1. This revision is against the order passed by the Tribunal holding that the assessee is liable to pay sales tax on the disputed turnover of Rs. 46,741 - 40 representing the value of brass sheets and rings supplied to its customers for the assessment year 1957-58.
2. The assessee is a firm carrying on the business of manufacture and sale of brass sheets and circles at Madras. For the year 1957-58 the assessee returned a gross turnover of Rs. 36,32,087-83 and a net turnover of Rs. 33,08,111-69. The Commercial Tax Officer, Assessment II, North Madras, determined the net turnover at Rs. 33,69,834-84. In determining the taxable turnover of the assessee, the Commercial Tax Officer accepted the contention of the assessee that the manufacturing charges realised by it on the order placed by third parties for conversion of a particular metal supplied by them into sheets of the same metal are not to be included in the taxable turnover. But a scrutiny of the conversion ledger maintained by the assessee disclosed that it received copper scrap from customers for being converted into brass sheets and for the difference in price between the copper and brass scrap, credit has been allowed to the customers. The Commercial Tax Officer therefore held that these transactions constituted sales taxable under the provisions of the Act.
3. Aggrieved by this order the assessee preferred an appeal to the Appellate Assistant Commissioner of Commercial Taxes, Madras II, who agreed with the view taken by the Commercial Tax Officer that there are really two transactions, namely, when the assessee receives the copper scrap from its customers and when the assessee sends brass sheets and rings. He also held that the transactions are sales liable to be assessed under the Act and confirmed the order of the Commercial Tax Officer.
4. The assessee again filed an appeal before the Sales Tax Appellate Tribunal. Before the Tribunal the assessee filed a statement showing the name of the party sending copper scrap, date of receipt of the copper scrap, quantity received for conversion into brass sheets, quantity of despatched goods and date of credit note and amount. The first transaction referred to in that statement gives the following details. One Margabhandu Iyer of Vellore sent copper scrap on 1st May, 1957, which were received by the assessee on 11th May, 1957. The quantity received is mentioned as 560 lbs. The assessee despatched 511 lbs. of brass sheets on 18th May, 1957, and passed a credit note dated 18th May, 1957, for Rs. 190. In the statement filed by the assessee other transactions are also entered similarly. The Tribunal held that the transaction of Margabhandu Iyer indicated that the assessee purchased copper scrap and sold brass sheets and rings. The Tribunal was of the view that the transactions above referred to would come under the definition of 'sale' in Section 2(h) read with Rule 17 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. In the end the Tribunal dismissed the appeal. It is against this order of the Tribunal that the assessee has now preferred the present revision.
5. It is necessary to give some more facts for a proper disposal of the revision. The assessee is a Corporation having its factories at Mettur Dam, Salem District and Tiruvottiyur High Road, Madras. It has depots at Mint Street, Madras, and in mofussil places at Shevapet, Salem and Coimbatore. It is carrying on business in the manufacture and sale of brass sheets and circles etc., at Madras. In the course of its business, it purchases copper scrap, melts them, rolls them into sheets and circles of particular dimensions and sells them. It also undertakes to manufacture sheets for third parties for wages utilising the scrap supplied by them. On some occasions the customers supply the assessee with copper scrap for being converted into brass sheets. But whenever the assessee-firm supplies brass sheets for copper scrap, it mixes 40 per cent, mine to the copper scrap given by the customers and prepares brass sheets as per specification. Since copper is very much costlier than brass, the assessee passes a credit note for the excess value to its customers after adjusting the manufacturing costs. It is on these facts we have to consider whether only a manufacturing process was involved in the supply of brass sheets for copper scrap received from customers, or whether the assessee purchased copper scrap from customers and sold brass sheets to them.
6. Learned counsel for the petitioners contended before us that there was no element of sale in these transactions, that there is no agreement between the parties to purchase and sell goods for money consideration and that in any event the transaction may amount to an exchange but not to sale or purchase as contemplated under the Madras General Sales Tax Act. Learned counsel further contended that the present case is really governed by the principle laid down in South India Metal Works and Rolling Mills v. State of Madras  11 S.T.C.507 where the assessee received scrap metal from his customers, melted the scrap, manufactured sheets and rings and gave back to the customers the new sheets and rings. It was held that there was no element of sale either when the assessee took over the scrap for the specific purpose of melting and converting into sheets and rings or when there was delivery of the finished product, i.e., sheets and rings. The learned counsel also relied on the decision in Raju Chettiar and Brothers v. Stale of Madras  6 S.T.C. 131 plaintiff-firm carrying on business as jewellers and merchants in gold and silver bullion, supplied from time to time silver to manufacturers of silverware and silver jewellery and debited the accounts of the manufacturers with the weight of such silver in tolas. When the finished articles were received from the manufacturers, they were credited with the weight of the finished articles. The manufacturers were also credited with the wages or making charges when the finished articles were received and were debited when they were paid in cash. Periodically balances were struck in respect of silver but only in weight. It was held that 'there were no sales of silver bullion by the plaintiff to the manufacturers which were assessable to sales tax and the manufacturers were really in the position of bailees.' The principles laid down in both the above cases will not apply to the instant case, because the assessee receives copper scrap and returns brass sheets. It supplies a different metal, which is an alloy of mine and copper. While supplying brass sheets, the assessee also gives a credit note to its customers for the difference in values between the two metals.
7. While considering the nature of the transactions in this case, it is necessary to refer to the definition of 'sale' given in Section 2(h) of the Madras General Sales Tax Act, 1939, which is as follows:-
'Sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the Gourse of trade or business for cash or for deferred payment or other valuable consideration....
8. In Jayarama Chettiar, In re  1 S.T.C.168, Govinda Menon, J., while considering the meaning of 'sale' given in the Act observed at page 171:.in order to bring the transaction within the ambit of them term as defined in the Madras General Sales Tax Act it need not necessarily be that money alone should be the consideration. Every sale under the Sale of Goods Act is certainly a sale under the General Sales Tax Act, but every sale under the General Sales Tax Act will not come within the definition of the term in the Sale of Goods Act, e.g., if a person transfers the property in goods to another in the course of trade or business for cash or for deferred payment or other valuable consideration, it is a 'sale' within Madras Act IX of 1939, but unless there is money consideration for the sale, the transaction will not amount to a sale under Act III of 1930.
9. Lord Blackburn in his Introduction to the First Edition of his 'Treatise on the effect of the Contract of Sales' says at page viii :
A contract concerning the sale of goods may be defined to be a mutual agreement between the owner of goods and another, that the property in the goods shall for some price or consideration be transferred to the other, at such a time and in such a manner as is then agreed. If the consideration to be given for the goods is not money, it might perhaps, in popular language, rather be called barter than sale, but the legal effect is the same in both cases.
10. In the South Australian Insurance Co. v. Randell L.R. 3P.C. App. Cas. 101, Napier, J., observed at page 108 :
The law seems to be concisely and accurately stated by Sir William Jones in the passages cited by Mr. Mellish from his treatise on Bailments, pp. 64 and 102 (3rd Edn). Wherever there is a delivery of property on a contract for an equivalent in money or some other valuable commodity, and not for the return of his identical subject matter in its original or an altered form, this is a transfer of property for value-it is a sale and not a bailment.
11. Chancellor Kent in his Commentaries, Vol. II, p. 761 (11th Edn.), where he refers to the case of Seymour v. Brown  Johns. (Amr.) Rep.44 of which he disapproves in common with Mr. Justice Story, adopts the test, 'whether the identical subject matter was to be restored either as it stood or in an altered form ; or whether a different thing was to be given for it as an equivalent; for in the latter case it was a sale, and not a bailment.'
12. In Halsbury's Laws of England, Vol. 34, 3rd Edn., there is the following passage at page 6 :
The law relating to contracts of exchange or barter is undeveloped, but the courts seem inclined to follow the maxim of the civil law, permutatio vicina est emptioni, and to deal with such contracts as analogous to contracts of sale. It is clear, however, that statutes relating to sale would have no application to transactions by way of barter.
13. In Benjamin on Sale, Eighth Edition, some illustrations are given in page 3 to bring out the distinction between sale and barter. The learned author says :
Thus in Aldridge v. Johnson 7 E. & B. 885 the contract was for the transfer of 52 bullocks, valued at 6 each, against 100 quarters of barley valued at 2 a quarter, the difference to be paid in cash and this was held to be a contract of sale. It is also a contract of sale where the buyer has the option of delivering goods in lieu of the payment of the agreed money price. A very common form of contract in these days is the purchase of a motor car at an agreed price of which part is to be satisfied by the delivery of another car by the purchaser : G.J. Dawson (Clapham) Ltd. v. H. and G. Dutfield  2 All E.R. 232
14. We have thus got both textual authorities and rulings to come to the conclusion that the transactions in dispute would amount to sales as defined in the Act. We also find from the letter dated 18th May, 1957, written by Margabhandu Iyer to the assessee asking the assessee to give credit to him for the difference in value between the metals while supplying the brass sheets to him. Evidently each party should have contemplated two independent transactions ; Margabhandu Iyer when sending the copper scrap should have treated it as a sale to the assessee and equally when the assessee supplied brass sheets he should have treated it as a sale of brass sheets to Margabhandu Iyer. In this connection we may usefully refer to the observations of Sadasiva Ayyar, J., in Ariyaputhira v. Muthukumaraswami I.L.R.  Mad. 423
If two persons mutually exchange two things (neither of which is 'money only') it may be an exchange or barter and not a sale. But if they mutually fix the values of the exchanged things in current coin and exchange them as of equal value, I think they might be held to effect 'sales' and to pay 'prices' and not merely to effect an exchange or barter.
15. It is clear from the facts of this case that the disputed turnover relates to sale of brass sheets by the assessee to its customers. During the course of the transactions there is an element of sale both at the time when the assessee receives copper scrap from the customers and when the assessee returns brass sheets to them, with only the latter of which we are here concerned.
16. The assessee's counsel further contended that the transactions should be treated as works contracts and relied on the decision in State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd. (1958) 9 S.T.C. 353 We do not think it necessary to discuss it as the principles laid down in that case will not, in our opinion, be applicable to the facts of this case.
17. We therefore agree with the conclusion arrived at by the Tribunal that the disputed transactions are sales liable to be assessed under the Act. The revision is accordingly dismissed with costs. (Court fee Rs. 100).