A transfer of property in goods involved in the execution of a works contract is a sale within the meaning of the Madras General Sales Tax Act.

( 1 ) THE Judgment of the Court was delivered by the Hon ble The Chief justice. This is a revision against the order of the Andhra Sales Tax Appellate tribunal confirming that of the Commercial Tax Officer, East Godavari district. The petitioner carries on the business of baling and pressing palmyra fibre. He purchases gunny cloth and iron hoops for the purpose of using them in the baling process. For the year 1951-52, the Sales Tax authorities assessed him to sales tax on a turnover of Rs. 22,865-7-6 being the value of gunny cloth and iron hoops. It was contended before the Tribunals that the contracts entered into between the petitioner and his constituents were work contracts and that the gunny cloth and the iron hoops became an integral part of the product entrusted to him for baling and pressing. Both the Tribunals negatived the contention and held that the petitioner is a dealer and that the transactions relating to gunny cloth and iron hoops were sales within the meaning of the Act. Learned Counsel raised before us the same points, which his client unsuccessfully raised before the Tribunals. He relies strongly upon the decision of a Division Bench of the Madras High Court in Gannon dunkerley and Co. v. State of Madras in support of his contention that the contracts in question were not sales within the meaning of the definition of sale in the Act but only work contracts. There, Messrs. Gannon Dunkerley and Co. entered into a contract with third parties. They purchased some materials, which were made part of the building. One of the questions that arose for consideration was whether the materials supplied and made part of the building were sold by the assessee to the employer. The Division Bench held that there was no transaction of sale between the assessee and the employer and that the materials supplied became an integral part of the building constructed by them, under the contract. This view was dissented from by the Nagpur High Court in Pandit Banarsi Das v. State of Madhya pradesh \ Hidayatullah J. , who delivered the judgment on behalf of the bench, after noticing the decision of the Division Bench of the Madras High court, observed at page 105 thus : "the Madras decision, with all due respect, seems to suggest that the expression sale of goods received its full and final meaning by 1035 through legislation and decided cases. The cases cited there do not refer to taxation but deal with other matters. So also the statutes. That building contracts are entire, that property in the building materials passes when they are part of immovable property and the payment is in a lumpsum and not separately for the materials may be matters of consequence in some contexts. But there is always a sale if goods are transferred to another and paid for by him. It cannot be gainsaid that there is payment for materials though the payment is not made separately but as part of a larger amount. That building materials are goods is clear from the Deputy Federal Commissioner of Taxation v. Stronach (55 C. L. R. 305) and M. R. Hornibrook (PTY) Ltd. v. Federal Commissioner of Taxation (62 c. L. R. 372) and certain other rulings in Australia. The Sales-Tax (Assessment) Acts, 1930-36 lay the tax on goods manufactured or imported into Australia granting exemptions for some building materials and these cases may not be fully apposite. But there is a clear statement that building materials can be treated as goods and the wide definition of that term in the Constitution Act, 1935, renders the dictum easily applicable here. The Canadian Statutes also tax "manufacture" but the cases of tailors (e. g. The King v. Pedrick and Palen 59 D. L. R. 315) are interesting though again not quite appropriate. " it is not necessary in this case to express our preference to one or other of the two views, for, in this case, we are concerned only with moveable property and they continued to be moveable even after the work contract was completed. The only q

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