Real nature of contract test confirms supply and sale transaction, making quarrying exemption inapplicable.

The contract had to be read as a whole to determine its real character, and the court treated the quarrying directions as incidental safeguards for quality and source rather than the substance of the bargain. Because the tender required the assessee to produce and deliver specified materials at fixed unit rates at predetermined spots, and remuneration was payable only on supply, the agreement was characterised as a contract of sale and supply, not a works or quarrying contract. The exemption notification for quarrying contracts was therefore inapplicable because it covered a different class of transactions. The revision petition failed and the assessment was sustained.

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Issues: Whether the agreement was, in substance, a contract for sale and supply of materials or a works contract for quarrying and labour, and whether the exemption notification for quarrying contracts applied.

Analysis: The contract was construed as a whole. The tender documents required the assessee to produce and deliver specified materials at fixed rates per unit at predetermined spots, and the quarrying directions were treated as incidental safeguards as to quality and source rather than as the substance of the bargain. The payment structure showed that the assessee was entitled to remuneration only on supply, which pointed to a sale transaction rather than a labour-only arrangement. The exemption notification was held inapplicable because it was directed to quarrying contracts of a different character and did not cover a contract whose real nature was the supply of materials.

Conclusion: The contract was held to be a contract of supply and sale, not a works or quarrying contract, and the exemption notification did not apply.

Final Conclusion: The revision petition failed, and the assessment was sustained.

Ratio Decidendi: In determining whether a transaction is a sale or a works contract, the decisive test is the real nature of the contract viewed as an entirety, and incidental quarrying or transport obligations do not alter a contract whose essential obligation is supply of goods for payment on delivery.

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