Diesel supplied to contractors as recoverable cost was treated as a taxable sale under the sales tax law.

Supply of diesel by an assessee to contractors, with the cost recovered through contractor bills, amounted to a sale under the Karnataka Sales Tax Act because property in goods passed for valuable consideration by deferred payment. The plea that the diesel came only from locally purchased stock was not proved by acceptable evidence, and the earlier precedent relied on was distinguished on its facts. The transaction was therefore taxable, and the reassessment order was restored; the deletion by the Tribunal was not sustained.

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Issues: Whether the supply of diesel by the assessee to its contractors, with the cost recoverable from the contractors' bills, constituted a sale liable to sales tax, and whether the Tribunal was justified in deleting the reassessment and penalty.

Analysis: The assessee had entered into a contract with its contractors under which diesel was supplied for use in mining operations and its cost was recoverable from the amounts payable to the contractors. The arrangement involved transfer of property in goods for valuable consideration by deferred payment, bringing the transaction within the statutory definition of sale under the Karnataka Sales Tax Act, 1957. The plea that the diesel supplied to contractors came only from locally purchased stock was not established by acceptable evidence. The Court distinguished the earlier decision relied on by the assessee on the ground that, on the facts there, the goods had not passed to the contractor as property in the same manner.

Conclusion: The supply of diesel to the contractors was a taxable sale, and the reassessment order was rightly restored.

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