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Deputy Commissioner of Commercial Taxes, Tiruchirappalli Division Vs. D. Varadaraja Padayachi - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case Nos. 175 to 179 of 1968 (Revision Nos. 113 to 117 of 1968)
Judge
Reported in[1973]32STC150(Mad)
AppellantDeputy Commissioner of Commercial Taxes, Tiruchirappalli Division
RespondentD. Varadaraja Padayachi
Appellant AdvocateK. Venkataswami, First Assistant Government Pleader (Tax 1)
Respondent AdvocateK. Srinivasan and ;K.C. Rajappa, Advs.
DispositionPetition allowed
Cases ReferredMuthurma Reddiar v. State of Madras
Excerpt:
- .....specification. the question is whether, under the terms of the contract, the transaction of supply of pebbles to the corporation will amount to a sale. in muthurama reddiar v. state of madras [1968] 22 s.t.c. 174, a contract similar to the one in the present case came up for consideration and this court took the view that the transaction of supply of pebbles under the contract amounted to a sale. but the learned counsel for the respondent contends that the above decision requires reconsideration, in view of the subsequent decision of the supreme court in commissioner of sales tax v. purshottam premji [1970] 26 s.t.c. 38. what is contended by the learned counsel is that the main reason for holding the transaction of supply of pebbles to be a sale in muthurama reddiar v. state of.....
Judgment:

Ramanujam, J.

1. The common question that arises in all the above cases is whether the supply of pebbles by the respondent to the Neyveli Lignite Corporation during the assessment years in question amounts to a sale or whether it partakes the character of works contract. In these cases, the respondent had entered into an agreement with the Neyveli Lignite Corporation to procure pebbles from certain portions of the Government land, which were taken on lease by the Neyveli Lignite Corporation and supply them to the corporation. The said agreement provided that the royalty payable to the Government for the collection of pebbles has to be borne by the respondent, that the pebbles to be supplied to the corporation should be of a particular specification and that the corporation has got right to reject the pebbles, if they are not of the required specification. The question is whether, under the terms of the contract, the transaction of supply of pebbles to the corporation will amount to a sale. In Muthurama Reddiar v. State of Madras [1968] 22 S.T.C. 174, a contract similar to the one in the present case came up for consideration and this court took the view that the transaction of supply of pebbles under the contract amounted to a sale. But the learned counsel for the respondent contends that the above decision requires reconsideration, in view of the subsequent decision of the Supreme Court in Commissioner of Sales Tax v. Purshottam Premji [1970] 26 S.T.C. 38. What is contended by the learned counsel is that the main reason for holding the transaction of supply of pebbles to be a sale in Muthurama Reddiar v. State of Madras [1968] 22 S.T.C.174 is that the assessee in that case was required to pay the seigniorage fee, which the corporation is liable to pay to the Government and that the said reason is no longer tenable in view of the said decision of the Supreme Court. In Commissioner of Sales Tax v. Purshottam Premji [1970] 26 S.T.C. 38, under a contract with the railway, the assessee was to quarry stones from quarries belonging to the railway, break the stones into pieces and convert them into ballast of specified sizes and supply them to the railway administration at specified rates. The said contract provided that the seigniorage fee payable to the Government in respect of quarrying should be paid by the assessee. In considering the question whether the supply of ballast prepared from the stones quarried from the quarries belonging to the railway would amount to a sale, their Lordships of the Supreme Court expressed the view that the payment of seigniorage fee by itself would not be sufficient to make the assessee owner of the ballast, as the same always continued to be the property of the railway. We are not able to construe that decision as laying down that the payment of seigniorage fee will not be of any consequence under all circumstances. In that case, as the land belonged to the railway and the quarrying was done in the railway land, the payment of seigniorage fee to the Government was treated as inconsequential because such a payment will not make the property, which was in the railway, pass on to the assessee. Therefore, we are not inclined to agree with the learned counsel for the respondent that the decision of this court in Muthurma Reddiar v. State of Madras [1968] 22 S.T.C. 174 requires reconsideration. We are of the opinion that the principle laid down in that case still holds good and, following the same, the tax cases are allowed. No costs.


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