M. Ponnuswamy Udayar vs The Government of Madras

Veeraswami, J.—The terms of the contracts are more or less similar to those in Tax Case (Appeal) No. 196 of 1966 (Venugopal Naidu v. The State of Madras) at page 177 supra. Learned Special Government Pleader argues, on the basis of Chandra Bhan Gosain v. State of Orissa [1963] 14 S.T.C. 766 that the transactions are sales of goods. We are unable to agree. Chandra Bhan Gosain v. State of Orissa [1963] 14 S.T.C. 766 has no application. There, clearly the Supreme Court held that the earth, out of which the bricks were to be made and supplied, was given to the assessee free of cost, which meant that there was transfer of property in the earth to the assessee. That is not the case here. It cannot be said, having regard to the terms of the contracts, that the property in the metal quarried by the assessee passed to him at any stage. The transactions were, therefore, purely of work and labour. Following the ratio of our decision in Tax Case (Appeal) No. 196 of 1966 [1963] 14 S.T.C. 766, we allow these tax appeals. No costs.