1. The appellant had entered into a contract with a company called theHindusthan Steel Private Ltd., for the manufacture and supply of bricks atRourkela in Orissa. Large quantities of bricks were manufactured and suppliedunder the contract and the appellant received payment for them. The respondentState assessed the appellant to sales tax under the Orissa Sales Tax Act, 1947on these supplies on the basis that they were sales. The appellant contendedthat the contract was only for labour or for work done and material found, andthat there was really no sale of any goods on which the tax could be levied. Hemoved the High Court of Orissa for a write of mandamus directing the respondentState not to assess or levy the tax. The application was rejected in limine bythe High Court. The appellant has now come to this Court in further appeal.
2. Now a sale which can be taxed under the Act has been defined as 'Anytransfer of property in goods for cash or deferred payment or other valuableconsideration.' The point at issue is whether the contract was for atransfer of property in the bricks from the appellant to the Company for aconsideration.
3. It is said that the bricks were made out of earth belonging to theCompany and, therefore, the bricks had all along been its property and therecould be no transfer of property in them to it. This contention is founded on aclause in the contract which says, 'land will be given free' andwhich was apparently intended to make the earth available to the appellant formaking the bricks.
4. We are unable to agree that this clause proved that the earth all alongcontinued to belong to the Company. It seems to us that when the clause said,'land will be given', it meant that the property in the earth to bedug out for making the bricks would be transferred to the appellant. It may bepresumed that it was understood that in quoting his rate for the bricks, theappellant would take into account the free supply of earth for making thebricks. Again what was supplied to the Company by the appellant was not theearth which he got from it but bricks, which, we think, are something entirelydifferent. It could not have been intended that the property in the earth wouldcontinue in the Company in spite of its conversion into such a different thingas bricks. Further we find that the contract provided that the bricks wouldremain at the appellant's risk till delivery to the Company. Now, obviously brickscould not remain at the appellant's risk unless they were his property. Anotherclause provided that the appellant would not be able to sell the bricks toother parties without the permission of the Company. Apparently, it wascontemplated that without such a provision the appellant could have sold thebricks to others. Now he could not sell the bricks at all unless they belongedto him. Then we find that in the tender which the appellant submitted and theacceptance of which made the contract, he stated, 'I/we hereby tender forthe supply to the Hindusthan Steel Private Ltd. of the materials described inthe undermentioned memorandum.' The memorandum described the materials asbricks, and also stated the 'Quantities to be delivered' and the'Rate at which materials are to be supplied'. All these provisionsplainly show that the contract was for sale of bricks. If it were so, theproperty in the bricks must have been in the appellant and passed from him tothe Company. The same conclusion follows from another provision in the contractwhich states that if bricks are stacked in a specified manner 'then 75% ofthe value of the bricks at kiln site will be measured and paid....... Thebalance of 25%... will be paid finally when all the bricks have been delivered....Only full bricks as finally delivered...... will be taken intoaccount......'
5. Before we leave this part of the case we have to notice the decision inP. A. Raju Chettiar v. The State of Madras 6 S.T.C. 131., to whichlearned counsel for the appellant referred. We do not think however that it isof any assistance. That was a case in which a merchant had delivered silver toworkmen for manufacture of utensils and the workmen returned the manufacturedutensils. It was held that there was no sale of the silver by the merchant tothe workmen. It was so held because the weight of the silver had been debitedto the workmen on delivery and credited to them on the manufactured goods beingmade over to the merchant and the price of the silver had never been debited orcredited to them. Furthermore, the workmen had been paid only the charges fortheir labour. On these facts it could not be said that the property in thesilver had ever passed to the workmen. The facts in the present case are differentand for the reasons earlier mentioned, justify the view that here there was atransfer of the property in the earth to the appellant by the Company.
6. Learned counsel stressed the fact that the contract nowhere used the wordsale in connection with the supply of the bricks, in support of his argumentthat there was no sale. But it is not necessary that to constitute a sale, theword 'sale' has to be used. We have said enough to show that under the contractthere was a transfer of property in the bricks for consideration and,therefore, a sale notwithstanding that the word 'sale' was not used.
7. The other argument of learned counsel for the appellant was that even ifthe earth of which the bricks had to be made to be taken to have beentransferred under the contract to the appellant, this was not a contract forscale of goods but one of work done and materials found. A contract of thiskind is illustrated by the case of Clay v. Yates (1856) 1 H &.There the contract was to print a book, the printer to find the materialsincluding the paper. Robinson v. Graves (1935) 1 K.B. 579., was also referredto. There a person had commissioned an artist to paint the portrait of a ladyand it was held that the contract was not for sale of goods though the artisthad to supply the paint and canvas and had to deliver the completed picture. Inthese cases in arriving at the view that the contract was not for sale of goodsthe test that was applied is, what was the essence of the contract Was it theintention of the parties in making the contract that a chattel should beproduced and transferred as a chattel for a consideration This test has nowbeen accepted as of general application to decide whether a contract was forsale of goods or for labour supplied and materials found : see Benjamin onSales (8th ed.) p. 161 and Halsbury's Laws of England (3rd ed.) vol. 34, P. 6.
8. It is true that the test will often be found to be difficult ofapplication. But no such difficulty arises in the present case. Here theintention of the parties in making the contract clearly was that the Companywould obtain delivery of the bricks to be made by the appellant; it was acontract for the transfer of chattels qua chattels. The essence of the contractwas the delivery of the bricks, though no doubt they had to be manufactured toa certain specification. It would be absurd to suggest that the essence of thecontract was the work of manufacture and the delivery of the bricks was merelyancillary to the work of manufacture, in the same way as the delivery of thepaint and the canvas were held to be ancillary to the contract to paint theportrait in Robinson v. Graves (1935) 1 K.B. 579..
9. The fact that under the contract the bricks had to be manufacturedaccording to certain specifications, and, therefore, the appellant had tobestow a certain amount of skill and labour in the manufacture of the bricks,does not affect the question. That was not the essence of the contract. Theobject of the contract nonetheless remained the delivery of bricks. It hasnever been doubted that 'the claim of a tailor or a shoemaker is for theprice of goods when delivered, and not for the work or labour bestowed by himin the fabrication of them' : see Grafton v. Armitage (1845) 2 C.B. 336.and J. Marcel (Furriers) Ltd. v. Tappear (1953) 1 All. E.R. 15.. The presentcase, therefore, must a fortori be one of sale of goods.
10. It remains now to notice a preliminary objection to this appeal raisedby the respondent. It was said that before the High Court was moved under Art.226 for the writ, the appellant had filed appeals against the orders ofassessment to the Sales Tax Appellate Tribunal. These appeals failed and theappellant's application for an order on the Tribunal to refer to the High Courtthe question of law raised in this appeal was also rejected by the High Court.It is, therefore, said that this appeal is concluded by the order of the HighCourt last mentioned. But it appears the this Court had granted leave to appealfrom the High Court's order refusing to issue the writ before the appeal to thetribunal had been dismissed. The appellant could have appealed from the HighCourt's order refusing to direct a reference of the question but he chose toprosecute the appeal against the order in the petition for the writ which wouldhave given him the same relief. Either remedy was open to him and neither canbe said in the circumstances to be barred by the other.
11. The appeal however fails on the merits and it is dismissed with costs.
12. Appeal dismissed.