1. This is a petition under Article 226 of the Constitution by the Association of the Nagpur Yarn and Dyes Merchants. Along with this Association five persons who are carrying on the business of dyeing yarn have also joined as petitioners.
2. Two points have been raised in this petition and they are (i) that no sales tax is payable by the petitioners for dyeing yarn of the customers handed over to them for the purpose of dyeing, and (ii) that no sales tax is payable upon the sale of yarn purchased by the petitioners, dyed and then sold as dyed yearn. In so far as the second point is concerned there is hardly any difficulty. Under section 6(1) of the Central Provinces and Barer Sales Tax Act, 1947, no tax shall be payable under this Act on the sale of goods specified in the second column of Schedule II, subject to the conditions and exceptions, if any, set out in the corresponding entry in the third column thereof. Entry No. 20 in that Schedule is as follows :
'Yarn excluding sewing and knitting thread.'
3. What the petitioners sell may be dyed yarn, but it is yarn, all the same. No exception has been made in the case of dyed yarn in the sense that the yarn does not cease to be tax-free merely because it is dyed. In the circumstances, therefore, the petitioners' contention that their transactions in respect of the sales of dyed yarn are not taxable under the Act must be upheld.
4. In regard to the first point there is no doubt a certain difficulty due to the following observations of the Division Bench of the Nagpur High Court in Babulal v. D. P. Dube  6 S.T.C. 255 :
'The contention of the petitioner on the main case is that the dyestuffs and chemicals purchased by him are not sold by him to the customers but that they are utilized for dyeing yarn brought by the customers, for which a price is charged without there being a separate price for the dye-stuffs. This argument is similar to the one repelled in Miscellaneous Petition No. 279 of 1954, Pandit Banarsi Das v. State of Madhya Pradesh  6 S.T.C. 93. If the contract of dyeing yarn involves therein the transfer of property in dye-stuff and the price thereof is included in the price paid for the finished work there is no reason why the law cannot isolate the transaction of sale involved from other matters and tax it. Indeed, in view of the decision of the Division Bench this point was not very strongly pressed before us.'
In the first place, this observation is obiter inasmuch as that petition was decided in favour of the petitioner on quite a different ground. Secondly, as the learned Judges, who were parties to the decision pointed out that the point was not very strongly pressed before them by the petitioner. It may further be pointed out that this view is said to be based upon the decision of the Nagpur High Court in Pandit Banarsi Das v. State of Madhya Pradesh  6 S.T.C. 93. That case was of a building contract, and as would appear from para. 26 of the order, the contract related specifically to the supply of materials and further provided for the execution of the work on these materials to product a completed object. The learned Judges held that by reason of these circumstances the contract was partly for the supply of goods. That decision thus rested upon an entirely different set of facts from those which we have here or which were before the same learned Judges in Babulal's case  6 S.T.C. 255.
5. Shri Phadke, who appears for the petitioners, relies on the following observations in Benjamin on Sales (8th Edition) page 168 :
'Where the workman supplies either all or the principal materials, the contract is a contract for sale of the completed chattel and any materials supplied by the employer when added to the workman's materials vest in the workman by accession.'
6. Shri Phadke points out that all that the petitions have done is that they have used certain dye-stuffs and chemicals for the purpose of dyeing the yarn supplied to them by the customers and returned the dyed yarn to those customers. Though this may amount to a manufacturing process, it cannot be said that it constitutes either sale or supply of dyestuffs by the petitioners. No doubt, some dye-stuffs or effects of dyestuffs are left on the yarn which has been dyed, but, according to Shri Phadke, whatever is left on the yarn is merely an accession to the yarn and that it cannot be said that what amounts to an accession to the yarn is supplied or sold by the petitioners to the customers. The definition of 'sale' contained in section 2(g) of the Act means 'any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract .......' Where an accession takes place, Shri Phadke points out, there can be no transfer of property which has acceded or has become part of the property. There seems to us considerable force in Shri Phadke's contention.
7. Apart from that, a person can be made liable under the Sales Tax Act to pay the tax on his turnover provided that he is a dealer. A dealer defined in section 2(c) is 'a person who ..... carries on .... the business of selling or suplying goods, whether for commission, remuneration etc. .....' Now it is common ground that none of the petitioners is carrying on the business of selling dye-stuffs.
8. Shri Abhyankar, who appears for the department, says that the petitioners supplied dye-stuffs and chemicals which they used. It seems to us difficult to say that the petitioners, merely because they used dye-stuffs and other chemicals in the process of dyeing, could be said to be supplying these goods to the persons who handed over their yarn to them for being dyed. The work which is entrusted to them is of dyeing only and though for carrying out that work the petitioners have to use dye-stuffs, it would be stretching the language too far to say that the petitioners by using dye-stuffs must be deemed to supply them to the customers. We may also point out that in their petition the petitioners have specifically alleged that the dye-stuffs and chemicals used by them are eventually washed by them as part of the process of dyeing. The precise allegations of the petitioners on this point are in para. 13 of the petition and run thus :
'Dyeing is a process and by the chemical combination of various chemicals and dye-stuffs with the help of chemical agents such as caustic soda, hydro-sulphide of soda different colours are prepared, but none of these stuffs are left on the yarn. The yarn is processed and there is no transfer of property in the processed yarn of any of the dye-stuffs or chemicals.'
These allegations have not been denied by the department and we would therefore be justified in regarding them as having been admitted.
9. It will also be pertinent to refer to a decision of the King's Bench Division in Robinson v. Graves  1 K.B. 579. In that case the question was whether the contract between the defendant and an artist for painting the portrait of a lady for a remuneration of 250 guineas can be regarded as a contract for the sale of goods. The learned Judges of the Court of Appeal held that it was a contract for work and labour and not for the sale of goods as the substance of the contract was that skill and labour should be exercised upon the production of the portrait, and that it was only ancillary to that contract that there should pass from the artist to his customer some materials, namely, the paint and the canvas, in addition to the skill and labour involved in the production of the portrait. It seems to us that this decision is pertinent and would apply to the circumstances present in the instant case.
10. We may also refer to two decisions of the former Board of Revenue in Rajasthan Printing and Litho Works, Akola, In re  3 S.T.C. 62: 1951 N.L.J. 613 and Chauthmal Champalal v. State  3 S.T.C. 245 : 1952 N.L.J. 342 which following the decision in Dominion Press Limited v. Minister of Customs and Excise  A.C. 340 took the same view.
11. We are entirely in agreement with this view and we hold that the transactions in question, i.e., with regard to the work done on the yarn supplied to the petitioners by the customers, did not amount to the sale of goods and that consequently the petitioners were not liable to pay any sales tax with respect to the turnover of their business concerning these transactions.
12. Accordingly, we allow the petition with costs to this extent that the order of the Sales Tax Officer holding the petitioners liable in respect of the two kinds of transactions referred to above is quashed. There will, however, be only one set of costs.
13. The outstanding amount of security deposited by the petitioners shall be refunded to them.
14. Petition allowed.