Court affirms divisible contract for cable supply & laying, dismisses agent argument.

The court upheld the Tribunal's decision that the contract between the assessee and the Western Railway was divisible, involving separate components for the supply of cables and their laying. The court dismissed arguments of the assessee acting as agents for the railway and the timing of property transfer, citing procedural and evidentiary deficiencies. The court affirmed the Tribunal's ruling, concluding that the contract was divisible, and ordered the assessee to pay the costs of the reference.

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Issues Involved
1. Nature of the contract between the assessee and the Western Railway: indivisible works contract or contract of sale of goods.
2. Whether the assessee acted as agents of the Western Railway for the imported cables.
3. Timing of the transfer of property in the cables and its implications for sales tax liability.

Detailed Analysis

1. Nature of the Contract
The primary issue was whether the contract between the assessee and the Western Railway was an indivisible works contract or a divisible contract involving the sale of goods. The Tribunal had previously concluded that the contract was divisible, with one part for the supply of cables and the other for laying them. This was based on several factors:

- Separate Rates: The contract specified separate rates for the supply of cables and for the excavation and laying of the cables, indicating a rate contract rather than a lump sum contract.
- Retention of Excess Cables: The fact that 300 yards of excess cables were retained by the railway suggested that the contract was not merely a works contract. If it were, the excess cables would have been returned to the assessee.
- Distinct Guarantees: The contract included distinct guarantees for defects in materials and workmanship, further indicating that the supply of cables was a separate component.

The court upheld the Tribunal's view, stating that the contract was indeed divisible. The terms of the contract, the separate rates, and the retention of excess cables all pointed towards a severable contract.

2. Assessee as Agents of Western Railway
The assessee's counsel attempted to argue that the assessee acted merely as agents of the Western Railway for the imported cables. However, this argument was not entertained because:

- Procedural Grounds: The Tribunal had rejected the request to refer this question as it was not argued before them.
- Lack of Discussion: The issue was not discussed by the Tribunal, making it inappropriate for the court to consider it at this stage.

3. Timing of Property Transfer
The final argument from the assessee's counsel was that the property in the cables passed only when they were embedded in the earth, and thus, there was no sale of movable property subject to sales tax. The court rejected this contention for several reasons:

- Not Raised Before Tribunal: This argument was not raised before the Tribunal, and the timing of the property transfer is not a pure question of law but involves the intention of the parties.
- Lack of Evidence: No evidence was led on the question of intention regarding the transfer of property. The Tribunal's judgment indicated that the only evidence produced by the assessee consisted of contract terms and other documents that did not clarify this issue.

Conclusion
The court concluded that the contract was divisible, affirming the Tribunal's decision. The assessee's arguments regarding acting as agents and the timing of property transfer were not considered due to procedural and evidentiary shortcomings. The question referred to the court was answered in the affirmative, and the assessee was ordered to pay the costs of the reference fixed at Rs. 250.

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