S.K. Mal Lodha, J.
1. This Court vide its order dated 21st October, 1976, passed in D. B. Sales Tax Case No. 183 of 1974 (Commercial Taxes Officer, Circle B, Udaipur v. Executive Engineer, Irrigation, Kankroli) directed the Board of Revenue for Rajasthan, Ajmer ('the Board' herein), to state the case and refer the following question of law for opinion under Section 15(2)(b) of the Rajasthan Sales Tax Act, 1954 (No. 29 of 1954) ('the Act' herein):
Whether, in the facts and circumstances of the case, supply of cement bags by the Executive Engineer to the contractor for price for utilisation in the execution of contract constituted sale and this turnover attracted levy of tax
2. The Board has accordingly submitted the statement of the case and referred the aforesaid question. During the pendency of this reference the Rajasthan Sales Tax (Amendment) Act, 1984 (No. 20 of 1984) ('the Amendment Act' herein), was promulgated. Sub-section (2) of Section 1 of the Amendment Act provided that the Amendment Act shall come into force on such date as the State Government may, by notification in the official Gazette, appoint. By Notification No. F. 4(2)/FD/Gr. IV/79 dated 1st May, 1985, published in the Rajasthan Gazette (Extraordinary), Part IV(C)-2, dated 1st May, 1985. Section 13 of the Amendment Act deals with transitory provision. Sub-section (11) of Section 13 of the Amendment Act provides that every reference made by the Board before 1st May, 1985, pending before the High Court shall be deemed to be an application for revision under Section 15 of the principal Act as substituted by the Amendment Act and shall be disposed of accordingly. It may be stated here that under Section 15 of the Act, as substituted by the Amendment Act, the revision lies on the ground that the case involves a question of law. The question of law that arises in this case has already been stated hereinabove.
3. We may recall a few facts : The non-petitioner (Executive Engineer, Irrigation, Kankroli, District Udaipur) supplied cement bags to the contractor under the terms of the agreement for execution of the contract works on behalf of the Government between the period from June, 1957, to August, 1957. It appears from the assessment order, anuexure A, dated 1st May, 1964, that the irrigation department was brought on G. I. R. with effect from July, 1962, on its application under Section 6-A of the Act and prior to that it was not on the record as a registered dealer. The A. C. T. O., Ward B, Udaipur, passed an assessment order, annexure A, dated 1st May, 1964, and held that the supply of cement by the non-petitioner to the contractor was a sale within the meaning of the Act and assessed the transaction of supplying of cement to the contractor during the assessment year 1957-58. The non-petitioner lodged an appeal and the Deputy Commissioner (Appeals), Commercial Taxes, Udaipur, by his order annexure B, dated 31st July, 1965, accepted the appeal observing that the assessing authority erred in levying tax on the supply of cement made to the contractor for execution of Government contract by treating such supplies as sales. He, therefore, set aside that order and remanded the case back to the assessing authority for making reassessment in the light of the observations made therein. Being dissatisfied, a revision under Section 14(1) of the Act was filed against the appellate order dated 31st July, 1965, passed by the Deputy Commissioner (Appeals), Commercial Taxes, Udaipur. The Board by its order dated 3rd December, 1971, rejected the revision after noticing Clause (11) of the agreement between the State of Rajasthan and the contractor and in particular noticing the words 'shall remain the absolute property of the Government and shall not on any occasion be removed from the site of the work'. The learned Member of the Board observed as under :
The determination of the point whether sale took place or not will depend upon the terms of the agreement between the parties. Where the agreement shows that property in the goods has not passed, sale cannot be said to have been effected. In the present case, the terms of the agreement clearly shows that the property in goods had not been transferred and hence the learned Deputy Commissioner was justified in reaching the conclusion that this supply of cement bags under the terms of contract by the Government to its contractor, was not a sale and not assessable to tax.
4. A special appeal was filed before the Division Bench of the Board. The Division Bench rejected the special appeal holding that no regular sale was involved in. the transaction in dispute and that the Executive Engineer would not be considered as a dealer in terms of the Sales Tax Act. A reference application was filed under Section 15 of the Act. That was rejected as according to the learned Member of the Board, no question of law arose out of the Board's order. An application under Section 15(2) was filed in this Court. In view of the decision reported in Hindustan Steel Ltd. v. State of Orissa AIR 1970 SC 253, this Court opined that a question of law does arise from the Board's order. It, therefore, directed the Board to make the reference on the aforesaid question which we have now heard as a revision under Section 13(11) of the Amendment Act.
5. We have had an advantage of hearing the learned standing counsel of the Sales Tax Department only as despite service of notice, nobody has appeared on behalf of the non-petitioner.
6. For the proper appreciation of the controversy involved in this case it will be relevant to notice the provisions of the Act which then existed. Reference hereinunder to the section will be to those provisions which then existed. Section 2(cc) of the Act defines 'business' as under :
(i) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and
(ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern; but does not include activities of sale, supply or distribution of goods carried on without any profit-motive by-
(i) any charitable or religious institution in the performance of its functions for achieving its avowed objects; and
(ii) an educational institution, where such sale, supply or distribution is made to its students.
7. [This definition was inserted vide Section 2(b) retrospectively by Rajasthan Act No. 9 of 1965].
8. The definition of 'dealer' in Section 2(f) of the Act is as under:
(f) 'dealer' means any person who carries on the business of selling or supplying goods in the State whether on commission or for remuneration or otherwise and includes a Hindu undivided family, and also a society, club or any other association which sells or supplies goods to its members;
Explanation.-Where a dealer who resides outside the State carries on the business of selling or supplying goods in the State through a manager or agent, the manager or agent shall, in respect of such business, be deemed to be a 'dealer' for the purpose of this Act.
9. 'Sale' has been defined in Section 2(o) of the Act as follows :
(o) 'sale' with all its grammatical variations and cognate expressions 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 execution of a contract, but does not include a mortgage, hypothecation, charge or pledge;
Explanation 1.-A transfer of goods on hire-purchase or other instalment system of payments shall, notwithstanding the fact that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale;
Explanation 2.-Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930 (III of 1930), the sale of any goods which have actually been delivered in the State as a direct result of such sale for the purpose of consumption in the said State, shall be deemed for the purposes of this Act, to have taken place in the said State, irrespective of the fact that the property in the goods has, by reason of such sale, passed in another State.
10. We may state that the definition of the word 'dealer' was amended by Act No. 18 of 1960 so as to include the State Government in respect of any business. Before a Division Bench of this Court in Commercial Taxes Officer, Survey & Investigation, Jodhpur v. Divisional Superintendent, Northern Railway, Jodhpur [1980J 45 STC 18, a question arose whether in the definition of 'dealer' as it stood prior to amendment in the year 1958, the State Government and the Central Government were excluded or not. In that connection it was observed that the State Government was not included in the definition of the term 'dealer' prior to 1st April, 1958, and that the State Government initially and the Central Government subsequently were explicitly included within the term 'dealer' only by way of clarification, in order to remove doubts, if any. It was opined that that does not mean that the State Government and the Central Government were excepted from the operation of the Act by necessary intendment. It was held in that case that when a department of the State Government or the Central Government carries on business activity, it is a 'dealer' within the meaning of Section 2(f) of the Act.
11. Clause (11) of the contract provides that the material supplied to the contractor by the Engineer-in-charge shall be the absolute property of the Government and shall also be not removed from the site of the work. It further provides that unused material shall be returned to the Engineer-in-charge. The Board held that where the agreement says that the property in the goods has not passed, sale cannot be said to have been effected. After construing the terms of the agreement it was observed that property has not been transferred and hence supply of cement under the terms of the agreement by the State Government to the contractor was not a sale. In Hindustan Steel Ltd.'s case AIR 1970 SC 253 a somewhat similar question arose under the Orissa Sales Tax Act. The definitions of 'dealer' and 'sale' are almost identical, though the word 'business' was not defined. One of the conditions of the contract was largely similar of Clause (11) of the agreement in the case on hand. It may be stated that in that case no serious arguments were advanced before their Lordships of the Supreme Court that the supply of building material belonging to the company for an agreed price did not constitute a sale. Section 3 of the Act lays down that subject to the provisions of the Act every dealer whose turnover in the previous year in respect of sales or supplies of goods exceeds the amount mentioned therein shall be liable to pay tax under the Act on his taxable turnover from the date of the commencement of the Act. After construing condition No. 10 of the contract in that case, which is similar to that of Clause (11) of the agreement, their Lordships held that the company was a 'dealer' carrying on the business of sale and supply of goods in the State. It was held that having regard to condition No. 10, it would be difficult to resist the conclusion that the company in that case was not carrying on the business of selling cement and structural steel. According to Clause (11) of the agreement, the non-petitioner was to supply cement to the contractor on payment of its price. Similar condition was interpreted by their Lordships of the Supreme Court in Hindustan Steel Ltd.'s case AIR 1970 SC 253, wherein the goods supplied were to remain the property of the company, it was held that the supply amounted to sale, taxable under the Orissa Sales Tax Act, 1947. The Board, in our opinion, was not right when it came to the conclusion that since the title of the cement had not passed to the contractor it did not constitute 'sale' so as to attract the liability of the non-petitioner to pay the tax under Section 3 of the Act. We adopt the reasons given in Hindustan Steel Ltd.'s case AIR 1970 SC 253, which are fully applicable to this case.
12. We, therefore, hold that the supply of cement bags by the non-petitioner to the contractor for price for being utilised in the execution of the contract constituted 'sale' within the meaning of Section 2(o) of the Act and thus, this turnover attracted liability to tax. The reference is accordingly disposed of as a revision.
13. The revision is allowed and the orders, annexure B dated 31st July, 1965, of the Deputy Commissioner (Appeals), Udaipur, annexure C dated 3rd December, 1971, of the learned single Member of the Board and annexure D passed by the Division Bench of the Board in special appeal are set aside by which it was held that the transactions did not constitute sale and the order, annexure A, dated 1st May, 1964, passed by the Assistant Commercial Taxes Officer, Udaipur, holding that the transactions constituted 'sale' is restored.
14. As nobody has appeared on behalf of the non-petitioner, there will be no order as to costs.