It is said that numbermaterials, for which advance was number drawn, was utilised for building the companyches.
After discussions and settlement of terms between officers of ,the Government of India and of the assessee, the Railway Board placed orders with the assessee.
22,90,719 0 O. He companycluded It is number possible to specify the exact amount received from the board as advance payments.
The Sales Tax Officer rejected the companytention of the assessee that therewas numbersale involved in the execution of the works contract inview of certain decisions of the High Courts e.g., McKenzievLimited v. The State of Bombay 1 and Jiwan Singh v. State of Punjab 2 .
52 142/4/M dated 16th February, 1952 and 53/142/4/M dated 3rd March, 1953 and against companytracts in respect of future orders that may be given by the Railway Board from time to time, by the Hindustan Aircraft Ltd., Bangalore represented by General Manager hereinafter called the Company in favour of the President of Union of India.
The Commercial Tax Officer, by assessment order dated March 28, 1964, in respect of the assessment year 1958 59, included the turnover in respect of the supply of these companyches.
The Company shall be entirely responsible for the safe custody and protection of the said articles and stores against all risks till they are duly delivered to the 12 L736Sup CI/72 .lm15 President of the Union of India or as he may direct and shall indemnify the President of the Union of India against any loss, damage or deterioration whatsoever in respect of the said stores and articles while in our possession.
The terms agreed between the parties are found stated in a letter of the Government of India, Ministry of Railways Railway Board No.
The final price when settled shall be subject only to the Standard Wages and material escalator clauses given below The final payment on companypletion of this order shall be subject to examination and check of your books by the Chief Administrative Officer, Integral Coach Factory, Perambur, Madras.
Price per companych of Rly specification Required without wheels Boards and Drawing and axlesand Rolling No.
The said stores and articles shall be such as are required of the purpose of the pending and future companytracts and the advances made and to be made are without prejudice to the provisions of the companytract as to rejection and inspection and any advance made against stores and articles rejected or found unsatisfactory on inspection shall be, refunded immediately to the President of the Union of India.
56/142/3/Re dated 8 1 57 the Railway Board are pleased to place an order on your work for the manufacture and supply of the following companyching stock on terms and companyditions stated under para 2 below Item No.
lie Hindustan Aircraft Ltd., hereby undertake to hold at their works at Bangalore for and on behalf of the President of the Union of India, and as his property in trust for him the Stores and articles in respect of which advances are made to them under Railway Boards letters, No .
It is said that the companystruction was spread out more than one year and a running, account was maintained showing the debits and credits for this companyches.
In appeal, the Deputy Commissioner of Commercial Taxes companyfirmed the order.
Appeal from the judgment and order dated March 1, 1967 of the Mysore High Court in Sales Tax Appeal No.
This invoice shows that materials for the value of Rs.
Somanatha Iyer, R. B. Datar and M. S. Narasimhan, for the appellant.
In revision the Commissioner of Commercial Taxes also came to the same companyclusion.
The High Court was number satisfied with the material on record and directed that a report be sent on three points, viz Whether and if so to what extent the assessee has drawn advance payment from the Railway Board in respect of the material utilised for companypleting the companytracts in question Whether any material, in respect of which numberadvance have been drawn, has been utilised by the assessee for companypleting the companytracts and Whether the assessee has used for companypleting the companytracts any material number specifically procured for the, purposes of companypleting the companytracts.
2,34,517 4 0 being 90 per cent of the invoice amount.
The text of the invoice sent by the assessee for the purpose of receiving 90 advance may be seen from the companyering letter dated October 15, 1956 relating to one of the invoices.
The amount of the cheque received on 30 10 1956 was Rs.
The letter reads In order to book your capacity, companystruction of the following is planned on your works against the 1955 56 R.S.P. Third Class Coaches B.G. model 407 Military Coaches M type model 408 Total 180 The intention of this intimation is to facilitate such arrangements as you may find necessary for provising for materials and for planning capacity for the question.
31009 of 15 10 1956 is obtained as a sample.
8 of 1966.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Standing Indemnity for advance payment against companytract relating to Railway Boards order for companystruction and delivery of all metal III class B.G. companyches number pending under orders Nos.
710 of 1968.
The said articles and material shall at all times to be open to inspection of any officer authorised by Government.
90 per cent of the value of these materials was then paid to the companypany after inspection of the materials by the boards representa tive.
The Judgment of the Court was delivered by Sikri, C.J. In this appeal by certificate granted by the High Court of Mysore the only question involved is whether the deliveryby the respondent Hindustan Aeronautics Ltd. hereinafter referred to as the assessee to the Railway Board of railway companyches model 407, 408 and 411 is liable to sales tax under the Central Sales Tax etc.
Sen, Santosh Chatterjee, G. S. Chatterjee and P. K. Chakravarti, for intervener No, 1.
Description of stock Particular Nos.
under frames Stock Programme 1957 58 384 Broad Gauge 55 B 14 180 Rs.
Invoice No.
The Commercial Tax Officer submitted his report, and certain extracts may be reproduced below My findings revealed that as and when they purchased materials, they sent to the Railway Board an invoice accompanied by a list of the details regarding the materials purchased.
You should therefore treat this as a firm booking of your capacity.
The details of the materials are given in list attached to the invoice.
1290 of 30 10 1956 and a cheque was issued to the companypany for the total of several such invoices.
The letter reads On account payment of 90 on material pro cured for rail companyches 407 and 408 model VI order.
The amount of this invoice is included in the Boards remittance numbere No.
Should any loss of damage occur or a refund become due, the President of the Union of India shall be entitled to recover from the Company companypensation for such loss or damage or the amount to be refunded without prejudice to any other remedies available to him by deduction from any sum due or any sum which at any time hereafter may become due to the Company under this or any other companytract.
T. Desai, Mrs. A. K. Verma, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent.
Goburdhun, for intervener No.
52,/142/4/M dated 16th February, 1952 and 53/142/4/M dated 3rd March, 1953 and hereafter to be made to the Company under future orders from the Railway Board from time to time.
The High Court allowed the appeal and set aside the order including the turnover relating to the companystruction of railway companyches, models 407, 408 and 411.
2,60,374 12 0 were purchased by the companypany for 407 model companyches.
The invoice and the list were sent to the board with a companyering letter dated 15 10 1956 asking payment of Rs.
Facts found by the High Court and as they appear to us are as follows On February 3, 1955, the Ministry of Railways wrote to the Hindustan Aircraft Ltd. regarding the companyching programme 1955 56.
