TaxTMI 
TaxTMI 
1973 (6) TMI 57
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....f Sorath District. The State Government has sanctioned the grant to the company of the mining lease for the aforesaid period for limestones with an option of renewal for a further period not exceeding the duration of the original lease. The company instead of extracting limestone materials from the quarries entered into an agreement with M/s. Palanji Shapoorji & Co. (hereinafter referred to as "the contractors") for excavating, collecting and transporting limestone chips to the company from the leased land or from other sources. The contractors entered into a sub-contract in this behalf with the applicant-company (hereinafter referred to as "the sub-contractors "). It appears that this applicant-company has been assessed for the period from....
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.... a works contract. In Commissioner of Sales Tax, M.P. v. Purshottam Premji[1970] 26 S.T.C. 38 (S.C.)., the Supreme Court laid down the following test for answering the above question: "In C.B. Gosain v. State of Orissa[1963] 14 S.T.C. 766 (S.C.). , this court ruled that for finding out whether a contract is one of work done and materials found or one for sale of goods depends on its essence. If not of its essence that a chattel should be produced and transferred as a chattel, then it may be a contract for work done and materials found and not a contract for sale of goods. The primary difference between a contract for work or service and a contract for sale of goods is that in the former there is in the person performing work or rendering....
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....from the quarries situated on the plots of land leased out to the company; (3) the contractors entrusted the same work to the subcontractors; (4) the sub-contractors were to break the stones so excavated into required sizes and thereafter to load in wagons so as to carry them to the factory site of the company; (5) the royalty for mining those materials was to be paid by the company and for purposes of the work entrusted, the company has to pay a rate of 6.65 per ton to the contractors; (6) the contractors and, therefore, the sub-contractors were under an obligation to remove and clear the site of the rejected materials found by the company as not according to the specifications as agreed; (7) if the quantity finally rejected in a month exc....
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.... limestones and the property in limestones excavated or as lying buried in mines at no point of time passed to the contractors or sub-contractors. Neither the mining lease was assigned nor the rights and interest of the company was transferred so as to urge that the property in the "thing produced as a whole" was in the contractors or sub-contractors. Therefore, it was for all intents and purposes a contract for work done and materials found. It should also be noted that in the case of rejected materials neither the contractors nor the sub-contractors had any right or interest therein. They were at liberty to dispose of these materials with the consent of the company, provided they were in a position to find out the purchasers who might be ....