C. B. GOSAIN versus STATE OF ORISSA

Citation: [1964] 2 S.C.R. 879 · Decided: 05-04-1963 · Supreme Court of India · Bench: S.K. DAS · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

2 S.C,R.' 
SUPREME COURT REPORTS 
fl79 
C. B. GOSAIN 
v. 
STATE OF ORISSA 
(S.K. Das, A.K. SARKAR and M. HrnAYATULLAH JJ.) 
· Bales 
Tax-Contract for Manufacture and· supply of 
bricks-Brick. manufactured and supplied according to contract 
and payment received-Contractor whether .liable to sales tax on 
brick• •upplied-Transfer of property in the bricks-What consti-
tut~• sal<-:-Orissa Sales Tax Act, 1947 (Ori.,a U of 1947). 
The appellant manufactured and supplied a large quantity 
of bricks to a company under a contract according to the 
specifications contained in it. The 
contract provided thac 
land would. be given by the company fo the appellant free for 
providing earth for the manufacture of the bricks. 
Held that ·the supplies -constituted 
a sale of goods and 
were liable to be subjected to sales tax. 
The proper interpre-
tation of the contract w"s that the earth supplied by the 
company to the appellan! became the latter's property and that 
the bricks that the appellant manufactured were also his 
property and these bfick< were what ho sold to the company 
under the contract and the cop.tract was 
not, therefore, one 
_only for labour supplied or wprk done. 
P. A. Raju Chettiar v. The State of Madra•, [19.55] 
fiS. T. C. 131, distinguished. 
Nor \Vas the contract one of work done and materials 
found. 
Whether a contract is one of work done and materials 
found or orie for sale of goods depr-nds on .its essence. 
If not 
of its essence that a cha~tel should be produced and transferred 
~s a chattel, thr.n it may be a contract for work done and 
materials found and not a contract for sale of goods. 
The 
contracc in this ca:se n9 douht required the appellant to b~stow 
a 'certain amount of skill and lab'lur in 
the manufacture of 
........, 
b.ricks but the object of tht:: contract 
nevertheless 
remained· 
the delivery of brick!\ manufactured, as chattel. 
, 
P. A. Raju Oheitiar v. The Stale of Madra•, [1955) 6 S.T. 
C .. }31, Olay v. 
Yates (1856) 
I H & N. 73, Robin.•on v. 
Graves, (1935] ·I K. B. 579, Grafton v. Armitage, [1845] 
1963 
April 5 
1969 
C. B. GOJ•bi 
•• 
Stal1 •/ Oti.sS41 
Sonar J. 
.880 
SUPREME COURT REPORTS [1964] VOL. 
2 C. B.336 and J. Marul (Furriera) Lid. v. Tapper, (1953) I 
All. E. R. 15, referred to. 
CIVIL APPELLATEJURISDICTION : Civil Appeals 
Nos. 41 to 49 of 1962. 
Appeals by special leave from the judgment 
and order dated July 23, 1959, of the Orissa High 
Court in 0. J.C. No. 33 of 1959. 
A. Ranganadham Chetty, B. D. Dhawan, S. K. 
Mehta and K. L, Mehta, for the appellant. 
C. K. Daphtary, Attorney-General for India, 
R. Ganapathy Iyer and R. N. Sachlhey, for tbe 
respondents. 
1963. 
April 5. 
The Judgment of the Court 
Ytas delivered by 
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 ' 
consideration.'' The ·point at ·issue is whether the 
contract. was for a transfer of property -in the bricks 
from. the ·appellant to the Company for a consi-
deration; 
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<>

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