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TMI Blog1963 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of a works contract which he had entered into. This contention was rejected, it being held that the contract which the assessee had with the Corporation called for the supply of material and was not a works contract. In the appeal against this assessment before the Appellate Assistant Commissioner, the case of the assessee was advanced on the basis that the contract called for the performance of certain services by the assessee, that is to say, the quarrying and the conveyance of the material, that there was no supply of material for any stipulated price and that there was no element of sale in the transaction. The Appellate Assistant Commissioner examined the contract and some further correspondence with the officials of the Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions in question are covered by an exemption notification issued by the State of Madras. In amplification of these arguments, learned counsel claims, that the other contracting party, the Corporation, insisted upon the quarrying of the materials from certain quarries indicated in the contract and that it was not open to the assessee to produce material quarried from any other place. It was no doubt conceded that the quarries wherefrom the materials were to be collected were quarries which belonged to the assessee himself; but, nevertheless, since the contract contains certain specific terms, it should be construed, so it was argued, that it was a contract for the supply of labour and execution of certain works. The agreement between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chedule A. In the agreement, the name of the work is styled: "Collection of laterite metal 1 1/2" to 3" size, unscreened gravel 1 1/2" granite metal, river sand. Estimate: Rs. 4,70,000 gross." Beneath this followed the various items headed and described thus: No. of item Class description of work to be executed MDSS Unit of Calculation Rates of payment Rs. NP. 1. Supply of hard laterite 1½" to 3" size at stie of work shown by the Corporation Officers along the road margin in and around blocks 24 and 25 of Neyveli Township including stacking for pre-measurement. SS.96 100 C. ft. 12 50 2. * * * * * 3. * * * * * 4. * * * * * 5. * * * * * 6. * * * * * At the end of these items, specifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular places and the rates of payment were fixed at so much per 100 c.ft. of the material. These rates did in fact vary according as the place of delivery was place A or place B. The assessee was not called upon to do any work for the Corporation in the status of a sub-contractor as it were. The indication of the quarries was only to ensure the quality of the material supplied, for, a clause in the agreement also provided that if the quarry could not supply the material in adequate quantity, the assessee could approach the Corporation and take their permission to secure the material from other quarries. The work, if it can be so called, was, according to the terms of the agreement, only the supply of the material at a predetermined spot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarry the material from certain indicated quarries does not alter the situation in any way. Reliance was placed upon a notification of the State of Madras, which is in these terms: "In exercise of the powers conferred by section 6(1) of the Madras General Sales Tax Act, 1939, His Excellency the Governor of Madras hereby exempts earth-work, laterite metal, sand, jelly and gravel quarrying contracts from tax payable under section 3(1) of the said Act." We are exceedingly doubtul whether this notification of exemption will cover the incidents of the present transaction. What a quarrying contract is, in so far as the notification purported to exempt it, is not quite clear. If a person was employed on a quarrying contract, that is to say, to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acting parties. That was only intended to serve the purpose of fixing the price of the material as delivered at the spot indicated. That does not alter the nature of the contract in any way. In a decision of the Andhra Pradesh High Court in State of Andhra Pradesh v. Kalva Suryanarayana[1962] 13 S.T.C. 317., the case of a contract for the collection and supply of gulmohva flower used for the preparation of alcohol to the Government distillery was in question. The contract required the assessee to collect the flower, store it in his godown, and transport it to the distillery at his expense. He was to be paid for all of these functions at a particular rate for each grade of flower supplied. The question that had to be considered by the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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