Satish Chandra, C.J.
1. The assessee carried on the business, inter alia, of manufacture and sale of bricks. For the assessment year 1958-59, it returned an amount of Rs. 28,141.96 in its returns but with a note that this amount was not liable to sales tax because it was received by way of compensation. The assessing authority did not accept this submission and brought a sum of Rs. 47,173.45 to tax. This view was upheld in appeal as well as in revision.
2. At the instance of the assessee, the following question of law has been referred for our opinion :
Whether, on the facts and in the circumstances of the case, the price of the goods which had been misappropriated by the stockists of the assessee would be sale price so as to constitute the turnover of the assessee ?
3. The relevant facts are that the assessee is a co-operative society. It received 24 wagons of coal. Of this, 12 wagons were given by it to Messrs. Fakir Chand Baijnath for manufacturing bricks. The arrangement was that Messrs. Fakir Chand Baijnath will sell the bricks so manufactured under permits issued by the assessee-society. The contractor manufactured the bricks. It is also admitted that the assessee-society issued a few permits. Disputes arose between the parties which were referred to arbitration. The arbitrator held that the price of bricks sold by the contractor was Rs. 35,173.45. It was also held that the contractor had spent about Rs. 7,000 on wages, etc., and was liable to pay Rs. 28,141.96 to the assessee-society on account of the bricks manufactured and sold by the contractor.
4. Under the arrangement with the contractor, the assessee-society permitted the bricks manufactured by the contractor to be sold by him under permits to be issued by the society. The price that the contractor obtained by so selling the bricks was undoubtedly part of the turnover of the assessee of its business of manufacture and sale of bricks. The disputes between the parties were resolved by arbitration under which a sum of Rs. 35,173.45 was held to be the sale price payable by the contractor to the assessee. We have no hesitation in holding that this amount represented the turnover of the assessee as defined under the. Act. Clause (i) of Section 2 defines 'turnover' to mean the aggregate amount for which the goods have been supplied or sold by the dealer either directly or through another, whether for cash or on deferred payment. Here the assessee sold bricks through the contractor on deferred payment basis. Such a transaction would be covered within the meaning of the term 'turnover'.
5. The assessee sold these bricks through the contractor on deferred payment basis. It was held entitled to receive the amount of Rs. 35,173.45 as price of the bricks. On facts, it has been found that this amount was not awarded to the assessee by way of compensation for any misappropriation done by the contractor. If at all the contractor had tried to misappropriate, not the bricks but their price which he was liable to pay the assessee.
6. The sum of Rs. 7,000 was held deductible by the arbitrator on account of expenditure incurred by the contractor in manufacturing the bricks. That is not liable to be deducted from the turnover of the assessee. The assessee was entitled to receive Rs. 35,173.45 as sale price. The assessee may be entitled to claim deduction of Rs. 7,000 on the income-tax side.
7. We, therefore, answer the question referred to us in the affirmative in favour of the department and against the assessee. The Commissioner will be entitled to costs which are assessed at Rs. 200.