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TMI Blog1976 (4) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... for the same in accordance with the agreed rates. The assessee made an application under section 52 of the Bombay Sales Tax Act, 1959, on November 19, 1967, to the Deputy Commissioner of Sales Tax, to determine the question whether the said supplies of bricks by the assessee to the Public Works Department were sales or works contract. The Deputy Commissioner held the supplies of bricks by the assessee as sales. The assessee then appealed to the Tribunal against that order. The Tribunal following the ratio of the decision of this court in Chandra Bhan Gosain v. State of Orissa [1963] 14 S.T.C. 766 (S.C.)., came to the conclusion that the supplies of bricks were sales. At the instance of the assessee, the Tribunal referred the following question of law to the High Court: "Whether, on the facts and in the circumstances of the case, the transaction envisaged by the contract entered into by the applicant with the Public Works Department of the Government of Gujarat on 6th September, 1965, for the manufacture and supply of kiln-burnt bricks to the said department and the supply of bricks to the said department in terms of their running bill No. XI dated 28th October, 1967, is a sale or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The nature of work is described as "manufacturing and supplying kiln-burnt bricks for construction of Gandhinagar". The question will depend upon the true construction of the tender which, on acceptance, is treated here as the contract containing all the terms and conditions agreed upon between the two parties. In the tender the assessee stated "I/We, Chairman, Sabarmati Reti Udyog Sahakari Mandli Ltd., the undersigned do hereby tender for the supply of the materials described in the schedule attached herewith subject to the conditions annexed". The schedule described materials as bricks and also stated "quantities to be delivered", and "rate at which to be supplied ". The tender is described as "supply of materials tender". Although the above nomenclature, by itself, is not decisive, we find that the same is justified by the principal terms governing the contract to which we will presently refer. "Clause 6: The contractor shall give notice to the Executive Engineer or his Assistant of his intention of making delivery of materials and on the materials being approved, a receipt shall be granted to him by the Executive Engineer or by his Assistant and no materials which is not so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... schedule of the contract will be ordered during the period of the contract. But, the Executive Engineer shall purchase from the contractor all such materials as are detailed in the schedule which he may require to purchase during the period of the contract. Clause 17: No claim or claims made by the contractor for increased rates on the grounds that the market or other rates included in the contract, have risen during the period of his contract, will be recognised, that is to say, the contractor is bound to complete the work and/or to supply materials at the rates mentioned in the contract. Clause 22: All rates quoted by the contractor are inclusive of sales tax and the contractor will pay the same himself. Clause 24: The contractor hereby declares that the articles sold to the buyer under this contract shall be of the best quality (and workmanship) and shall be strictly in accordance with the specifications and particulars contained in the schedule and accompaniments hereof and the contractor hereby guarantees that the said articles would continue to conform to the description and quality aforesaid for the period shown in the schedule from the date of delivery of the said articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to him the common features are the following: The land was given free for manufacture of bricks in both the cases. The materials shall remain at the contractor's risk till the date of final delivery. In Chandra Bhan Gosain's case[1963] 14 S.T.C. 766 (S.C.)., the contractor could not sell the bricks to third parties without previous permission of the company. Here also the contractor has no right to sell the bricks, etc., but if he does sell, he will have to pay 10 per cent of the value of the materials at the tender rates. Both the clauses are, therefore, permissive clauses and are substantially the same. In both the contracts the contracting parties have used the words such as "sell", "purchase", "deliver" or "rate of supply", etc., in the contract. In Chandra Bhan Gosain's case [1963] 14 S.T.C. 766 (S.C.)., dealing with those very common features, this court observed as follows: "It may be presumed that it was understood that in quoting his rate for the bricks, the appellant would take into account the free supply of earth for making the bricks. Again what was supplied to the company by the appellant was not the earth which he got from it but bricks, which, we thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a contract of sale. These terms do not appear to impinge on the character of the contract as one for sale of the bricks manufactured. The Government in its overall interest and anxiety for general welfare could insist on compliance with certain beneficial legal measures. It could also insist on certain terms which will ensure efficient production of the material. Provision against subletting when the land was given free by the Government is also understandable. All the above features do not negate the concept of a contract of sale of the bricks that are ultimately manufactured. The true test in this case is whether in making the contract brick produced was transferred as a chattel for consideration and we are clearly of the opinion that this has taken place in this case. The property in the bricks was entirely of the assessee. He had not only to manufacture them but also to stack them for facilitating delivery. The essence of the contract was, therefore, the delivery of the bricks after manufacture. The present case cannot be distinguished from the decision of Chandra Bhan Gosain's case [1963] 14 S.T.C. 766 (S.C.). We are, therefore, clearly of the opinion that the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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