TMI Blog1981 (1) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... ls and as such no tax was leviable on the price of materials used in making the blocks? (2) If the answer to question No. (1) above is in the negative whether the price of the materials alone, which is supplied to the customer in the shape of the block is liable to sales tax? (3) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the sale of the offset printing machine consequent upon the closure of that business will not be liable to sales tax?" 3.. The first two questions are common to all the references while the third question arises out of the order of the Board of Revenue dated 1st October, 1975, relating to the assessment of the assessee for the year 1971-72. 4.. The facts giving rise to these references briefly stated are as follows: The assessee, M/s. L. Vasudeo Rao, is engaged in the business of block-making and was assessed to tax under the Act, for the Diwali years 1965-66, 1966-67, 1967-68, 1968-69, 1969-70, 1970-71 and 1971-72. The assessing authority, after negativing the contention of the assessee that block-making was a works. contract involving labour and skill and, therefore, the turnover of the assessee was not li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Sales Tax[1957] 8 S.T.C. 370., it was held that in block-making and supplying the same to the customer the sale of the block is involved and as such the turnover is liable to sales tax. He therefore contended that the assessee's case has been finally decided by this Court against him and, therefore, question No. (1) has to be answered in favour of the department. The learned counsel for the assessee contended that the decision of this Court in B.C. Kame v. Assistant Sales Tax Officer, Circle No. 2, Jabalpur(1), has been affirmed by the Supreme Court in Assistant Sales Tax Officer v. B.C. Kame[1977] 39 S.T.C. 237 (S.C.). and the matter is now concluded by the decision of the Supreme Court and the Board of Revenue has not committed any error of law in holding that the turnover of the assessee regarding the making and supply of blocks was not liable to sales tax. 6.. Before considering the rival contentions of the learned counsel for the parties it would be useful to reproduce the finding of the Board of Revenue regarding the nature of the business of the assessee. In para 8 of the order the Board of Revenue has held as follows: "8. Viewed in this light it must be said tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any years, and though its importance has been greatly diminished by the repeal of section 4 of the Act, it still cannot be ignored. It was thought for many years that Lee v. Griffin[1861] 1 B. S. 278. laid down that, if a contract would result in the transfer of the property in goods from one party to another, then it must be a contract of sale. This view was exploded in Robinson v. Graves[1935] 1 K.B. 579 at 587., where it was held that a contract to paint a portrait was a contract for skill and labour and not a contract for the sale of goods, despite the fact that it was the object of the contract to transfer the property in the completed portrait to the defendant. Greer, L.J., stated the law as follows: 'If the substance of the contract...is that skill and labour have to be exercised for the production of the articles and......it is only ancillary to that that there will pass from the artist to his client or customer some materials in addition to the skill involved in the production of the portrait, that does not make any difference to the result, because the substance of the contract is the skill and experience of the artist in producing the picture." The Supreme Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the material used in making the same. Relying upon the aforesaid decision in Assistant Sales Tax Officer v. B.C. Kame[1977] 39 S.T.C. 237 (S.C.). our answer to question No. (1) is in the affirmative and against the department. 9.. In view of our answer to question No. (1), question No. (2) does not arise. 10.. As regards question No. (3) the Board of Revenue has held that the assessee closed his business of printing and the sale of the said printing machines was effected as a consequence of the closure of that business. The sale was of a fixed asset of the assessee and was not exigible to tax. 11.. In State, of Gujarat v. Raipur Manufacturing Co. Ltd.[1967] 19 S.T.C. 1 (S.C.). the assessee carried on the business of manufacturing and selling cotton textiles. The assessee disposed of miscellaneous old and discarded items such as stores, machinery, iron scrap, cans, boxes, cotton ropes, rags, etc. The assessee did not carry on the business of selling these items of goods. The question arose whether the sale of miscellaneous old and discarded items by the assessee was liable to sales tax. The Supreme Court held that the sale of discarded material was not liable to tax. The Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern and irrespective of the volume, frequency, continuity or regularity of such trade, commerce, manufacture, adventure or concern; and (ii) any transaction of sale or purchase of goods in connection with or incidental or ancillary to the trade, commerce, manufacture, adventure or concern referred to in sub-clause (i), this is to say,- (a) goods of the description referred to in sub-section (3) of section 8 of the Central Sales Tax Act, 1956 (No. 74 of 1956), whether or not they are specified in the certificate of registration, if any, of the dealer under the said Act and whether or not they are in their original form or in the form of second-hand goods, unserviceable goods, obsolete or discarded goods, mere scrap or waste materials; and (b) goods which are obtained as waste products or by-products in the course of manufacture or processing of other goods or mining or generation of or distribution of electricity or any other form of power. " By the amended definition under the term "business" any trade, commerce, manufacture or any adventure or concern in the nature of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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