C. B. Gosain v. State of Orissa

Sonar J. SARKAR J .-The appellant had entered into a

contract with a company called the Hindustfian Steel Private Ltd., for the manufacture and supply of bricks at Rourkela in Orissa. Large quantiues of bricks were manufactured and supplied under the contract and the appellant received payment for them. The respondent State assessed the appellant to sales tax under the Orissa Sales Tax Act, 194 7 on these supplies on the basis that they were sales. The appellant contended that the contract was only for labour or for work done and material found, and that there was really no sale of any goods on which the tax could be levied. He moved the High Court of Orissa for a write of mandam'U8 directing the res-pondent State not to assess or levy tbe tax. The application was rejected in limine by the High Court. The appeltant has now come to this Court in further appeal.

Now a sale which can be taxed under the Act has been defined as "Any transfer of property in

2 s.e.R .• SUPREME COURT' REPORTS 881 ·'

goods· for cash or, deferred· payment·or other valuable ' 1963 consideration.'' The ·point at ·issue is whether the C. B. .. Gw•in contract. was for a transfer of property -in the bricks Stole of Orisso from. the ·appellant to the Company for a consi-deration; SaTkar I.

It is said that the bricks .were made out of.earth· belonging to the Company and, .therefore, the bricks'

had all ·along been its property and there could be 'no transfer 0f property· in them to it. This conten- · tion is founded on a clause in the contract which says, "land will be given free" and which was apparently intended to make the earth available to the appellant · for making.,the bricks.

We are-unable. to agree that this clause proved that.the earth. all .along continued to belong t<> the Company .. It . seems . to us that when the clause said, "land will be g.iven'', it meant that the· property in• the earth to be dug out for making the ·bricks would be transfered to. the appellant. It may be presumed that it was undersood that in quoting his rate., for the ·bricks, the appellant would take into account· the free supply of earth for making the bricks. · Again what was supplied to the Company by the appellant was not the earth which he got from it but bricks, which, we think, are something entirely different. It could not have been intended that the property in· the earth would continue in the Company in spite of its conversion into such a different thing as· bricks. Further we find that the contract provided that the bricks would remain at the appellant's risk till delivery to the· Company. Now, obviously bricks could not remain at the appellant's risk unless !hey were his property.

Another clause provided that the appellant would not be able to. sell the bricks to other parties without the permission of the Company. Apperantlv, it wa~ contemplated that without such a provision the appellant could have sold the bricks to ·others .. , 1963 Now he could not sell tlie bricks at all unless they

belonged to him. Then we find that in the tender G•s•in which the appellant submitted and the acceptance Sl•'I •risstJ of which made the contract, he stated, "l/we hereby

SmUr 1. tender for the supply to the Hindusthan Steel Private

Ltd. of the materials described in the undermen-tioned memorandum". The memorandum described the materials as bricks, and also stated the "Quanti-ties to be delivered" and the "Rate at which materiali are to be supplied". All these provisions plainly show that the contract was for sale of bricks. If it were so, the property in the bricks must have been in the appellant and passed from him to the Company. The same conclusion follows from another provision in the contract which states that if bricks are stacked in a specified manner "'then 7;)% of the value of the bricks at kiln site will be measured and paid....... The balance of 25 % ... .. . will be paid finally when all the bricks have been delivered... . . Only full bricks as finally delivered ...... will be taken into account. ..... "

Before we leave this part of the case we have to notice the decision in P.A. Raju Chettiar v. 1'he State of Madras ('}, to which learned counsel for the appellant referred. We do not think however that 1t is of any assistance. That was a case in which a merchant had delivered silver to workmen for manufacture of utensils and the workmen returned the manufactured utensils. It was held that there was no sale of the silver by the merchant to the workmen. It was so held because the weight of the silver had been debited to the workmen on deliverv and credited to them on the manufactured goods being made over to the merchant and the price of the silver had never been debited or credited to them. Furthermore, the workmen had been paid only the charges for their labour. On these facts it could not be said that the property in the silver had ever. passed to the workmen. The facts in the

(I) [19~] 6 S, T, C, 131,

present case are different and for the reasons earlier . 1963 mentioned, justify the view . that here there was a C. B. ... Gorain transfer of the property in the earth to the appellant ef by the Company. 81411 OrislA S.Ur Learned counsel stressed · the fact that the contract now here used the word sale in connection with the supply of the bricks, in support of his argument that there was no sale. But it is not necessary that to constitute a sale, the word 'sale'

has to ·be 'used. We have said enough to show that under the contract there was a transfer of property in the bricks for consideration and, therefore, a sale notwithstanding that the word 'sale' was not.

used.

The other argument of learned counsel for the appellant was that even if the earth of which the bricks had to be made be taken to have been trans-ferred. under the contract to the appellant, this was not a contract for sale of goods but one of work done and materials found. A contract of this kind is illustrated by the case of 01.ayv.

Yates (1). There tho contract was to print a book, the printer to find the materials including the paper.

Robinson v. Graves ('), was also referred to. There a person had commissioned an artist to paint the . portrait of a lady and it was held that the contract

was not for sale of goods though the artist had to sup.ply the paint and canvas and had to deliver the completed picture. In these cases in arriving at the view that the contract was not for sale of goods the test that was applied is, what was the essence of the ·contract ? Was it the intention of the parties in making the contract that a chattel should be produced and transferred as a chattel for a consi-deration ? This test has now been accepted as of general application to decide whether a contract was for sale of goods or for labour supplied and materials found: see Benjamin on Sales (8th ed.) p. 161 ".nd Halsbury's Laws of England (3rd ed.) vol. 34, I-· 6.

\I) (1856) I H & N 751 (2) (1935) I K1B, li7~

884·;•SUPREMECOURT.REPORTS [1964] vot. ... It is true. that the .test. will :often .. be found to Goslin be. difficult .of application. But. no such difficulty ef arises· in the present c-ise. ,, Here the intention of. Stot O.i#a

the parties in making the contract . clr.arly was • Sor/:w·J, that the Company would obtain delivery of the bricks

to be made. by the appellant; it was a contract for the.transfer of chattels qua chattels. The essence of the contract was the delivery of the bricks, though no doubt they had to be manufactured to a ctrtain specification. It would be a0surd .to .suggrst that the essence. of the contract was the work of manu· facture and the delivery of the bricks was merely ancillary to the work of manufacture, in the same way as the delivery of the paint and the canvas were held to be ancillary to the contract to paint the portrait in Robi;1son v. Graves(').

The fact that under the contract the bricks had to be manufactured according to certain specifi-cations, and; therefore, the appellant had to bestow a certain amount of skill and labour in the manufacture of the bricks, does not affect the question. That was not the essence of the contract. The object or. the contract nonetheless remained the delivery of bricks. It has never been doubted that "the claim of a tailor or a sho~maker is for the price of goods when delivered, and not for the work or labour bestowed by him in the fabrica-tion of them" : see Gmfton v. Armit1Jge (') and J. Marcel (Furriers) l.trl. v. T"ppcr ('). The present case, therefore, must a fMtori be one of sale of coods.

It remains now to notice a preliminary objec-tion to this appeal raised by the respondent. It was said that before the High Court was moved under Art. 226 for the writ, the appellant had filed appeals against the orders of assessment to the Sales Tax Appellate Tribunal. These appeals failed and the appellant's application for an order on the Tribunal (l) (!935) t K.B 579. (2) (1845)·2 C.B. 356.

(3) (1953) I All. E.R. 15.

to refer to the High Court the question of law raised in this appeal was alsc1 rejected by the High Court. C. B. Gosain It is, therefore, said that this appeal is concluded by •• the order of the High Court last mentioned. But it St.if!!o/ Orissa appears that this Court had granted leave to appeal 8rJrkt1r J, from the High Court's order refusing to issue the writ before the appeal to the tribunal had been dismissed.

The appellant could have appealed from the High Court's order refusing to direct a reference of the question but he chose to prosecute the appeal against the order in the petition for the writ which wou Id have given him the same relief. Either remedy was open to him and neither can be said in the circums-tances to be barred by the other.

The appeal however fails on the merits and it is dismissed with costs.

Appeal dismissed.

CHANDER BHAN GOSAIN 196J

v. A;ril

ST ATE OF ORISSA & ORS.

(S.K. DAS, A.K. SARKAR and M. HrnAYATULLAHJJ.)

Buprtm• Court Practict-Appwl-Court Fee-One petition fika under Art. 226 to challang• many assessmtnl oraera-Appeal again1t one order of High Court-Court Jee payahlt.

This appeal was against the order of the Deputy Registrar directing the present case to be registered as nine appeals and requiring the appellant to pay nine sets of court fees. The case originated out of one petition under Art. 226 of the Constition challenging the validity of various assessment orders.

The High Court passed one order on the petition and one appeal was filed in this Court.