the party who produced it, at some time before delivery, and the property therein passes only under the contract relating thereto to the other party for price. " ;