Contract terms control taxability of "meat on hoof"; contractual description alone cannot determine whether the supply is taxable or exempt.

Taxability of a supply described as "meat on hoof" depended on the real nature of the transaction under the Assam Sales Tax Act, 1947. The contractual description was not conclusive; where a written contract exists, the authorities must examine its terms to determine whether the bargain was for live animals or for meat, including the basis of pricing. Because the taxing authorities proceeded without examining the contracts or the pricing basis, the existing orders were unsustainable and were quashed, with the matter remitted for fresh determination. The ultimate tax liability was left open for reconsideration.

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Issues: Whether the supply described as "meat on hoof" was to be treated as a sale of live animals or of meat for the purpose of levy under the Assam Sales Tax Act, 1947, and whether the authorities could determine taxability without examining the contract terms.

Analysis: The decisive question was the true nature of the transaction. The description used in tender notices was not conclusive by itself. Where there is a written contract, the nature of the goods sold and whether the price was fixed on the basis of the meat-content of the animal or on the basis of live animals must be ascertained from the contractual terms. Extraneous considerations or a mere label attached by the parties cannot determine whether the supply falls within the taxable entry or within the exemption for meat under section 7 read with item 11 of Schedule III. Since the taxing authorities had proceeded without examining the contracts and without determining the basis of pricing, the orders were not sustainable.

Conclusion: The question of taxability had to be determined afresh on the basis of the contract terms, and the impugned orders were liable to be quashed and the matters remitted.

Final Conclusion: The assessees succeeded to the extent of obtaining quashing of the existing orders and a fresh adjudication on the nature of the supply, but the ultimate tax liability was left open for reconsideration by the taxing authority.

Ratio Decidendi: In determining whether goods are taxable or exempt, the real nature of the sale must be gathered from the terms of the contract, and the contractual description alone is not decisive.

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