TMI Blog1995 (12) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... lant, Bhilai, is a public undertaking incorporated under the Indian Companies Act. It is a registered dealer under the Act. Prior to the enforcement of the Act it was registered under the C.P. and Berar Sales Tax Act as a registered dealer. The assessee was constructing buildings for the office as well as residential quarters during the period between 1969-70 to 1979-80. The constructions of the aforesaid buildings were carried through the contractors and fabricators. The assessee used to supply materials to the contractors and fabricators and the value of these materials was deducted from the bills submitted by these persons. The assessee was assessed to sales tax under the Act and also turnover tax on the materials issued to contractors/fabricators for the period of 1969-70 to 1979-80 by various orders dated December 28, 1981 (1969-70), December 28, 1981 (1970-71), July 30, 1977 (1971-72), July 30, 1977 (1971-72), August 31, 1977 (1972-73), August 26, 1978 (1973-74), July 28, 1978 (1974-75), July 28, 1978 (1974-75), December 6, 1980 (1975-76), July 30, 1981 (1976-77), July 30, 1981 (1976-77), December 31, 1981 (1977-78), December 31, 1982 (1978-79) and December 31, 1983 (1979-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods in question belonged to the company and the contractors were merely supplied the goods for constructions of the buildings and, therefore, the question of taxing under "the Act" for sale of goods did not arise. The learned counsel for the assessee relied on a decision in the case of Commissioner of Sales Tax, Madhya Pradesh v. Hindustan Steel Limited, Bhilai Steel Project, Bhilai reported in [1971] 27 STC 478 (MP) and distinguished on Commissioner of Sales Tax v. Mohammad Zahoor reported in [1975] 36 STC 414 (MP); [1975] 8 VKN 301. In the alternative it was submitted by the learned counsel for the assessee, in any case the assessee is entitled to exemption from payment of tax under the Notification No. 2990-3935-V-ST, dated September 17, 1977, whereby the purchase from the State Government or public undertaking was exempted. Since the purchases from the public undertaking in respect of the goods sold to the contractors or fabricators were exempted from payment of purchase tax, therefore, the assessee could also claim benefit of a notification and claim exemption from payment of sales tax. In this connection learned counsel drew the attention of this Court to an unreported ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , under the notification the goods are exempt from tax. The first condition, therefore, is not applicable. That being so, section 7 is not attracted and therefore no purchase tax is payable on the goods in question. 7.. The learned Government Advocate supported the view taken by the Board of Revenue for the reasons given by it. 8.. The answer to the first question whether the assessee is liable to sales tax or not depends upon the agreement between the assessee and the contractors/ fabricators. The answer to this question has to be given in the context of the agreement between the parties. Clause 51(1) of the general condition of the contract is also a part of agreement between the appellant and the contractor/ fabricator which reads as follows: "51(1) If the specification or estimate of the work provides for the use of any special description of materials to be supplied from the Engineer's store, or if it is required that the contractor shall use certain stores to be provided by the Engineer (such materials and stores and plants and the prices to be charged therefor as hereinafter mentioned being so far as practicable for the convenience of the contractor but not so as in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dum may be set off or deducted from any sums then due, or thereafter to become due to the contractor under the contract, or otherwise or against or from the security deposit. All materials supplied to the contractor shall remain the absolute property of the company, and shall not on any account be removed from the site of the work, and shall at all times be open to inspection by the Engineer-in-Charge. Any such materials unused and in perfectly good condition at the time of the completion or determination of the contract shall be returned to the Engineer-in-Charge's store, if by a notice in writing under his hand he shall so require......" was considered by Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa, which is a sister concern of the assessee, reported in [1970] 25 STC 211. This clause was interpreted by the Supreme Court to the effect that the transactions amounted to sale within the meaning of section 2(g) of the Orissa Sales Tax Act, 1947. Their Lordships of the Supreme Court after quoting the definition of "sale" which is identical with that of sale under section 2(n) of the Act, held that: "The company supplied building material to the contractors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... radesh General Sales Tax Act, 1958 (No. 2 of 1959), the State Government hereby exempts, from payment of tax, in whole, the purchases of the class of goods specified in column (1) of the Schedule below for the period specified in column (2) thereof: SCHEDULE class of goods Period (1) (2) Goods specified in Schedule II, when purchased by a dealer from any department of the Central or State Government, any local authority or any undertaking in public sector for use in construction of a building or other work of the like nature for such department of the Central or State Government or such local authority or such undertaking in public sector and proved to the satisfaction of the assessing authority that the goods have been so used. From 1st April, 1959 to 31st March, 1978 (both days inclusive)." See [1970] 26 STC 302 (SC). It may be readily seen from the notification that it exempts only purchase tax. Therefore, it is necessary to define purchase tax, leviable under section 7 of the Act. The language of section 7 is somewhat involved. However, the meaning of the section 7 is fairly clear. The purchase tax is leviable where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Government hereby exempts, in whole, the class of goods specified in column (1) of the Schedule below from payment of tax for the period specified in column (2) and subject to restrictions and conditions specified in column (3) of the said Schedule: SCHEDULE Class of goods Period Restrictions and conditions subject to which exemption is granted (1) (2) (3) All kinds of foodgrains, cerals, rice and paddy. From 1st April,1963 to 31st March, 1964(both days inclusive). When sold by Central Reserve Depots of the Government of India situated in Madhya Pradesh." It may be noticed that in this notification merely purchase tax has not been exempted from payments of tax but the goods have been exempted from payment of tax. In view of this matter, the Division Bench of this Court rightly held that the assessee was not liable to pay purchase tax because the goods have been exempted from payment of tax whether it be sales tax or purchase tax. 11. Paragraphs 2 and 3 quoted above in M.P. No. 80 of 1966 formed complete answer to the argument of the learned counsel for the Revenue in that case. The assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at sale point. But when it is sold by a farmer/agriculturist raising cattle on lands held by him, he cannot be taxed because he is not a dealer. The purchaser is taxed in such cases provided he satisfies one of the conditions specified in clauses (i) to (iii) in the section, thereby becoming the last purchaser in the State of such milk. 66.. It would, therefore, be clear that the real object of the clauses (i) to (iii) in the section is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the State of such goods. The goods cease to exist or cease to be available in the State for sale or purchase attracting tax. In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed. In this connection, observations of P.S. Poti, J., in Malabar Fruit Products Co. v. Sales Tax Officer [1972] 30 STC 537 (Ker); 1972 Tax LR 2202 (Ker), which have been expressly approved by this Court in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191; AIR 1975 SC 1871-discussed in detail in Part V may be referred to. It is not necessary to set out the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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