Works contract supply of cement bags treated as taxable sale despite retained title under the contract.

Supply of cement bags by a Government engineer to a contractor for use in executing a works contract was treated as a taxable sale under the Rajasthan Sales Tax Act, 1954. The Court applied the statutory definitions of "sale" and "dealer" and held that reservation of title in the cement with the Government did not prevent taxability where goods were supplied for price in the course of contract execution. The transaction fell within section 2(o), the turnover was liable to tax, and the contrary view of the taxing authorities was set aside.

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Issues: Whether the supply of cement bags by the Government engineer to the contractor for price, for use in execution of the contract, constituted a sale liable to tax under the Rajasthan Sales Tax Act, 1954.

Analysis: The relevant statutory definitions of "sale" and "dealer" were considered in the context of supplies made under a works contract. The contract term reserving property in the cement with the Government did not prevent the transaction from amounting to a sale, because the statutory definition of sale included transfer of property in goods made in the course of execution of a contract. The Court followed the principle that where goods are supplied for price in execution of a contract, the transaction is taxable even if title is retained by the supplier under the contract terms.

Conclusion: The supply of cement bags constituted a sale within section 2(o) of the Act and the turnover was liable to tax. The revision was therefore allowed and the contrary view of the taxing authorities was set aside.

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