Quarry materials supplied after extraction were treated as a sale, not a works contract, for sales tax purposes.

The Tribunal's reliance on the letter dated 9 January 1968 under rule 61 was upheld because the document was considered by the Court and no objection to its use was pressed. The quarry agreement was treated as a sale, not a works contract, because payment of royalty and the licence-like arrangement showed the contractor acquired title to the metals and chips on extraction before supplying them to the department. The prohibition on private sale did not alter that character. The supply was therefore a transfer of property in goods for consideration and was exigible to sales tax.

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Issues: (i) Whether the Tribunal was right in accepting in evidence the letter dated 9th January, 1968 under rule 61 of the Orissa Sales Tax Rules, 1947; and (ii) whether the contract for supply of metals and chips from the quarries constituted a works contract or a sale exigible to sales tax.

Issue (i): Whether the Tribunal was right in accepting in evidence the letter dated 9th January, 1968 under rule 61 of the Orissa Sales Tax Rules, 1947.

Analysis: The document was looked into before the Court and no objection was pressed against its consideration for deciding the reference. In that situation, the Tribunal's acceptance of the letter in evidence did not call for interference.

Conclusion: The Tribunal was right in accepting the letter dated 9th January, 1968 in evidence under rule 61.

Issue (ii): Whether the contract for supply of metals and chips from the quarries constituted a works contract or a sale exigible to sales tax.

Analysis: The decisive question was whether title to the chips and stones vested initially in the contractor or remained with the Public Works Department. The agreement required payment of royalty for the quarry produce, which created a licence-like relationship and showed that the contractor acquired title to the materials when extracted. The prohibition against private sale did not alter that position. On the statutory definition of sale as transfer of property in goods for consideration, the supply of the materials after extraction amounted to a transfer of movable property and therefore a sale, not a mere works contract.

Conclusion: The contract constituted a sale and the supply of materials was exigible to sales tax.

Final Conclusion: The reference was answered in favour of the Revenue, with the transaction held to be a taxable sale rather than a works contract.

Ratio Decidendi: Where a contractor extracts quarry materials from government-owned quarries on payment of royalty and thereby acquires title to the materials before supplying them to the department, the transaction is a sale because it involves transfer of property in goods for consideration.

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