B.N. Sapru, J.
1. These sales tax revisions have been filed by the assessee and pertain to the years 1970-71, 1971-72, 1972-73, 1973-74, 1974-75, 1975-76 and 1976-77.
2. The assessee is a contractor and supplies stone ballasts to the Northern Railway. He made tenders for the supply of ballasts to the railways. The various tenders of the assessee were opened on 13th October, 1970, 23rd March, 1971, 24th September, 1971, 7th July, 1972, 9th March, 1973, 6th May, 1975, and 7th September, 1973. These tenders were accepted by the Railway Administiation and the assessee -made supplies. The railways paid the assessee for the work done by him. The Sales Tax Officer assessed the entire amount received by the assessee from the railways to sales tax. The assessee appealed. The assessee's appeal for the years 1970-71, 1971-72, 1973-74, 1975-76 and 1976-77 were partly allowed by the Assistant Commissioner (Judicial) who held that the assessee was only liable to tax on the price of ballast supplied by him and not on the amount received by him towards the transport and other charges from the railways. However, for the assessment years 1972-73 and 1974-75, the assessee's appeal was dismissed by the Assistant Commissioner (Judicial), who upheld the order of the Sales Tax Officer. In respect of the assessment years 1972-73 and 1974-75, the assessee went up in appeal to the Sales Tax Tribunal, where as in respect of the other years, the department went up in appeal before the Sales Tax Tribunal. The Sales Tax Tribunal has allowed the appeals by the department and dismissed the appeals by the assessee. In these circumstances, the assessee has come in revision.
3. Tenders had been invited by the Railway Administration. These tenders are in standard form. The tenders contained various clauses, including special conditions. Special conditions of clauses 28, 29 and 30 are reproduced below :
28. The rate quoted by the contractor/contractors should be an all inclusive through rate, i.e., the rate for the material delivered at site. No lead, lift, sales tax or royalty or any other taxes that may be levied by the Government or by the local bodies will be paid. They will also themselves arrange and pay for such working facilities as they may need (as land for labourers, camps, contractors' office, access road to the site of work, etc.). The contractors will be deemed to have included this element of cost, royalty or compensation in their through tender rate and will not be entitled to any extra payment. They are advised to see the site of work before tendering.
29. The contractor(s) is/are advised to bring only such materials to the site which conforms to the specification. Any material which falls short of the prescribed standard will be rejected and will have to be removed by the contractor(s) at his/their own expenses. It should be noted that all material will be passed at the site of delivery only and no passing will be carried out at the source or anywhere else.
30. If the supply is to be given from the private quarries the contractors shall have to make their own arrangements to procure ballast from the private quarries at their own expenses.
4. The tender also contained clause 3 and clause 4, which are reproduced below :
3. Tender containing erasures and alterations of the lender documents are liable to be rejected. Any corrections made by the tender/tenders in his/ their entries must be attested by him/them. No correction of type script of tender form issued by the railway will be taken notice of. If the contractor wishes to stipulate any conditions of his own, he should state that in the covering letter of the tender. It should be noted however that the railway reserves the right not to consider such conditional tenders and to reject the same without assigning any reason.
4. Tenders will not add or delete any condition in the tender otherwise the tender will not be considered. If it is desired to state anything the same be done in the covering letter submitted with the tender, which will be deemed to be part of the contract only to the extent the same has been expressed accepted by the railway.
5. The tender also contained 'NOTE' 1 to 4, which contained the following conditions :
1. Rates for supply of ballast will include stacking on a place of ground to be levelled at tender's own cost and in a manner as may be directed by the Assistant Engineer-in-Charge at site. No extra charges on account of levelling and stacking will be paid. The supply of ballast is required to be made in stacks not less than 1.20 metre (4') in height at any site.
2. Rate of supply of ballast will include stacking 200 ft. or 60.96 metre at sites convenient for loading and approved by the Assistant Engineer-in-Charge of the section.
3. Quantity within 5 per cent more or less than contracted for may be accepted against this contract.
4. The railway will not entertain any request for supply of wagons at any station for loading of ballast. The contractor will make his own arrangement for transport of ballast.
6. In the tender, there was a column No. 1-A. Rate of supply including stacking of 40 mm. gauge stone ballast at Etawah Railway Station including all charges for loading, carting to site, unloading, handling, stacking, etc. The unit of rate was allowed at per cubic metre. Thereafter, the rate was to be quoted in cubic metre. The assessee had made the following entry as against the third column :
1. Rs. 16,00 per cubic metre of ballast at quarry. 2. Rs. 54.00 per cubic metre carriage from quarry to Etawah Station.
Thereafter, was the total which mentioned the price of Rs. 70.00 per cubic metre.
7. In one of the tenders, which was opened on 9th March, 1973, there is under the above entry by the assessee as against the column relating to price an entry in his handwriting which runs as follows :
Negotiated rule as under accepted-
Rs. 17.48 per cu.m. ballast at quarry.
Rs. 52.54/69.92 per cu.m. carriage from quarry to site.
8. The assessee had before the Assistant Commissioner (Judicial) filed two letters purporting to have been written by an officer on behalf of the Divisional Railway Manager, Allahabad, to the assessee which said that this is to certify that following contracts were awarded to the above firm on the following rates. The tenders are accepted as follows. The two letters referred to above are reproduced below :
Northern RailwayM/s. Aruna Trading Co., AllahabadJawahar Road, 21.6.79.Bharthana Dear Sir,This is to certify that following contracts were awarded to the above firm on the following rates. The tenders are accepted as follows :
Tender opened on 13-10-70.1. 5,000 cu.m. stone ballast supply (i) Costs of ballast 40.00 per 100 cft.40 mm. gauge at ETW Case (ii) Carriage from quarry to destina-No. 22-W/120/Bills. tion 89.87 per 100 eft.(iii) Loading of wagons 5.00 per 100 cft.Tender opened on 23-3-71.2. Supply of 20,000 cum. stone (i) Cost of ballast 8.83 per cum.ballast of 40 mm. gauge for FTS (ii) Carriage from quarry to destina-Case No. 22-W/123/Bills. tion & Exp. 8.83 per cu.m.(iii) Loading of wagons 1.76 per cu. m.Tender opened on 24-9-71.3. Supply of 10,000 cu. m. stone (i) Costs of ballast 15.40 per cu. m.ballast of 40 mm. gauge from (ii) Carriage of ballast 49.27 per cu. m.ETW to Makhanpur.Case No. 22-W/139/Bills. Tender opened on 7-7-72,4. Supply of 10,000 cu. m. stone (i) Costs of ballast 17.48 per cu. m.ballast of 40 mm. gauge ETW to (ii) Carriage & other Exp. 52.39 per cu. m.Samoha.Case No. 22-W/136/ Bills. Tender opened on 9-3-73.5. 1,00,000 cu. in. stone ballast of (i) Costs of ballast 17.48 per cu. m400 mm. gauge at ETW Rly. (ii) Carriage and other Exp. 52.39 per Station. cu. m.Case No. 22-W/183/Bills. Tender opened on 6-5-75.6. Supply of 5,000 cu. m. stone (i) Costs of ballast 18.70 per cu. m.ballast of 400 mm. gauge duly (ii) Carriage & other Exp. 56.09 per stacked at Achalda. cu. m.Case No. 22-W/Bills/242Sd/- For Divisional Railway Manager,Allahabad. Northern Railway, Allahabad.Northern Railway Allahabad,No. 22-W/142/B. 115 18-7-79.M/s. Aruna Trading Co., Jawahar Road, Bharthana, Dist. Etawah.Dear Sirs,Reg : Contract for supply of 10,000 cm. stone ballast of 40 mm. size dulystacked at Phaphund. Ref. Your letter dated 21-6-79.In continuation of this office letter even No. dated 21-6-79, the rates quoted by you.
The above tender as accepted is given below for your information :1. Supply of 1,00,000 cu. m. stone (a) Cost of ballast at quarry Rs. 17.48ballast of 40 mm. gauge duly per cm.stacked at Phaphund Rly. (b) Carriage from quarry to distance,Station. unloading, stacking, etc.,Tender opened on 7-9-73. Rs. 52.44 per cm.Yours faithfully,Sd/- IllegibleFor Divisional Railway Manager,Allahabad.
9. The Tribunal after referring to clauses 28, 29 and 30 of the contract between the parties has come to the conclusion that what the assessee had quoted and what the Railway Administration had accepted was an all inclusive rate, i.e., the rate for the material at the site to be paid to the assessee. It went on to hold that the assessee undertook the responsibility for delivering the material at the site where the goods were to be inspected and passed by an engineer. It further found that the property in the ballast remained vested in the assessee till it was measured and passed at the site of delivery and it was after this event only that the Railway Administration became the owner of the ballast supplied by the assessee. It further found that the assessee could not be permitted to break it up into (a) rate of ballast at quarry (b) carriage from quarry to destination, loading, stacking, etc. It further referred to the definition of 'turnover' which means the aggregate amount for which goods are supplied or distributed by way of sale or are sold by a dealer either directly or through another, on his account or on account of others, whether for cash or deferred payment or other valuable consideration. It then referred to Clause (i) of explanation (ii) to the definition of turnover which runs as follows :
Subject to such conditions and restrictions, as may be prescribed in this behalf, the amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery thereof, other than cost of freight or delivery, or cost of installation or the amount realised as sales or purchase tax, when such cost or amount is separately charged.
10. It found that the assessee's argument that the assessee could only be taxed on the cost of the ballast had to be rejected as in the view of the Tribunal the price could not be broken up as mentioned earlier. Thereafter, the Tribunal also said that the matter could also be looked at from another aspect, it held that under Rule 8 of the U. P. Sales Tax Rules the dealer's liability to pay tax under the Act shall be determined on the basis of his gross turnover. It noticed that Rule 44 of the Rules prescribed the deductions which could be allowed to arrive at the taxable turnover and found that it did not permit the deduction of cartage, loading and unloading charged by the seller from the purchaser.
11. The learned counsel for the assessee has urged that the contract between the assessee and the railways indicates clearly that the price of ballast and the cost of other charges had been separately agreed to between the assessee and the railways. In this connection reference was made to the schedule of rates where the rate of ballast at the quarry and the rate of cartage from the quarry to the destination including loading, unloading, handling, stacking and other charges were shown separately. Reference was also made to the letters from the Railway Administration which indicated that the tender accepted showed clearly that the cost of ballast and the other charges were accepted and paid by the Railway Administration separately. It was pointed out that before the Assistant Commissioner (Judicial) before whom the letters from the Railway Administration dated 21st June, 1979, and 18th July, 1979, were produced, the department did not challenge their authenticity nor did they challenge the authority of the officer who signed the letters on behalf of the Divisional Railway Manager, Allahabad. S-55-31
12. It was submitted that the Tribunal while deciding the case was in error in ignoring these letters on the ground that they had not been signed by the Railway Manager and that it was against the terms of the contract including special conditions of clauses 28, 29 and 30.
13. Before this Court, on behalf of the assessee, a letter from the Divisional Superintending Engineer for the Divisional Manager, Northern Railway dated 16th March, 1982, has been filed which confirms what was stated in the earlier letters. Even apart from the letter of the Divisional Superintending Engineer, the letters filed before the Assistant Commissioner (Judicial) should have been accepted as authentic by the Tribunal, particularly in view of the fact that there has been no objection in regard to these letters before the Assistant Commissioner (Judicial) who had acted upon it.
14. The contract between the parties is on a standard form used by the railways when it invites tenders from contractors for supply of authorised articles including ballast. In clause 3 of the tender it is provided that tenders containing erasures and alterations of the tender documents are liable to be rejected. It further provided that no conditions of the contractor shall be accepted. In clause 3 it is further provided that if the contractor wishes to stipulate any conditions of his own, he should state that in the covering letter of the tender. The assessee has not produced any covering letter which he might have sent to the Railway Administration along with the tender. What the assessee has done and what the railways has accepted was that the price of the ballast at the quarry had been separately fixed and the cost of removing it from the quarry and other labour charges were provided for separately. In this situation, the learned counsel for the assessee urges that only the price of the ballast sold by the assessee could be included in the assessee's turnover. The learned standing counsel, in support of the judgment of the Tribunal, has very strongly urged that reading the contract as a whole it is clear that what the assessee had done was in fact the price of ballast to be supplied to the railways per cubic metre. He submits that the assessee while making the tender bill had shown the price of the ballast at the quarry and the cost of labour separately in order to indicate to the Railway Administration that the ultimate price that he was quoting was a reasonable price. He further submits that by showing the cost of the ballast at the quarry and the labour cost separately, the assessee could not alter the basic nature of the contract between the parties which was that the assessee would supply ballast at the site. If the price agreed to between the railways and the assessee had been a composite price for the ballast and for handling and labour charges, etc., there can be no manner of doubt that on the contract as it is worded the entire composite price would have to be included in the turnover of the assessee. But in this case apart from the fact that in the contract the rate of ballast at the quarry and the rate of cartage, etc., are separately mentioned, we have the letters of the Railway Administration that the cost of the ballast and the amount paid for expenses incurred by the assessee were separately entered into. This would indicate that there were in effect two types of contracts entered into between the parties : one for the supply of ballast at the site and there was a condition provided in the contract that the assessee would transport the ballast from the quarry to the site where the ballast was required and do the necessary work there; the price of the ballast at the quarry and the other costs were separately provided for.
15. Where the assessee is being paid price for the ballast separately and is being separately paid for the transport and other charges, the assessee cannot be taxed on anything other than the price of the ballast that he has been paid which had necessarily to be included in his turnover.
16. Counsel for the assessee has referred to a decision of this Court in the case of Commissioner of Sales Tax v. Gael Trading Co., Gorakhpur 1979 UPTC 1139. In that case the assessee had entered into a contract for the supply of sand and boulders, etc., and for transporting them to the desired site. The contract clearly stipulated that the transportation charges were to be reimbursed. It was held that the aggregate amount which the assessee received for the sand which he supplied to the purchaser was the price of the material and not the transportation charges which was paid for separately. This case clearly supports the contention of the assessee that the transportation charges, etc., could not be included in his turnover.
17. In the result, the revisions are partly allowed. The orders of the Tribunal are modified to this extent that only the cost of the ballast as shown in the tender shall be included in the assessee's turnover and the other charges, viz., carting to the site and unloading, handling, stacking, etc., received by the assessee shall be excluded while determining his turnover. The papers will now go back to the Tribunal in accordance with the provisions of Section 11(8) of the Sales Tax Act for making appropriate orders. The assessee is entitled to his costs, which I assess at Rs. 200 one set.