P.V. Dixit, C.J.
1. This is an application under Article 226 of the Constitution for the issue of a writ of certiorari to quash a decision, dated 15th March, 1963, of the Commissioner of Sales Tax by which the Commissioner upheld in revision an order made by the Sales Tax Officer, Rajnandgaon, on 10th August, 1960, assessing the petitioner- company to sales tax in the sum of Rs. 23,524-25 nP. for the period from 1st February, 1957, to 31st March, 1959, and imposing on it a penalty of Rs. 30,000 under Section 18(6) of the Madhya Pradesh General Sales Tax Act, 1958 (hereinafter referred to as the Act).
2. The material facts are that during the period from 1st February, 1957, to 31st March, 1959, the petitioner 'supplied' sand from Sheonath riverbed to the Hindustan Steel (Private) Ltd., Bhilai Steel Project, Bhilai (hereinafter called the Project) under an agreement concluded between the petitioner and the Project on 13th April, 1956. In January, 1960, the Sales Tax Officer, Rajnandgaon, issued a notice under Section 18(6) of the Act informing the petitioner that it was a 'dealer' under the Act liable to pay tax in respect of the aforesaid period and had failed to apply for registration and thereby rendered itself liable to be assessed to the best of judgment and also made itself liable to penalty, and calling upon it to sho cause why it should not be assessed to tax and why a penalty should not be imposed. The petitioner appeared before the Sales Tax Officer and contested its liability to tax on the ground that under the contract between it and the Project it had only collected and transported sand from the quarry at the Sheonath riverbed to the site of the steel plant; that the supply of sand to the Project did not involve any sale but was in execution of a contract for the performance of certain services, namely, the conveyance of sand, at certain rates; and that it was the Project which held a lease from the Government for the extraction from the riverbed and the sand always remained the property of the Project. This contention was rejected by the Sales Tax Officer who took the vie that though the lease for quarrying was in the name of the Project, it was actually worked by the assessee itself ; that according to Clause 37 of the contract between the petitioner and the Project all quarry fees, royalties, octroi duties and ground rent for stacking materials were paid by the petitioner-contractor; that under that contract the petitioner was to organize extraction of sand at the quarry and its transportation over a distance of 10| miles to the Auxiliary Plant Site ; and that these terms of the contract made it clear that the ' ownership of quarry ', though for a temporary period only, was of the assessee. He accordingly held that the contract, which the petitioner had with the Project, was a contract for the supply of sand and not a works contract. The value of sand ' supplied' by the petitioner during the material period was computed by the Sales Tax Officer at Rs. 77,301-83 nP. After allowing certain deductions, the Sales Tax Officer assessed the petitioner to tax at Rs. 23,524-25 nP. He also imposed a penalty of Rs. 30,000 under Section 18(6) for the petitioner's failure to get itself registered and to submit returns.
3. The petitioner did not appeal against the order of assessment made by the Sales Tax Officer. It, however, preferred a petition under Section 39(1) of the Act before the Commissioner of Sales Tax for revising the assessment order passed by the Sales Tax Officer. Before the Commissioner, the assessee repeated the contention that when it ' supplied ' sand to the Project under the contract, which it held with the Project, there was no supply of materials for any stipulated price and there was no element of sale in the transaction. The Commissioner examined the terms of the quarry lease, which the Project held from the Government, and of the contract between the petitioner and the Project, and noted that under the quarry lease the Project was the lessee of the Sheonath riverbed quarry and that it had the right to extract sand and dispose of it at its own will and pleasure and had to pay rent and royalty at the rates mentioned therein and it could not assign or sublet the lands or part thereof without the previous written sanction of the lessor. He then proceeded to observe that under the terms and conditions of the agreement entered into by the petitioner with the Project the applicant had to collect and supply sand from the quarry at Sheonath riverbed in accordance with the specifications laid down therein and transport it to the Project at the Auxiliary Plant Site and stack it in the bins ; that the applicant had to pay all quarry fees, royalties, octroi duties, ground rent etc.; that payment to the contrator was made only for approved sand conforming to the specifications given ; and that ' on account payment' for sand of approved supplies stored on the river bank at the specified area was made on the basis of approximate measurements to the extent of Re. 1 per 100 eft. ' for the approximate value of sand ' and the Government had lien on such material. The Sales Tax Commissioner regarded these incidents as conclusively showing that the contract, which the petitioner held with the Project, was a contract for sale and supply of sand and not a contract of works. The Commissioner thought that he was fortified in this conclusion by the decision of this Court in Seth Pamandas Sindhi v. State of Madhya Pradesh  14 S.T.C. 74.
4. The petitioner contends that the agreement under which it 'supplied' sand to the Project was nothing more than an agreement for transport and carriage of sand ; that by that contract no title in the land vested in the petitioner and the 'supply' of sand by the petitioner to the Project did not involve any sale; that the sand always remained the property of the Project, the holder of the lease in respect of the quarry ; that the provisions in the agreement regarding the mode of payment, inspection and acceptance of sand by the Project only indicated that the transaction was not a sale ; that in these matters the petitioner acted like an agent of the Project; that the payment of royalties, rent etc. was made by the petitioner for and on behalf of the Project; that the petitioner was not liable to pay these amounts to the Government and what actually took place was that, according to the terms of the contract between the petitioner and the Project, the Project deducted a sum equal to the royalty payable by it to the Government from the sum payable to the petitioner by the Project ; that the royalty thus recovered from the petitioner was actually paid to the Government by the Project; that both the Sales Tax Officer and the Commissioner erroneously assumed that because of this convenient method of calculation and payment of royalty the petitioner became the owner of the sand; and that thus the petitioner, which was not a 'dealer' as defined in the Act and did not sell any sand to the Project, could not be assessed to any sales tax.
5. In the return filed on behalf of the respondents opposing the petition, it is not disputed that the lease for extraction of sand from Sheonath riverbed in Mouza Sirsa Khurd was granted by the Government to the Project for a period of four years commencing from 8th June, 1957. It has, however, been averred that the fact that the lease was executed in favour of the Hindustan Steel Limited is not relevant and though the contract, which the petitioner held with the Project, was embodied in a form commonly used for a works contract, it was in essence a contract for supply of goods. In the return, the opponents have laid stress on the circumstances that the petitioner was required to provide at its own cost all labour, material, tools etc. for collection, transport, stacking and supply of sand; that the sand was to be of specified granulometric composition conforming to certain specifications and the Project had a right to reject the sand which did not conform to the standard ; that the petitioner was to guarantee the supply of the quantity of sand ; and that it had also to bear quarry fees, royalties, octroi duties, ground rent etc., as indicating that the Project had authorized the petitioner to quarry the sand from the riverbed on payment of royalty, to appropriate the sand to itself and then to supply it to the Project. The respondents say in paragraph 17 of their return-.the contract between the petitionercompany and the Hindustan Steel Ltd. was for supply of goods, i.e., sand, according to the specifications given at the Project site after winning the sand from the Sheonath river-bed at a specified price. All the costs of winning, processing and carrying the sand and stacking it in the specified bins was to be borne by the petitioner inclusive of royalties, octroi, ground rent, etc. The essence of the contract therefore was for supply of approved quality of goods to the extent of specified quantity at a specified site and at a specified rate. The transaction was a transaction of sale and not works contract as alleged. The fact that from the bills submitted by the petitioner the royalty was deducted does not in any way change the nature of the contract. The liability under the contract to pay the ground rent and royalty was that of the petitioner but under the quarry lease executed in favour of the Hindustan Steel Ltd., the purchaser was liable to pay the royalty and hence to safeguard its own interest the royalty was deducted by the purchaser and so it means that there is a grant of quarry lease by the Hindustan Steel Ltd., to the petitioner. The fact that between the period the sand was won from the riverbed and was supplied to the purchaser at the Project site the contractor was to agree to Government having the lien on the materials so won clearly indicates that the property was to vest in the petitionercompany and in order to ensure the payment of royalty etc. a lien was created. The fact that the payment was to be made on the basis of quantities accepted after inspection clearly shows that the payment was not to be made for all the sand won and extracted but only the sand which was accepted on inspection by the Hindustan Steel Ltd. This clearly shows that there was to be appropriation of the goods after inspection and the title to the goods was to pass to the purchaser at that stage.
The respondents further say that the Sales Tax Authorities had jurisdiction to construe the contract and determine whether it was for supply of goods or was a mere works contract; that it could not, therefore, be said that they acted in excess of jurisdiction ; and that there was no error of la apparent on the face of the record. It has also been said that if the petitioner was aggrieved by the order of assessment made by the Sales Tax Officer, then it should have filed an appeal under Section 38 of the Act and then brought the matter before this Court on a reference under Section 44 ; and that having failed to avail itself of the remedy provided by the Act for challenging the order of assessment and the penalty imposed, the petitioner was not entitled to invoke the jurisdiction of this Court under Articles 226 and 227 of the Constitution for quashing the assessment order.
6. The question that arises for determination is whether on the construction of the agreement of lease dated 18th May, 1960, concluded between the State of Madhya Pradesh and the Hindustan Steel Limited, Bhilai Steel Project, Bhilai, and the agreement, dated 13th April, 1956, entered into by the petitioner with the Project, on the footing of which the Sales Tax Authority assessed the petitioner to sales tax, it could be held that there was a sale by the applicantcompany of sand 'supplied' by it to the Project. Taking first the lease (Annexure-A to the petition) in favour of the Project, it is evident from the first clause thereof that the Project was given the right in enter upon land measuring 38'50 acres situated in Mouza Sirsa Khurd, Durg District, constituting the riverbed of Sheonath river, to extract sand and to do all acts necessary for the extraction of sand, and the Project was prohibited from selling sand at a rate exceeding the one fixed from time to time by the Collector. Clause 2 of the lease made the Project liable from 8,th June, 1957, and during the subsistence of the lease for the payment of half- yearly rent of Rs. 673-75 nP. This clause also provided that for and in respect of the rent so paid, the lessee may in the period in respect of which the same is payable work and raise from or out of the lands leased, and sell, export and otherwise dispose of such quantity of sand as would at the rate mentioned in the lease yield or pay for the half year a royalty equal in amount to the aforesaid certain half-yearly rent. The third clause of the lease cast an obligation on the lessee to pay to the lessor a royalty at the rate of ten per cent, of the value at the pit's mouth subject to a minimum of Re. 1 per ton of all sand raised from and out of the said lands. By the fourth claure, the lessee, that is the Project, was made liable for the payment of land revenue and waterrate that may be assessed in respect of the land. Clause 6 laid down that the arrears of rent and royalty due under the lease would be recoverable from the lessee as arrears of land revenue under the C. P. Land Revenue Act, 1917. The Project was prohibited by Clause 9 from assigning or underletting the leased land or any part thereof, or the rights or privileges granted therein, without the previous written sanction of the lessor.
7. These terms of the lease held by the Project from the Government leave no doubt that the right to extract sand from the riverbed quarry was vested in the Project and the property in the sand extracted belonged to it. The Project had the right to sell, export, or otherwise dispose of the sand extracted at the rate fixed by the Collector and could not assign, sublet or transfer the right of extraction to anyone without the previous written sanction of the lessor, that is, the Government. That the Project had the right to extract sand and dispose of it at its own will and pleasure and had to pay rent and royalty and that it could not assign or sublet the quarry was recognized by the Commissioner of Sales Tax himself, and is not disputed in the return filed on behalf of the opponents. What the respondents urge is that the condition in the lease prohibiting the Project from assigning and underletting the quarry to anyone without the sanction of the lessor did not render any assignment or transfer of the lease by the Project invalid, if they made it in violation of that condition; that the contravention of the condition only exposed the Project to a claim of damages by the lessor ; and that by the agreement concluded between the petitioner and the Project the right of extraction and consequently the title to the material extracted was transferred to the petitioner, and, therefore, the supply of extracted sand by the petitioner to the Project, according to the terms of the agreement dated 13th April, 1956, constituted a ' sale ' of the material within the definition of ' sale ' given in the Act. Even if it be assumed that the respondents are right in their contention that assignment in violation of the, condition in the lease in favour of the Project prohibiting assignment or subletting is not invalid, an examination of the terms and conditions of the agreement between the petitioner and the Project will sho that their further submission that by that agreement there was an assignment of the quarry in favour of the petitioner is unsound.
8. Admittedly, the agreement between the assessee and the Project is in the form of a contract for works. The form signed by the contracting parties is styled 'tender for works '. The assessee made a tender ' for the execution for the President of the Indian Union of the works specified in the underwritten memorandum within the time specified in such memorandum at the rates specified therein, and in accordance in all respects with the specifications, designs, drawings, and instructions in writing referred to in Rule 1 hereof and in Clause 12 of the annexed conditions and with such materials as are provided for, and in all other respects in accordance with such conditions so far as applicable '. The memorandum described the works thus-
(a) *General description ... Collection and supply of
sand from Sheonath
river including 10
miles road transport
(b) Estimated cost ... Rs. 36,79,545.
(c) Earnest money ... Rs. 75,000.
(d) Security deposit Rs. 3,67,954.
(including earnest money).
(e) Percentage, if any, per cent.
to be Ten. deducted from bills.
(f) Time allowed for the work from
the About four years. date of
written order to commence.
(g) Rate per item of work. See
The assessee agreed to abide by and fulfil all the terms and provisions of the contract on the acceptance of his tender. It is not necessary to refer to any of the general conditions of the contract because they nowhere deal with the assignment of transfer to the petitioner of the right of extraction of sand granted by the Government to the Project. Clause 37 of the general conditions of the contract, which has been relied upon by the respondents, is as follows-
Clause 37 : Refund, of quarry fees and royalties :-All quarry fees, royalties, octroi duties and ground rent for stacking materials, if any, should be paid by the contractor.
It is on the above clause and the special conditions of the contract that reliance has been placed by the learned Government Advocate appearing for the respondents, to support his contention that the contract between the assessee and the Project was a contract for the supply of sand and the supply constituted sale as defined in the Act. It was pointed out that according to the special conditions of the contract the assessee was required to provide at this own cost all labour, material, tools, plants etc. for the collection, transport, stacking and supply of sand at specified storage bins at the Auxiliary Plant Site; that the sand to be supplied had to be of the granulometric composition specified in the table incorporated in the special conditions; that the Project had a right to inspect and test the quality and sizes of sand and the assessee was required to pay the expenses of such tests ; and that the petitioner guaranteed the supply of 1,57,83,570 c. ft. of sand during the four years from 1956 to 1959. It was also stressed that advance payments to the assessee were on the basis of 'approximate value of sand' and the contractor agreed that the Government had a lien on 'sand of approved supplies stored on the river bank at the specified area'. These conditions, according to the learned Government Advocate, indicated that there was a grant of quarry lease by the Project to the petitioner, that the petitioner had property right in the sand extracted by it, and when sand conforming to the specified granulometric composition was supplied to the Project at the site fixed for it there was a transfer of property in the sand by the assessee to the Project and the sale of the sand to the Project.
9. In our judgment, it is impossible to say on the conditions of the contract relied on by the respondents that the agreement between the assessee and the Project was not a contract for labour and transport of sand wholly and purely but was a contract for the sale and supply of sand conforming to the specified granulometric composition at the nominated place. On the face of it, the contract, which the petitioner-company held from the Project, was one for quarrying the riverbed on their behalf. The operation, which the petitioner-company undertook under the contract, consisted of extracting or quarrying the sand, breaking and screening it for the purposes of collecting sand only of the requisite granulometric composition, collecting the sand thus screened and conveying it from the quarry to the Auxiliary Plant Site. The work and labour was involved in these operations. Under the agreement no proprietary rights in the quarry were transferred by the Project to the assessee. The sand all along remained the property of the Project, and the assessee, which had never any property in the sand extracted, could not be said to have transferred a nonexistent right to the Project when it supplied sand conforming to the specified granulometric composition. The sand of the requisite granulometric composition, which was supplied by the petitioner to the Project, was also not in any sense a ne material manufactured by the petitioner after purchasing any sand from the Project and subjecting it to some treatment or processing. It cannot, therefore, be suggested that the sand supplied by the petitioner to the Project constituted transfer of some ne material qua material.
10. The features of the contract, on which the respondents relied, do not alter the situation in any way. The condition that the assessee was to provide at its own cost all material, labour, tools etc; for the collection, transport, stacking and supply of sand at the Auxiliary Plant Site and was also to organize the extraction of the sand at the quarry and its transportation to the site is in consonance with the nature of the contract as a contract for the execution of work and supply of labour. Indeed in a contract wholly and purely for sale, supply and delivery of material at a specified place it would be quite unnecessary to provide that the cost of labour, material, transport etc. would be borne by the supplier. It would be assumed that these costs will be borne by him and the sale price would be fixed having regard to the cost of production and transport of the material. The inspection and testing of sand collected is in no way decisive of the nature of the contract. That condition is only for ensuring that the sand collected and supplied is of the approved granulometric composition The contract envisaged that the assessee would be paid for the labour and work done by it in quarrying, collecting and supplying the sand at the specified site only if the sand supplied was up to the required granulometric composition and that the assessee would not get any payment if it were to supply only boulders or stones collected from the riverbed. The object of the condition of inspection and testing was only to ensure that sand of the right sort was supplied and not to constitute a contract of sale of sand. The condition with regard to guarantee of supply of 1,57,83,570 c. ft. of sand in four years was meant only for securing the expeditious execution of the work. This becomes clear from the general condition in the contract with regard to payment by the assessee of compensation for delay in the execution of the work. It is on the petitioner's liability under the agreement for the payment of quarry fees, royalties etc. and on the terms of the special condition with regard to advance payment that considerable emphasis has been laid by the respondents. In paragraph 17 of the return reproduced above, it has been stated-
The liability under the contract to pay the ground rent and royalty was that of the petitioner but under the quarry lease executed in favour of the Hindustan Steel Ltd., the purchaser was liable to pay the royalty and hence to safeguard its own interest the royalty was deducted by the purchaser and so it means that there is a grant of quarry lease by the Hindustan Steel Ltd. to the petitioner.
This is perhaps a picturesque way of putting the respondent's position ; but, logically, it is indefensible. Under the lease in favour of the Project, the legal liability for the payment of ground rent, royalties, quarry fees etc., being on the Project itself from which it could be recovered as arrears of land revenue, if the Project stipulated with the assessee that it shall pay these charges, it only meant that the Project passed on the financial burden and not the legal liability in respect of these charges to the assessee, which, to the extent that burden was passed on to it, was paid less for labour and work done in the operations involved in supplying sand to the Project. The amount in respect of royalties, ground rent etc. was no doubt deducted from the petitioner's bills. But it was in fact paid to the Government by the Project itself. We are unable to see ho this condition about payment of royalties, ground rent etc. by the assessee, standing.by itself and without any more and in the context of the lease in favour of the Project, can be construed as conferring on the petitioner a proprietary right in the sand extracted by it from the riverbed.
11. The special condition with regard to 'advance payments' does not carry the case of the respondents any further. That condition runs as follows-
On account payments for sand of approved supplies stored on the river bank at the specified area will be made on the basis of approximate measurements to the extent of rupee one only per 100 c. ft. for the approximate value of sand. These payments will be treated as purely advance payments. The contractor shall agree to Government having a lien on such materials, and undertake to safeguard against losses due to the contractor postponing the execution, of the work or to storage or misuse of the materials and against the expenditure entailed for their proper watch and safe custody.
The respondents' argument centred round the expressions 'for the approximate value of sand' and 'the contractor shall agree to Government having a lien on such materials' occurring in that term. It was said that the value of the sand meant the sale value, and the mention of a lien in favour of the Government pointed to the fact that the assessee was the owner of the sand. We do not agree. It will be observed that according to the above term advance payments for sand 'of approved supplies stored' were fixed 'on the basis of approximate measurements to the extent of rupee one per 100 c. ft. for the approximate value of sand.' The maximum rate of payment was thus Re. 1 only per 100 c. ft. Ihus the rate of advance payment that was fixed was with reference to the measurement of cubic feet and not on the basis of any percentage of monetary value of the sand collected. That being so, the monetary value of the sand did not at all enter into the picture in the fixation of rate of advance payment. The expression 'the approximate value of sand ' used in the condition could, therefore, only mean not the monetary value but the granulometric quality value of the sand and it was according to the quality of the sand stored that the rate of advance payment within the maximum limit of Re. 1 per 100 c. ft. was fixed. The term about 'on account payments' no doubt speaks of the contractor agreeing to the Government's lien on such materials. It is true that the creation of lien in favour of a person on some property postulates that the property belongs to another person, and a lien is a charge or security on the property for the payment of some debt or obligation. But it would be altogether erroneous to attach undue importance to the word 'lien' found in the above term of the contract ignoring the other vital terms and conditions of the contract, and to infer from the mere use of the word 'lien' that property in the sand extracted was in the petitioner. It must be noted that any 'on account payment for sand of approved supplies stored on the river bank' was not any debt. It was a part payment made in advance to the petitioner for the work it had to execute. The payment was related to the quantity of sand extracted and coming up to the standard prescribed that was stored on the river bank. In these circumstances, when the contract between the petitioner and the Project did not contain any term transferring the property right in the sand from the Project to the petitioner, the legitimate and reasonable construction of the term about Government having a lien on the sand of approved supplies stored on the river bank on making advance payment to the petitioner on the basis of the sand stored can only be that the Central Government which entered into a contract with the petitioner for supply of sand to the Project will have a right to demand that the particular sand stored, on the basis of which advance payment was made, shall be delivered to the Project.
12. The fundamental issue is as to whether the sand at any time became the property of the assessee before it was supplied to the Project. On the terms of the quarry lease, dated 18th May, 1960, held by the Project from the State of Madhya Pradesh and the agreement dated 13th April, 1956, concluded between the petitioner and the Project, there can be no doubt that the sand all along remained the property of the Project. There is no term in the agreement, dated 13th April, 1956, with regard to the transfer of property right in the sand from the Project to the petitioner-company. As we have endeavoured to point out, the vie of the Sales Tax Authorities that the payment of royalties, ground rent etc. by the petitioner showed that the petitioner became 'temporarily' the owner of the quarry, is untenable. The Commissioner of Sales Tax totally misunderstood the legal position with regard to the property right in the sand when he observed that the fact that the quarry lease for the relevant period stood in the name of the Project did not affect the real nature of the transaction as royalty etc. payable by the Project to the State Government was recovered from the petitioner and the applicant was in a position to transfer property right in the sand to the Project. The question is not whether the Project was in a position to transfer property in the sand to the petitioner and the petitioner was there after in a position to retransfer property in sand to the Project. It is whether this actually happened. On the terms and conditions of the two agreements, on the footing of which the Sales Tax Authorities reached the conclusion that they did, it cannot be held that the transactions of supply of sand by the assessee to the Project constituted sales as defined in the Act.
13. Turning no to the authorities, the Sales Tax Commissioner was of the vie that the assessee's case fell within the scope of the principle laid down in Seth Pamandas Sindhi v. State of M.P.  14 S.T.C. 74 That was a case where the assessee had taken several contracts for the supply of ballast to the railways and the Collectors of various districts gave leases of quarries to the assessee in their districts for quarrying stones and sand. The assessee extracted the material and sold it in the form of ballast to the railways at the contracted rates. It was held that the supply of ballast by the assesse to the railways was a sale transaction. The crucial distinction between the present case and the case of Pamandas  14 S.T.C. 74, which the Commissioner of Sales Tax failed to notice, is that whereas in the case of Pamandas  14 S.T.C. 74, the leases of quarries were held by Pamandas and he was the owner of the extracted material, in the present case the quarry lease was held by the Project and the ownership of sand vested in the Project. Learned Government Advocate cited Chandra Bhan Gosain v. The State of Orissa  14 S.T.C. 766 : S. Bhakthavatsalu v. State of Madras  14 S.T.C. 832 : State of Andhra Pradesh v. Kalva Suryanarayana  13 S.T.C. 317 and Mckenzies Limited v. State of Bombay  13 S.T.C. 602 All these cases are easily distinguishable. In Chandra Bhan Gosain  14 S.T.C. 766 the assessee entered into a contract with the Hindustan Steel Private Ltd., for the manufacture and supply of bricks at Roorkela in Orissa. The contract contained a clause that land would be given free to the assessee by the said company. The assessee contended that the contract was only for labour or for work done and material found and that there was really no sale of any goods on which sales tax could be levied. This contention was rejected by the taxing authorities as well as by the Orissa High Court. It was held by the Supreme Court that when land was given free to the assessee for manufacture of bricks, there was a transfer of property in the earth to the assessee by the Hindustan Steel Private Ltd., and when he supplied bricks to the said company manufactured out of the earth by bestowing certain amount of skill and labour, there was a contract for the transfer of chattels qua chattels. This is not the position here. The sand, which was extracted, collected, screened and transported by the petitioner to the Auxiliary Plant Site always remained the property of the Project. In the other case, namely, S. Bakthavatsalu v. State of Madras  14 S.T.C. 832 there was a contract between the Neyveli Lignite Corporation and the assessee for the supply to the Corporation at particular places of blue granite jelly of certain quality from certain specified quarries. The Madras High Court held that the contract was not a contract for labour wholly or purely but was a contract for supply of materials at a particular spot and the supply constituted sale transactions liable to assessment under the Madras General Sales Tax Act, 1939. In that case, it was conceded by the assessee that the quarries wherefrom the materials were to be collected were quarries which belonged to the assessee himself. Thus the assessee was the owner of the material which he supplied to the Corporation. At page 837 of the Report the learned Judge of the Madras High Court observed that-
If the quarrying was to be done by A in certain quarries belonging to B and the quantity quarried was supplied to B as a result of the contract, obviously there would be no transfer of property at all involved in the transaction.
The present case is clearly of the type illustrated by the learned Judge of the Madras High Court.
14. In State of Andhra Pradesh v. Kalva Suryanarayana  13 S.T.C. 317 the assessee contracted with the Government for the collection and supply of Gulmohva flower used as a base for preparation of alcohol. Under the contract the assessee had to collect the flower, store it in his godowns, transfer the same to Government distilleries at his expense, and was to be paid for all these at a particular rate for each grade of flower supplied. The contract contained a term that if the flower was picked from patta lands, the assessee would pay compensation to the pattadar at a certain rate while that picked from Government land was not subject to any charge. If the assessee failed to supply the required quantity of flower, the contract provided that the Government would be entitled to purchase the flower from other sources on his behalf and recover from him the difference between the price paid by the Government and that fixed under the contract. It was in this context of facts that it was held by the Andhra Pradesh High Court that the transaction of supply of flower was 'sale' and not a contract for work and labour. Jaganmohan Reddy, J., who decided the case, said that-.under the terms of the contract, whether the flower is picked from the patta lands or from the Government lands, it becomes the property of the contractor; in the former case on payment of certain consideration to the pattadar from whose lands the flower has been picked, and in the latter without any consideration. It is not, however, a contract of supply to the Government of its own property simpliciter.
In holding that the contract was one of sale, the learned Judge also emphasized the liability of the assessee in the event of his failure to supply the required quantity of flower and the Government being forced to purchase the flower from other sources, of making payment of the difference between the price paid by the Government and that fixed under the contract. The Andhra Pradesh case is thus a case of sale of material which belonged to the assessee. There is no analogy between the present case and the case of Mckenzies Limited v. State of Bombay  13 S.T.C. 602 That was a case where the assessee had agreed to construct and deliver to the Government of India several motor bodies fitted on the chassis supplied to it by the Government. The motor bodies built and fitted on to the chassis by the assessee were regarded by the Bombay High Court as articles sold by the assessee and purchased by the Government. That was clearly a case of the transfer of a chattel qua chattel and the fact that the body was built by the assessee and fitted on to the chassis belonging to the Government did not make the contract one of work.
15. The terms of the quarry lease, dated 18th May, 1960, held by the Project and the agreement, dated 13th April, 1956, concluded between the petitioner and the Project, which the Sales Tax Authorities considered in making the assessment, furnish no justification for holding that the sand, which the petitioner extracted and supplied to the Project, was the property of the petitioner and the supply transaction was a sale transaction. After the conclusion of the arguments, when the matter was pending for judgment, the respondents filed an application on 13th November, 1963, stating that the assessment period was from 1st February, 1957, to 31st March, 1959, and the quarry lease (Annexure A) held by the Project was executed on 18th May, 1960; that thus during the assessment period mining rights were not assigned by the Government to the Project; that in May 1957, when the Hindustan Steel Private Ltd., Bhilai, applied for a lease of the area in question, the Deputy Commissioner, Durg, by an order dated 8th June, 1957, granted a temporary permission to the Project to extract sand from the Sheonath riverbed quarry and also permitted the Project to 'allo any contractor to work' on behalf of the Project; and that subsequently the petitioner was allowed to work the quarry and also made liable to pay the royalties and other charges under the contract, dated 13th April, 1956, and consequently the sand became the property of the petitioner and the supply of sand by the petitioner to the Project constituted sale. When the application filed by the respondents on 13th November, 1963, came up for hearing before us, the respondents sought to amend their return introducing facts which were never placed before the Commissioner of Sales Tax or the Sales Tax Officer. By the intended amendment, the respondents sought to justify the order of assessment with reference to the temporary permission said to have been granted by the Deputy Commissioner of Durg, on 8th June, 1957, to the Project for extraction of sand from the riverbed and also with reference to a contract said to have been entered into by the assessee with the Project on 14th March, 1959, which allowed the assessee to work the quarry on behalf of the Project and contained a term that the material quarried by the assessee would be utilized only for the purpose for which permission had been obtained and that 'sale or disposal of the materials for any other purpose is prohibited except with the permission from estate section.'
16. The respondents cannot be allowed to introduce here for the first time ne facts which are not contained in the orders passed by the Commissioner of Sales Tax and the Sales Tax Officer, Rajnandgaon, for supporting those orders. It is well settled that it is not a good return to a rule nisi for the issue of writ of certiorari to state that the order is justified on facts not contained in the order. It has been stated in Halsbury's Laws of England (Vol. 11, III Edn., footnote (i) of page 63) that if a return to a writ of certiorari states any facts which are not contained in the order sought to be quashed, the Court cannot take cognizance of them. This proposition is supported by the decision in R. v. Liston 101 E.R. 189/1793 (5) T.R. 338. This rule was followed by the Madras High Court also in Vedachala v. C. R. T.Board A.I.R. 1948 Mad. 454. The vie that the respondents cannot be allowed to urge for the first time here ne facts for supporting the assessments finds confirmation in the observations of the Supreme Court in paragraph 12 of the majority judgment in Carl Still G.m.b.H. v. State of Bihar  12 S.T.C. 449. Those observations are-
When the appellants next moved the Court under Article 226 for quashing the proceedings, they urged that the provisions of the Act, in so far as they purported to impose a tax on the materials supplied in the performance of the contract, as if they were sold, were ultra vires. If the respondents sought to tax the appellants on the footing that sales of materials were effected outside the contract, it was their duty to have put that case forward in answer to the petition. They did nothing of the kind. They did not file even a counterstatement. At the time of the argument, when faced with the decision of this Court in The State of Madras v. Gannon Dunkerley and Co.(Madras) Ltd.  S.C.R. 379 their entire case was that the agreement between the parties should be construed as involving a sale of materials, and that their value could be ascertained from the invoices, account books and the course of dealings between the parties. No contention was urged that there were sales of materials which fell outside the agreement between the appellants and the owner. The learned Judges of the High Court in dismissing the petitions made it clear that the investigation before the Sales Tax Authorities must be as regards their liability to pay sales tax 'upon proper construction of the contract'. In this Court also, the respondents seek in their statement to maintain the liability of the appellants only on the basis of the contract, reliance being placed on Clause 15 already referred to and on Section 9 of the Sale of Goods Act. There is no claim that the appellants are liable on the basis of sales falling outside the agreement. It was stated before us for the appellants, and not contradicted by the respondents, that the Sindri Fertilisers and Chemicals (Private) Ltd., is a company controlled by the Government. If that is so, the respondents were at all times in possession of facts which would have shown whether the appellants entered into any transaction de hors the agreement, and it is significant that at no stage have they alleged any such facts. We are satisfied that the proceedings have at all stages gone on the footing that the liability of the appellants arose under the contract and not otherwise. In that view, we must hold, following the decision in The State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd.  S.C.R. 379 that the proceedings taken by the respondents for imposing sales tax on the supplies of materials by the appellants, pursuant to the contract dated December 19, 1953, are illegal and must be quashed.
In his dissenting judgment, Shah, J., also deprecated the practice of the taxpayer being permitted invoke the jurisdiction of the High Court to issue, high prerogative writs on certain assumed facts, the truth of which has never been subjected to scrutiny in the manner in which the la provides that they should be scrutinized. He observed-
The power to assess the facts on which the decision as to the true nature of the taxable transaction depends by the statute lies solely with the taxing authorities ; it does not lie with any other body or tribunal. Invoking the jurisdiction of the High Court to adjudicate upon the facts, directly or indirectly, on which the liability to tax depends, ...amounts to inviting the High Court to exercise jurisdiction which it does not possess.
These observations make it very clear that in proceedings under Article 226 for the issue of a writ of certiorari for quashing an order of assessment, it is not open to the assessee or the Department to place ne facts, which were never placed before the taxing authorities for assailing or supporting the impugned assessment. It is noteworthy that this liberty would not have been available to the petitioner or the Department if in this case the petitioner had filed an appeal Under Section 38.of the Act and the matter would have come up before us ons a reference under Section 44. In this vie of the matter, it is not necessary to express an opinion on the question whether the temporary permission granted to the Project by the Deputy Commissioner of Durg on 8th June, 1957, for extraction of sand from the riverbed saying that the Project could 'allo any contractor to work on behalf of the Project' resulted in the assignment of the quarry lease when the petitioner was allowed to work the quarry on behalf of the Project, and whether the term contained in the contract said to have been entered into between the petitioner and the Project on 14th March, 1959, prohibiting the disposal of the quarried material indicated that the petitioner became the owner of the sand. It must, however,, be added that though the lease (Annexure A) was executed on 18th May, I960) it .was effective as a lease for a period of four years commencing from 8th June, 1957. That lease, operated as, a present demise from 8th June, 1957, though the formal lease deed was executed on 18th May, I960.
17. The objection of the respondents that in the order of assessment passed by the taxing authorities there was no error which could be called an error apparent on the face of the record, may be disposed of by observing that if the taxing authorities have misconstrued the two agreements, on the basis of which they made the assessment, then there is clearly an error of la apparent on the. face of the record. It is well settled that the question of. the legal effect of words and expressions used; in a document is. a.question of law. Their further objection. that as the petitioner had the remedy of appealing under Section 38 of the Act against.i the order passed by the Sales Tax Officer and bringing the matter ultimately in a reference to this Court under Section 44 and, as it failed to avail itself of that remedy, it was not entitled to any relief under Article 226 of the Constitution, is unsubstantial. It . is true that the petitioner could have filed an appeal under Section 38 from the order of the Sales Tax Officer and could have also brought the matter before this Court under Section 44. But the Act itself gives an assessee the right of moving the1 Commissioner under Section 39 for a revision of an assessment order. When 'a revision petition is filed by an assessee under Section 39(1) and no order is made by the Commissioner under Sub-section (2) of Section 39 enhancing or modifying the assessment or cancelling it and directing a fresh assessment, then the assessee has no right of appeal to the Tribunal and consequently there can be n6 question of a reference to this Court under Section 44. A prudent assessee desiring to contest findings of fact reached by the Sales Tax Officer would no doubt resort to the remedy of an appeal under Section 38. But where the assessee is content with the findings of fact reached by the Sales Tax Officer and wishes to challenge the legality of the assessment order otherwise, he can do so by filing a revision' petition under Section 39(1) of the Act. If he does that, he avails himself of the remedy provided by the Act for challenging the assessment. Here, merely because the petitioner did not file an appeal against the order of assessment passed by the Sales Tax Officer and chose to file a revision petition under Section 39(1) of the Act, it cannot be held that it failed to avail itself of the remedy provided by the Act for challenging the assessment.
18. For the foregoing reasons, this application is allowed, the decision dated the 10th August, 1960, of the Sales Tax Officer, Rajnandgaon, assessing the applicantcompany to sales tax in the sum of Rs. 23,524-25 nP. and imposing on it a penalty of Rs, 30,000, and the decision dated 15th March, 1963, of the Commissioner of Sales Tax upholding the order of the Sales Tax Officer, are both Quashed. The respondents are restrained from giving effect to those orders and from making any demand of tax or penalty pursuant to those orders. The petitioner shall have costs of this application. Counsel's fee is fixed at Rs. 200. The outstanding amount of security deposit shall be refunded to the petitioner.