PWD had invited tenders for the construction of godown. Contractor\/appellant was to procure the material and use the same in the construction. However, as\u00a0\u00a0\u00a0\u00a0 per clause (10) of the contract, certain materials of special description were to be supplied by PWD (the employer). The prices of such materials were specified in\u00a0 the tender and were to be deducted from the final bill of the contractor. The PWD was not registered dealer, however the appellant\/contractor was the registered dealer.<\/p>\n
\u00a0<\/p>\n
Whether there was sale and whether the property in the goods in question passed to the appellant or continued to remain with the PWD although the PWD had in\u00a0 the final bill debited the prices of the goods so supplied to the appellant under clause (10) of the contract.<\/p>\n
\u00a0<\/p>\n
The Supreme Court was of the view that in order to be sale taxable to duty, not\u00a0 only the property in the goods should pass from the contractor to the government or the appellant in the impugned case, but there should be an independent contract \u2013 separate and distinct \u2013 apart from mere passing of the property where\u00a0\u00a0\u00a0\u00a0 a party purchases or procurers goods from the government. Mere passing of property from the contractor to government would not suffice. There must be\u00a0 sale of goods. The primary object of the bargain, judged in its entirety, must be viewed. For the purpose of performance of the contract, the contractor was bound\u00a0 to procure materials. In order to ensure that quality materials are procured, the PWD undertook to supply such materials and stores as from time to time required\u00a0 \u00a0by the contractor to be used for the purpose of performing the contract only. The value of such quantity of materials and stores so supplied was specified at a rate and got set off or deducted from any sum due or to become due thereafter to the<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
contractor. The Court was of the view that there was no inherent sale, however a sale inhered from the transaction.<\/p>\n
\u00a0<\/p>\n
By use or consumption of materials in the work of construction,\u00a0 there\u00a0 was passing of the property in the goods to the contractor from the PWD. By appropriation\u00a0\u00a0\u00a0\u00a0 and by the agreement, there was a sale as envisaged in terms of Clause (10) of the contract. Therefore, there was a sale which was liable to tax. The ratio Decidendi: \u201cFor purpose of sales tax there must be a contract for transfer of title to goods but also sale of goods which parties intend to sell for a money consideration\u201d. (CA\u00a0\u00a0\u00a0 No. 340 of 1998 dt. 28-10-1988)<\/p>\n
Editorial<\/em><\/strong>: This decision furnishes some first principles for application to new GST regime, though this must be done cautiously since the statutory framework\u00a0 has now changed. For a valid levy there have to be a supplier and a recipient which have been specifically defined under the GST Law under Sec 2(105) & (93) respectively.<\/p>\n \u201cLawyers will, as a\u00a0 rule,\u00a0 advance\u00a0 quarrels instead of repressing them. Moreover, men take\u00a0 up that profession, not in order to help others\u00a0\u00a0\u00a0 out of their miseries, but to enrich themselves. It\u00a0 is one of the avenues of becoming wealthy and their interest exists in multiplying disputes. It is within my knowledge that they are glad when\u00a0\u00a0 men have disputes.\u201d<\/em><\/p>\n – Mahatma Gandhi\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":" Madya Pradesh General Sales tax Act , 1939
\nS.2(n): Works Contract – Material supplied by the employer – price of the material so supplied and consumed by the contactor deducted from the prices of the material in the final bill of the contractor – Entry Tax payable on the entry of goods into the local area for sale, consumption or use – Supplies are \u201csales\u201d within the meaning of the MP Gen. Sales Tax Act \u2013 Contractor liable to pay entry tax [7(1), M. P. Sthaniya Kshetra Me Mal Ke Pravesh Per Kar Adhiniyam,1976, S. 3(1) , 6(c)]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-13134","post","type-post","status-publish","format-standard","hentry","category-gst-law"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3pQ","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13134","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=13134"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13134\/revisions"}],"predecessor-version":[{"id":13135,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13134\/revisions\/13135"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=13134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=13134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=13134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}