Works contract versus sale: quarry stone supply treated as non-taxable work arrangement, and departmental writ challenge was not maintainable.

Under the Assam Sales Tax Act, 1947, taxing authorities and the State had no independent right to maintain a writ petition under Articles 226 and 227 against the Board of Revenue's order, because the statutory appellate and reference scheme vested those remedies in the dealer and made the departmental order binding on the department. The quarry arrangement for collection, breaking and supply of stones was treated as a works contract, not a sale, because the contractor had no freedom to appropriate or resell the stones as owner and the substance of the arrangement was execution of work for the Public Works Department. The transaction was therefore outside the charging provision and not liable to sales tax.

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Issues: (i) whether the taxing authorities and the State could maintain a writ petition under Articles 226 and 227 of the Constitution of India to challenge the order of the Board of Revenue under the Assam Sales Tax Act, 1947; (ii) whether the transactions relating to collection, breaking and supply of stones under the quarry contract amounted to sales liable to tax, or were only works contract transactions outside the charging provision.

Issue (i): whether the taxing authorities and the State could maintain a writ petition under Articles 226 and 227 of the Constitution of India to challenge the order of the Board of Revenue under the Assam Sales Tax Act, 1947.

Analysis: The appellate and reference scheme under the Act conferred the right of appeal and reference on the dealer, and not on the taxing authorities. The order of the Assistant Commissioner, and thereafter the order of the Board, was binding on the department under the statutory scheme. The taxing authorities were created under the Act and the Rules to assist the Commissioner and to exercise only such powers as were conferred by the statute; they were not given an independent right to impeach the Board's order.

Conclusion: The writ petition was not maintainable at the instance of the taxing authorities, and the State also had no sustainable ground to challenge the Board's order.

Issue (ii): whether the transactions relating to collection, breaking and supply of stones under the quarry contract amounted to sales liable to tax, or were only works contract transactions outside the charging provision.

Analysis: The Board found that the contractor had no freedom to appropriate the stones as owner or to dispose of them to anyone else, and that the essence of the arrangement was execution of work for the Public Works Department. Applying the settled distinction between a contract for sale and a contract for work or service, the decisive consideration was whether property in the goods passed as goods sold or whether the contract was essentially for work done and materials found. On the facts, no sale of goods was involved and the transaction could not be taxed as a sale under the Act.

Conclusion: The transactions were not sales and were not liable to assessment under the Assam Sales Tax Act, 1947.

Final Conclusion: The Board's view that the quarry contract did not give rise to taxable sales was upheld, and the challenge to its order failed in writ jurisdiction.

Ratio Decidendi: In determining whether a contract is one of sale or of work and service, the true nature and intention of the arrangement control, and where the contractor does not acquire and transfer property in the goods as owner, the transaction is not a sale for tax purposes.

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