TMI Blog1995 (10) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... e business relations between the parties". The line of business of the dealers is to convert aluminium scrap collected as such or in the shape of old aluminium articles, from customers and after converting them into new aluminium articles, to supply them to the same customers, charging the labour charges. The weight of old articles or the scrap will be the same as that of the new articles. The prices of the scrap or old articles or the new articles are not kept in mind, between the parties. The Deputy Commercial Tax Officer levied tax on the total amount of labour charges of Rs. 1,52,827.31 in T.A. No. 33 of 1981 and of Rs. 74,416.85 in T.A. No. 34 of 1981, taking the view that the transaction amounts to sale of finished goods, the "consideration being the value of old articles and the balance in cash". On appeal the assessments made were confirmed, accepting the view that the transfer of the new aluminium articles is for valuable consideration "part of the consideration being in kind and part of the consideration being in money. The appellant realised the price of the goods sold in the shape of the old aluminium scrap and in the shape of labour charges". On further appeal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction. He receives aluminium scrap mostly in the shape of old articles and in exchange he supplies new aluminium articles of the same weight and collects the making charges from customers. His business is therefore making new articles out of the scrap, collecting the labour charges. In the strict legal sense, the transaction is not barter, since one will not exchange new articles of equal weight for scrap. In view of the department, if it is not barter or exchange, then it should be sale of new articles for the price of scrap and the "cash received". But the bills produced and examined in the case do not disclose the prices of the scrap or the new articles. There is no mention of the prices anywhere. The term "sale", either in the common parlance or in the sense it is used in Sale of Goods Act or the Transfer of Property Act or the Andhra Pradesh General Sales Tax Act, is defined as transfer of property for a "price or cash or other valuable consideration". It is well-settled that the consideration should be wholly in cash, and not partly in kind and partly in cash, as is the case here. In the absence of cash consideration, the transaction does not fall within the concept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the new aluminium articles was for cash or for deferred payment or for any other valuable consideration, it cannot be termed as sale and the transaction is not liable for tax. The Assistant Commissioner, Commercial Taxes I (Appeals) has found: ".............as regards the value of the goods no bill was drawn up for the full value of the goods. Part of the value was recovered by way of old aluminium articles and the remaining in the shape of labour charges." The values of scrap or new articles are also not shown in the bills. It is thus seen that the consideration for the new aluminium articles was not fixed or kept in mind by the parties to the transaction. In such an event it is difficult to accept the finding that the new articles were sold for a price or for cash or for any other valuable consideration. The finding of the Tribunal that the dealer made outright purchase of aluminium scrap and sold finished articles separately and the two transactions have been combined into one, to avoid payment of tax on the aluminium articles sold by the assessee, is untenable. In fact there was no sale of scrap by the customer in favour of the assessee since its price was not fixed. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not money but other valuable consideration, it may then be exchange or barter, but not a sale." The Supreme Court had an occasion in Devi Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430 to construe section 2(h) of the Punjab General Sales Tax Act, 1948, defining the expression "sale", which is analogous to section 2(n) of the Act. It was observed: "Now, coming to the expression 'price', it is no doubt defined in the Sale of Goods Act as 'money consideration'. Cash or deferred payment in clause (ff) of section 2 of the Act satisfies the said definition. The expression 'valuable consideration' has a wider connotation, but the said expression is also used in the same collocation in the definition of 'sale' in section 2(h) of the Act. The said expression must bear the same meaning in clause (ff) and clause (h) of section 2 of the Act. It may also be noticed that in most of the Sales Tax Acts the same three expressions are used. It has never been argued or decided that the said expression means other than monetary consideration. This consistent legislative practice cannot be ignored. The expression 'valuable consideration' takes colour from the preceding expression 'cash or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, and it was not a case of purchase of that scrap by the assessee. There was therefore no question of any transfer of property in the scrap from the customer to the assessee. If there was no purchase of the scrap by the assessee and no acquisition of property in the scrap metal, it is a little difficult to understand the basis for the view that, when the sheets and rings were made over to the customer, there was a sale involving an element of transfer of property." Vishweshwaradass Gokuldass v. Government of Madras [1962] 13 STC 113 (Mad.), is also an identical case where the aluminium scrap collected was converted into aluminium circles and supplied in equal weight after collecting labour charges. It was held by the Madras High Court, following the decision in South India Metal Works and Rolling Mills [1960] 11 STC 507 (Mad.) that the transaction was not a sale. The question that arose in Sales Tax Commissioner, U.P. v. Ram Kumar Agarwal [1967] 19 STC 400 (All.) was "whether the giving of bullion by a dealer in exchange for purchase of ready-made ornaments manufactured by goldsmiths is a 'sale of bullion' or is a barter or exchange transaction". Following Gannon Dunkerle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a sugar factory 1,300 tons of fertilizer mixture, comprising of certain chemicals and groundnut oil-cake and the sugar factory should supply the assessee 1,000 tons of groundnut oil-cake to be used in the mixture. The price of the fertilizer mixture was fixed at Rs. 308.98 per ton and the rebate shall be given in the bills for the value of the groundnut oilcake at Rs. 186.48 per ton and the sugar factory should pay the balance of Rs. 122.50 per ton. The question that fell for consideration before this Court was whether the price of fertilizer mixture was Rs. 308.98 or Rs. 122.50 per ton, and whether the assessee was entitled to deduct from the turnover the value of the groundnut oil-cake supplied by the sugar factory. This Court observed: "It is clear from the definition of 'sale' that the consideration of sale can be cash or deferred payment or any other valuable consideration. In the instant case, it is evident that the consideration for the supply of each ton of the fertilizer mixture was payment of Rs. 307.73 n.p., which consisted partly in cash, and partly in the value of groundnut oil-cake supplied by the sugar factory." This Court held that the assessee received gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value. They do not detract from the principle of Gannon Dunkerley [1958] 9 STC 353 (SC) and Devi Dass Gopal Krishnan [1967] 20 STC 430 (SC). V.P. Vadivel Achari v. Madras Sales Tax Appellate Tribunal [1969] 23 STC 273 (Mad.) is a case where gold jewels are supplied in consideration of equal weight of gold and labour charges for making the jewels. The Madras High Court held that the transaction amounts to sale of goods under the Madras General Sales Tax Act. Having noticed Devi Dass Gopal Krishnan [1967] 20 STC 430 (SC), Veeraswami, J., speaking for the court observed: "............What is in the nature of cash need not necessarily be cash itself. Money is not necessarily confined to coins or currency notes.......... Gold being, therefore, in the nature of money, as we are inclined to understand the expression, payment by gold may be regarded, in our opinion, as a payment in the nature of cash or as a money consideration in the context of sale of goods." The learned Judge drew support for his view from the decision reported in Jayarama Chettiar, In re [1948] 1 STC 168 (Mad.) where the Madras High Court held that "payment in silver was payment in money consideration". We do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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