Judgment

SARKAR J.-The appellant had entered into a contract with a company called the Hindustan Steel Private Ltd., for the manufacture and supply of bricks at Rourkela in Orissa. Large quantities of bricks were manufactured and supplied under the contract and the appellant received payment for them The respondent State assessed the appellant to sales tax under the Orissa Sales Tax Act, 1947 on these supplies on the basis that they were sales. The appellant contended that the contract was only for labour or for work done and material found, and that there was really no sale of any goods on which the tax could be levied. He moved the High Court of Orissa for a write of mandamus directing the respondent State not to assess or levy the tax. The application was rejected in limine by the High Court. The appellant has now come to this Court in further appeal.

Now a sale which can be taxed under the Act has been defined as "Any transfer of property ingoods for cash or deferred payment or other valuable consideration." The point at issue is whether the contract was for a transfer of property in the bricks from the appellant to the Company for a consideration.

It is said that the bricks were made out of earth belonging to the Company and, therefore, the bricks had all along been its property and there could be no transfer of property in them to it. This contention is founded on a clause in the contract which says, "land will be given free" and which was apparently intended to make the earth available to the appellant for making the bricks.

We are unable to agree that this clause proved that the earth all along continued to belong to the Company. It seems to us that when the clause said, "land will be given", it meant that the property in the earth to be dug out for making the bricks would be transfered to the appellant. 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 think, are something entirely different. It could not have been intended that the property in the earth would continue in the Company in spite of its conversion into such a different thing as bricks. Further we find that the contract provided that the bricks would remain at the appellant s risk till delivery to the Company. Now, obviously bricks could not remain at the appellant s risk unless they were his property. Another clause provided that the appellant would not be able to sell the bricks to other parties without the permission of the Company. Apperantly, it was contemplated that without such a provision the appellant could have sold the bricks to others.

Now he could not sell the bricks at all unless they belonged to him. Then we find that in the tender which the appellant submitted and the acceptance of which made the contract, he stated, "I/we hereby tender for the supply to the Hindusthan Steel Private Ltd. of the materials described in the undermentioned memorandum". The memorandum described the materials as bricks, and also stated the "Quantities to be delivered" and the "Rate at which materials are to be supplied". All these provisions plainly show that the contract was for sale of bricks. If it were so, the property in the bricks must have been in the appellant and passed from him to the Company. The same conclusion follows from another provision in the contract which states that if bricks are stacked in a specified manner "then 75% of the value of the bricks at kiln site will be measured and paid....... The balance of 25%......will be paid finally when all the bricks have been delivered...... Only full bricks as finally delivered ......will be taken into account......"

Before we leave this part of the case we have to notice the decision in P. A. Raju Chettiar v. The State of Madras (1), to which learned counsel for the appellant