1. The petitioners, Vishweshwardass Gokuldass are dealers in metals and mineral ores at Madras. They returned the gross turnover of the business for the year 1955-56 in the sum of Rs. 4,12,106-13-8. They claimed the sum of Rs. 44,855-9-9, the labour charges paid by them for converting aluminium scraps into circles, as expenses deductible from the gross turnover. The Deputy Commercial Tax Officer, Peddunaickenpet, treated the supply of aluminium circles wrought out of the aluminium scraps as sales and estimated the turnover value of such sales at Rs. 1,35,355-13-0. As against this sales turnover he allowed the labour charges of Rs. 44,855-9-9 and arrived at the net turnover. The assessees preferred an appeal before the Special Commercial Tax Officer, Madras City, and one of the objections raised by them before the appellate authority was that the supply of aluminium circles as against the aluminium scrap received from the constituents, who were supplied with the circles, was not a sale under the Madras General Sales Tax Act, and that there could be no assessment in respect of it. This contention was however negatived by the appellate authority. There was a further appeal before the Sales Tax Appellate Tribunal by the assessees and the contention was reiterated. The Tribunal also could not be persuaded to hold that the transaction was not a sale within the Act. The assessees therefore did not succeed before the Appellate Tribunal. This revision petition has been preferred by the assessees and the only contention raised on their behalf is that the transaction is not within the ambit of the charging provisions of the Act.
2. It is necessary to set out the course of business of the assessees in regard to the conversion of aluminium scrap into aluminium circles and their supply of such circles. The assessees received aluminium scrap from time to time from their constituents or customers. The scrap so received was weighed and the weight of the scrap and the receipt of the scrap were entered in the assessees' accounts. The assessees melted the scrap in big crucibles, each crucible having a melting capacity of 100 pounds scrap. They manufactured aluminium circles from the scrap so received and melted, and supplied them to the customers from whom they received the scrap. Between the dates 14th June, 1955, and 25th July, 1955, the assessees supplied aluminium circles to their customers equal in weight to the scrap received from them. But after 25th July, 1955, the assessees supplied only circles of the weight of 85 per cent, of the scrap received as they treated 15 per cent, as wastage. Labour charges were collected at a particular rate per pound and bills were issued to the customers for the payment of these charges. The account books of the assessees show the weight of aluminium circles delivered. It has been pointed out by the Commercial Tax Officer that from the account books produced by the assessees it will not be possible to find out whether any particular quantity of aluminium scrap supplied by a particular customer was ear-marked and kept apart, converted into circles and supplied back to the customers. The assessing authorities have also found that there have been instances, as disclosed by the accounts of the assessees, where the scrap was supplied by the customers long after they received the aluminium circles from the assessees.
3. The business of the assessees in regard to the supply of aluminium circles consists merely of converting quantities of aluminium scrap into circles for the benefit of the suppliers of the scrap receiving charges and expenses for such conversion. The assessees neither purchased scrap from their customers nor sold circles to their customers. This is not a case where it can be said that they were buying 'old lamps for new', or that there was a barter by which circles were supplied as against scrap.
4. The definition of sale in the Madras General Sales Tax Act is wider in concept than the term 'sale' as defined in the Sale of Goods Act, 1930. Section 4 of the Sale of Goods Act clearly indicates that payment of price is an essential ingredient to constitute a sale. Under that Act exchange of property for something other than money is not a sale. But if the exchange is made partly for goods and partly for price, the transaction might be one for sale (Aldridge v. Johnson (1857) 7 E. & B. 885, Sheldon v. Cox 3 B. & C. 420, G.J. Dawson (Clapham) Ltd. v. H. & G. Dutfield  2 All E.R. 232). Under the Madras General Sales Tax Act, three ingredients are necessary to constitute a sale: (i) There must be a transfer of property in goods; (ii) the transfer must be in the course of trade or business; and (iii) it must be for valuable consideration. It may be that even a barter or exchange of goods might become a sale under this Act, provided there is transfer of property in the goods and such transfer is in the course of trade or business.
5. In South India Metal Works and Rotting Mills v. State of Madras  11 S.T.C. 507, the assessee collected scrap metal from his customers, melted the scrap, manufactured sheets and rings and gave back to the customers the new sheets and rings. The identity of the new sheets and rings, could not be correlated to and established with the scrap supplied by the customer. The Sales Tax Authorities assessed the assessee to tax estimating the turnover of the transaction at three times the labour charges. The .Division Bench held that there was no purchase of the scrap by the assessee and there was therefore no element of sale when the sheets and rings were handed over to the customer and that what was collected from the customer was in substance and fact the charges for converting the old metal into new sheets and rings and that there was no liability on the part of the assessee to pay sales tax. This decision has direct application to the facts of the present case.
6. We are clearly of opinion that the decision of the taxing authorities and the Tribunal estimating the turnover of Rs. 1,35,355-13-0 in respect of the supply of aluminium circles on the footing that it constituted sale cannot be upheld. It follows that the exemption claimed and allowed by the assessing authority in respect of labour charges amounting to Rs. 44,855-9-9 cannot properly be granted to the assessees as there is no assessment on the transaction of the supply of aluminium circles.
7. The revision petition is allowed and the matter is remitted to the Sales Tax Appellate Tribunal for disposal in the light of the observations contained in this judgment. There will be no order as to costs.