LAWS(SC)-1970-4-32

COMMISSIONER OF SALES TAX M P Vs. PURSHOTTAM PREMJI

Decided On April 13, 1970
COMMISSIONER OF SALES TAX M P Appellant
V/S
Purshottam Premji Respondents

JUDGEMENT

(1.) These appeals by special leave arise from the decision of the High Court of Madhya Pradesh in references made to that court under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958 (to be hereinafter referred to as "the Act").

(2.) The sole question that arose for decision in those references was whether the transactions referred to in those references are "sales" within the meaning of the Madhya Pradesh General Sales Tax Act, 1958, or whether they were merely works contracts. The High Court has opined that they were works contracts and as such the turnovers relating to those transactions are not liable to be taxed under the Act.

(3.) The facts material for the purpose of deciding these appeals are : The assessee entered into two contracts with the S.E. Railway for breaking stones and supplying ballast. Under the first contract he was to break stones into ballast and supply approximately 60,00,000 cubic feet of ballast at Rs. 27-6-0 per cubic foot. Under the second contract, he was to supply in small slacks of a specified size at a flat rate of Rs. 35 per 100 cubic feet. The general and special conditions of those contracts were the same. The quarry from which the stones were to be quarried belonged to the railway administration. The assessee was merely to quarry stones from those quarries, break them into pieces of specified size and supply them to the railway administration. During the assessment period commencing from April 1, 1958, to March 31, 1959, the assessee had received Rs. 19,162.50 and Rs. 21,000 respectively for the works done under the aforementioned two contracts. The total amount of Rs. 40,162.50 so received was treated by the sales tax authorities as the price of the material supplied and the assessee was taxed on that turnover and further penalty was levied on him under Section 18(6) of the Act. During the assessment period April 1, 1959, to March 31, 1960, the assessee under two different contracts, similar to those mentioned earlier, received a sum of Rs. 37,728.13 from the S. E. Railway. The sales tax authorities have levied tax on the said turnover and further have levied penalty on the assessee under Section 18(6).