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Judgment
(1) The simple question involved in this writ application is, whether materials used in the retreading of the old tyres brought to the petitioner can be
treated as sale within the meaning of Section 2 Clause (I) of the General Sales Tax Act of 1962, and whether such sales can fall within the
definition of the word ""Turnover"" as defined in Section 2 (n) of the said Act.
(2) The word ""Sale"" is defined as 'any transfer of property or good' for consideration. The other part of the definition is not material.
Turnover"" is aggregate of such sales by a dealer.
Explanation No. 1, under it is material. It is as follows :
The amount for which goods are sold shall in relation to a contract be deemed to be the amount payable to the dealer for carrying out such
contract less the cost of labour"".
Contract"" is defined in Clause (f) of the said section, as including an agreement for fitting out, improvement or repairs of any movable property'*
(3) The petitioner is a dealer in new tyres and tubes, and has a side business, of retreading old tyres brought to him for repairs by different
customers. In the process of such retreading, the petitioner has admittedly to use certain materials like rubber and solution etc and for such repairs
he admittedly charges consolidated bills from the customers without specifying the charges incurred in relation to the materials On the assessment
account of the petitioner for the year 196667 the assessing authority at the appellate, stage being the Deputy Sales Tax Commissioner, by his order
dated 132196Q, has made an order for assessing the sales tax on the materials used by the petitioner in the retreading of the old tyres. In so doing,
he has assessed the value of such materials on the basis of goods imported on form 'C' by the petitioner. He has taken into account the total bills
charged from the customers by the petitioner for retreading of the tyres and from the total amount of such bills, he has deducted the value of the
imported material, which came to Rs. 43,567.45 and treated the same as sale of goods.
(4) The learned counsel Mr. Isher Singh appearing for the petitioners has relied upon a number of authorities to show that no sales tax is assessable
on materials used for the repairs of old article on a lump contract. These authorities are :
9 Sales Tax cases 687 relating to the Motor workshop in Madras.
The other case is 10, Sales Tax cases, page 146 relating to the reloading of tyres in Madras again.
The 3rd case is 22 Sales Tax cases 179 of Bombay High Court.
The materials used by a Tailor in the process of making garments.
The last case is 16 Sales Tax cases, page 240 decided by the Supreme Court in relation to work contract in Andhra Pradesh for redying of
tobacco and packing the same for sale.
(5) In all these cases, it has been held that the materials used for such kinds of work are not independent sales and they cannot be taken into
account for assessment of sales tax.
(6) The learned counsel Mr. Amar Chand appearing for the Respondents has, however, contended that all these cases relate to other States,
where the definition of 'Turnover'' is not similar to the one given in Explanation No. 1 of our Sales Tax Act. But the basic thing to remember is that
the assessee must first be a dealer and then he should sell any goods as such but if in doing some labour work for repairs of old tyers, brought to
the petitioner, some materials are used, they cannot be said to have been sold independently when they are not charged separately from the labour
costs The two are indivisible. The present case is directly covered by an authority of a Division Bench decision of this court, in a writ petition No
101 of 1968, which was decided on 1st Oct. 1969.. The meaning 'Turnover'' and 'Contract' as given in the definitions have been considered in this
case. It was a contract for the construction of a bridge. The materials used in the contract were indivisible from the main contract and therefore, it
was held that the materials used could not be assessed to Sales Tax.
(7) In the instant case also, the materials used in the retreading of old tyres cannot be separated particularly when the bills were consolidated ones,
not at all disclosing therein separately the price of the materials used.
(8) The particulars of goods imported by the petitioner for use in the retreading work cannot be a proper basis. Such goods may be used
otherwise as well than for using for repairs of the tyres. They could have been sold separately and for such sales of course, tax was payable. But as
I have indicated above, the materials used for retreading of old tyres cannot be separately assessed, as there is no provision for assessing sales tax
on the retreading of tyres. Thus the impugned order is bad in law.
(9) The impugned' order is set aside. The petitioner is entitled to a refund of the sales tax in question, if it is already paid. The parties shall bear their
own costs.