The sale of loom hours is not taxable under the Bihar Sales Tax Act, 1947, as it is not a sale of goods within the meaning of the Act.

Ramaswami, J.

1. This case is stated by the Board of Revenue under Sec.25(1), Bihar Sales Tax Act (Act 19 of 1947).

2. The assessee is an incorporated company called Messrs. Rameshwar Jute Mills Limited of Muktapur in the District of Darbhanga. Assessment was made by the authorities under Sec.13(2) (b), Sales Tax Act for the five quarters ending 31-9-1947, 31-12-1947, 31-3-1948, 30-6-1948 and 30-9-1948. For these five quarters the taxable turnover was determined to be Rs. 9,21,043, Rs. 9,39,910, 12,09,864/12/-, Rs. 6,58,752 and Rs. 6,92,895.

3. The assessee claimed deduction in respect of two matters. In the first place, he claimed certain, amounts shown as the price of loom hours which, were sold by the assessee to different parties, the amount of the sale price being credited in the account books of the assessee. It appears that the Indian Jute Mills Association, of which Rameshwar Jute Mills is a member, allotted certain loom hours to each mill and there was a condition that if for any reason a mill was not able to utilise its quota of loom hours, either due to shortage of raw materials or due to labour trouble or due any other cause it had the option of selling loom hours to some other concern which was capable of utilising the same. It wss claimed on behalf of the assessee that the sale of loom hours did not fall within the ambit of the Bihar Sales Tax Act. The argument was rejected by the taxing authorities. In the second place, it was alleged on behalf of the assessee that a quantity of gunny bags was sold to Messrs. Tata Iron and. Steel Co. Ltd. through Messrs. Shaw Wallace and Co., who acted as brokers. It was said that the sale was to a registered dealer and the price received for the gunny bags ought to be exempted from sales-tax. This claim also was rejected by the taxing authorities on the ground that the sale was effected in favour of Messrs. Shaw Wallace and Co. and the books of. the assessees showed that goods were supplied not to the Tatas but to Shaw Wallace and Co., on whom the responsibility for payment of the price rested.

4. Upon these facts the following questions of law have been formulated for the determination of the High Court :

"(1) Are loom hours goods as under Sec.2 (d), Bihar Sales Tax Act of 1947 and can sales of these be covered by Sec.2(g) and thus be included as turnover as under Sec.2(ii of the Act?" and (2) "Are sales to registered dealers of Bihar, through Commission agents outside Bihar, exempt from taxation by the operation of Sec. 5 (2)(a)(ii) of the Act?"

After hearing learned counsel for the parties we are of opinion that the questions should be altered in the following manner :

"(1) Are the sales of loom hours in the circumstances of this case taxable under the provisions of, the Bihar Sales Tax Act of 1947?" and (2) "Are the sales of gunny bags which were delivered to Messrs. Tata Iron and Steel Co. Ltd., Jamshedpore, sales to Messrs. Shaw Wallace and Co. in the circumstances of this case or whether they were sales to Messrs Tata Iron and Steel Co. Ltd., and therefore exempt under Sec. 5(2)(a)(ii) of the Act?"

5. On the first question it was contended by Mr. Bhattacharji on behalf of the assessee that loom hours cannot by any stretch of language be deemed to be goods the sale of which can be taxed under the provisions of the Bihar Sales Tax Act. It was argued by the learned counsel that there was a domestic arrangement between the members of the Indian Jute Mills Association, in consequence of which loom hours were allotted to each Jute mill and they had also agreed that if for any reason a mill was not able to utilise its quota of loom hours, it had the option of selling the loom hours to some other concern which was capable of utilising the same. It was submitted by the learned counsel that there was no legal sanction behind this arrangement and the so-called right to utilise the loom hours was not a right in the legal sense at all and so was not capable of being transferr