Court quashes tax orders, determines contracts for work or goods, penalty reconsidered.

The court quashed the Sales Tax Officer's and Deputy Commissioner's orders, ruling that contracts with Bhilai Steel Plant were either for work and labor or sale of goods based on property ownership of materials. The reduced tax rate declarations were accepted, but the petitioner's claim for reduced rate on certain transactions was rejected due to lack of prior claim. The penalty was reconsidered in light of the reduced tax rate entitlement, resulting in partial allowance of the petition, quashing the Deputy Commissioner's order, and directing a re-decision without costs awarded.

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Issues:
1. Quashing of sales tax officer's order and deputy commissioner's revision order.
2. Classification of contracts as sale of goods or work and labor.
3. Acceptance of reduced tax rate declarations.
4. Penalty reconsideration in light of reduced tax rate.

Detailed Analysis:
1. The petitioner sought to quash the order of the Sales Tax Officer dated June 14, 1976, and the Deputy Commissioner's order dated May 18, 1977. The Sales Tax Officer imposed sales tax and penalty on the petitioner, which was upheld in part by the Deputy Commissioner. The petitioner contended that the contracts with Bhilai Steel Plant were not sales of goods but contracts for work and labor.

2. The Deputy Commissioner examined the contracts and found that when material was supplied free of cost, the contracts were for work and labor. However, when material was supplied on a cost recovery basis, the contracts amounted to the sale of goods. The court upheld the Deputy Commissioner's decision, stating that the contracts were correctly classified based on whether the material became the property of the petitioner before fabrication.

3. The petitioner argued that the reduced tax rate should apply based on declarations filed before the Deputy Commissioner. The court agreed with this contention, citing a Full Bench judgment supporting the acceptance of declarations in revision. However, the court rejected the petitioner's request to claim the reduced rate for transactions deemed as sales by the Deputy Commissioner, as no such claim was made earlier.

4. Lastly, the petitioner requested reconsideration of the penalty under section 17(3) in light of the entitlement to a reduced tax rate. The court agreed with this contention, leading to the partial allowance of the petition. The Deputy Commissioner's order was quashed, and a re-decision was directed considering the court's observations. No costs were awarded, and the security amount was to be refunded to the petitioner.

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