Labour contract for earth removal was not a sale of goods; sales tax and dealer liability could not be sustained.

A contract for removing Government-owned earth and repairing an embankment was held not to involve a sale of goods for sales tax purposes. The court reasoned that liability under the Orissa Sales Tax Act required transfer of property in goods for a price, but the arrangement was only for labour and execution of work. The earth remained Government property throughout, there was no separate bargain or payment for earth as goods, and the use of tools and appliances was merely incidental. The amount received was treated as remuneration for labour, so the contractor was not a dealer and the assessment and penalty could not stand.

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Issues: Whether the contractor's earth-removal and embankment-repair contract involved a sale of goods so as to attract sales tax and render him a dealer under the Orissa Sales Tax Act.

Analysis: Liability under the Act depended on there being a sale of goods, involving transfer of property in goods for price. The contract in question was for supply of labour in removing Government-owned earth and placing it on the embankment. The earth remained Government property throughout, there was no separate bargain or payment for the earth as goods, and the use of labour, tools, and appliances was only incidental to the execution of the work. In the absence of any stipulation showing a separate sale of earth or any transfer of property in goods, the amount received represented remuneration for labour and not sale price.

Conclusion: The transaction did not amount to a sale of goods, the contractor was not a dealer for this purpose, and the assessment and penalty were unsustainable.

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