Sale of materials by a statutory board is taxable only if made in the course of business as a dealer.

Property in materials supplied by a statutory board to its contractors passed to the contractors on deferred payment, and contractual restrictions on removal and inspection did not prevent a transfer of ownership; the supply therefore amounted to a sale. However, sales tax liability also depended on the board being a dealer carrying on the business of selling goods. Because the supplies were incidental to statutory duties, lacked a profit motive, and were not part of a continuous commercial selling activity, the board was not carrying on business as a dealer. The reference was answered for the assessee, with the board held not liable to sales tax on these transactions.

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Issues: (i) Whether the supply of materials by the Board to its contractors amounted to a sale; (ii) Whether the Board carried on the business of selling goods so as to be a dealer liable to sales tax.

Issue (i): Whether the supply of materials by the Board to its contractors amounted to a sale.

Analysis: Property in the materials was transferred to the contractors for deferred payment. The price was adjusted against amounts due under the construction contracts. Restrictions on removal from site and inspection conditions did not prevent transfer of property. The repurchase clause also indicated an earlier transfer of property and was consistent with a sale.

Conclusion: The transaction amounted to a sale.

Issue (ii): Whether the Board carried on the business of selling goods so as to be a dealer liable to sales tax.

Analysis: The definition of dealer required carrying on the business of selling goods, and business in this context meant a continuous commercial activity pursued for livelihood or profit. The Board's supply of materials was incidental to its statutory duties, was not undertaken with a profit motive, and was not a regular commercial venture. The surrounding conditions of supply were also inconsistent with a business undertaken for profit.

Conclusion: The Board was not a dealer and was not liable to sales tax on the turnover of these transactions.

Final Conclusion: The reference was answered against the revenue and in favour of the assessee, since the Board's supplies, though sales, were not sales made in the course of business.

Ratio Decidendi: For sales tax purposes, a body is a dealer only if it carries on a continuous commercial activity of selling goods with a profit or livelihood motive; an incidental sale made in the discharge of statutory functions does not satisfy that test.

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