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1965 (11) TMI 136 - SC - VAT and Sales TaxWhether in view of the decision of the High Court of Orissa in S.J.C. No. 2 of 1965 dated 29th September, 1958, it is open to the Sales Tax Tribunal, Orissa, to hold that any part of the contract for tunnel-holing by Messrs John Mowlem & Co. Ltd., with the Government of Madras (now Andhra Pradesh) is liable for sales tax? Whether the contract entered into with Messrs John Mowlem & Co. Ltd., by the Government of Madras (now Andhra Pradesh) for tunnel-holing is in the nature of a contract of agency where the goods are Government property from the inception, and there is no passing of title in them, at any time, from the company to the Government? Whether the contract for tunnel-holing between Messrs John Mowlem & Co., Ltd. and the Government of Madras (now Andhra Pradesh) is not composite and indivisible, but contains a separate and distinct contract for the supply of material, viz., plant as such, and the value of the plant being liable for the sales tax? Held that:- Appeal allowed. Unable to agree with the learned Judges of the High Court. A covenant in the contract whereby the appellants undertook to deliver goods purchased by them on behalf of the State at the site where they were required by the latter is not inconsistent with the relation between them being of agent and principal, and a stipulation that the appellants "will remain responsible for transportation and insurance as far as the site" also does not detract from the overwhelming indications furnished by the other terms of the contract. The stipulation that goods purchased will be insured in the joint names of the Government of the State of Madras and the appellants is susceptible of no positive inference in favour of either case, and the learned Chief justice was right in observing that the term about the contractors' liability to pay customs duty, if any, was inconclusive. It is not possible to raise an inference from the clause "the final accounting for the plant, and its passing into the hands of the purchaser will take place" in paragraph 8 of the contract, that till it was delivered at the site of the Machkund Dam, the appellants were the owners of the plant. The clause deals merely with the obligations undertaken by the appellants for "transportation and insurance" of the plant, and not with the passing of property in the plant from the appellants to the State of Madras.
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