Blending contract and agency arrangement: imported additives used on behalf of owner did not constitute a taxable sale.

The supply and import of additives for blending lubricating oil was treated as an agency-and-service arrangement, not a sale under section 2(28) of the Bombay Sales Tax Act, 1959. The contract required the respondent to store, blend and fill Gulf Oil's base oil, while the additives were to be supplied for that limited blending work. Because the respondent imported the additives only on Gulf Oil's behalf and used them solely to perform the blending contract, the court held that there was no intention to transfer property in the goods by way of sale. The reference was answered in favour of the assessee.

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Issues: Whether the supply of additives imported by the respondent on behalf of Gulf Oil and used in blending lubricating oil amounted to a sale under section 2(28) of the Bombay Sales Tax Act, 1959.

Analysis: The contract showed that the respondent was engaged to store, blend and fill the base lubricating oil belonging to Gulf Oil, and that the additives required for blending were to be supplied by Gulf Oil. Because governmental restrictions prevented Gulf Oil from importing the additives itself, the respondent imported them on Gulf Oil's behalf and used them only for the agreed blending work. The transaction, viewed in substance and on the true intention of the parties, was one of agency and service in relation to blending operations, not a transfer of property in goods by way of sale.

Conclusion: There was no sale of additives within the meaning of section 2(28) of the Bombay Sales Tax Act, 1959, and the answer to the reference was in favour of the assessee.

Ratio Decidendi: Where goods are imported and used by one party on behalf of another solely for carrying out a blending contract, and the parties did not intend any transfer of property by way of sale, the transaction does not constitute a sale for sales tax purposes.

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