Ramaprasada Rao, J.
1. The petitioner is the same in all the three writ petitions. The petitioner is a firm carrying on business as a dealer in cement, diesel oil and petrol at Mandapam in Ramanathapuram District. He is a registered dealer. The petitioner entered into an agreement on 28th October, 1964, with the Industrial Chemicals Limited, a company incorporated under the Indian Companies Act, for the purpose of quarrying the coral limestones from the reefs in a mine for which the Industrial Chemicals Limited obtained a mining lease from the Government. The mine is situate at the fringes of the islands of Talaivi, Valai and Mulli in Ramanathapuram Taluk in Ramanathapuram District. The lease itself is for a period of five years from 10th June, 1964. The consideration recited in the agreement dated 28th October, 1964, is that the petitioner who is characterised as a contractor should be remunerated for such service undertaken by him to quarry the stone from the reefs in the manner specified in the agreement. Inter alia, the agreement provides that the petitioner was to engage all the labour necessary to carry out the quarrying operations; the place and time at which the quarrying is to be done shall be determined by the company, which condition shall be strictly adhered to by the petitioner; the petitioner as contractor shall quarry and transport all acceptable coral lime-stories so quarried and deliver the same at the railheads and load them into the wagons as per the instructions of the company; the quantity of such limestone to be so removed is also fixed under the contract; in consideration of the labour and work done by the petitioner in accordance with the terms set out and other conditions, the company agreed to pay the petitioner at the rate of Rs. 9.25 per cubic metre F.O.R. Mandapam and Rs. 9.90 per cubic metre F.O.R. Ramanathapuram for such limestone accepted by the company. It is also made clear in the contract that in the event of the company requiring the petitioner to deliver such limestones at any other place, the aforesaid rate will be suitably increased or decreased as mutually agreed upon. One other feature of the contract is, no payment will be made to the contractor for materials rejected by the company. The consideration is an all-inclusive one which embraces all expenses, costs and charges of the petitioner as contractor. The payment was to be made against delivery of coral limestones F.O.R. as mentioned above. The contractor also agreed to abide by the rules and regulations regarding quarrying and undertook to indemnify the company against all claims, damages, etc., in the course of carrying the quarrying operations.
2. Pursuant to this contract, the petitioner supplied during the years 1964-65, 1965-66 and 1966-67 various quantities of limestones so quarried under the contract to the company and effected deliveries of the same in accordance with the terms thereof and obtained payments for such agreed service rendered by him. For the year 1964-65 the petitioner, as a registered dealer, was assessed to tax. For the years 1965-66 and 1966-67 the assessment was not completed. On information that the petitioner did have dealings with the company in the manner stated above, the department reopened the assessment for the year 1964-65 under Section 16 of the Madras General Sales Tax Act and issued a notice for the purpose. For the years 1965-66 and 1966-67 notices were issued under Section 12 of the Act on the foot of the very same transactions between the petitioner and the company. Ultimately, the assessing authority was of the view that there was an escapement in the matter of turnover relatable to the transactions which the petitioner had with the company and on this foot the assessments were completed for the years 1964-65, 1965-66 and 1966-67. In and by the said agreement the alleged escaped turnover was brought to tax and the assessments were completed. Orders of assessment in each of the issues as above are the subject-matter of these three writ petitions.
3. At the outset, it should be noted that under the contract, the petitioner is obliged to supply the company such limestones as he would quarry from the mine for which the company had a mining licence. There was no obligation on the part of the petitioner to supply limestone to the company from any other source at all by purchase from outside or from other persons. It transpires that the assessing authority whilst considering the assessment in each of the years under consideration, found that apart from the supplies of limestones made by the petitioner to the company which were quarried from the mine in question, the petitioner did also supply limestones to the company from sources other than the mine entrusted to him by the company for the sole purpose of quarrying and stone won therefrom. In view of this, the assessing authority rightly came to the conclusion that such supplies made de hors the agreement between the parties by the petitioner to the company would be assessable in the sense that they were ordinary supplies of goods for consideration by the petitioner to the company. In each of these writ petitions an observation is made that the petitioner did make such supplies from a source other than the mine entrusted by the company to the petitioner for quarrying. It, therefore, follows that the assessment order in so far as it relates to such supplies made by the petitioner to the company in the course of the financial years in question are assessable since they are to be characterised as sales by a dealer to a person.
4. The contention, however, is that the major transactions which the petitioner had during the assessment years in question are covered by the contract of service referred to above dated 28th October, 1964. On a perusal of the terms of the contract, it is clear that the petitioner undertook to quarry the mine over which the company had the right to operate by virtue of the mining lease obtained by the company from the appropriate authority and such operation, which also led to the transport of the limestone won from the quarry is nothing but a service rendered by a contractor to a principal for consideration. The learned Government Pleader, however, would state that the overall impression gained in this case did not support the contention. I am unable to agree. If the agreement is read as a whole and its terms understood in the real perspective, then it is undeniable that the agreement reflects only a contract of service under which the petitioner has undertaken to quarry, win, transport and deliver limestone quarried to the company, at the places or to the persons nominated by the company. In these circumstances, the contract in question cannot be said to project a case where the dealings between the contractor and the company are equated to sales of goods by the petitioner to the said company. In the absence of sales there is no sales tax.
5. In so far as the dealings between the petitioner and the company relate and are attributable to the contract referred to above, they cannot be included in the assessable turnover of the petitioner. They have to be, therefore, excluded; but as regards the supply of limestone by the petitioner to the company from a source other than the mine which is the subject-matter of the agreement, then it undoubtedly reflects a relationship of seller and buyer. But these transactions have to be separated from the orders impugned and dealt with accordingly. That cannot be undertaken by this Court exercising jurisdiction under Article 226 of the Constitution.
6. As in the main, the petitioner succeeds in his contention, that the major portion of the dealings which are referred to in the orders impugned cannot be included in the assessable turnover, as in fact lump sums are received by the petitioner as consideration for the execution of the contract of labour, this has to be separated and on such separation they have to be excluded from the taxable turnover. As regards the other part of the turnover the matter has to be still investigated by the assessing authority, whether they relate to supply of stone from the mine or not.
7. In this light, the rule nisi is made absolute subject however to this direction that the matters will be remitted back to the assessing authority for a rescrutiny of the subject-matter and the assessable turnover determined in accordance with law and in the light of this judgment. The writ petitions are allowed. There will be no order as to costs.