1963 (4) TMI 94

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....ry owned by them. In the process of ginning and pressing of the cotton and converting it into bales of cotton, they utilise hessian and iron hoops, which they purchase. These hessian and iron hoops used in the pressing and making of the cotton bales go the customers along with the bales. The turnover of the purchases of hessian and iron hoops made by the applicants and utilized in their business exceeded the limit of Rs. 25,000 a year. The applicants under section 27 of the Bombay Sales Tax Act of 1953 applied to the Additional Collector of Sales Tax to determine whether the applicants were dealers within the meaning of section 2(6) of the said Act and whether they were liable for registration. The Additional Collector held that the applica....

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....quo the said purchases. Secondly, it is contended that the business activity of the applicants does not involve any purchase or sale of goods, but only consists of rendering services. Since the goods purchased, viz., the hessian and iron hoops, are not purchased with a view to resell them in the course of its business or in its business activity, but are only consumed by the applicants in the course of their business, which is rendering of services by supply of labour and not supply of goods, the applicants are not dealers in respect of their turnover of the purchases of hessian and iron hopes. 5. It appears to us unnecessary to deal with the first of the contentions, because in view of a decision of a Division Bench of this Court, there....

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....t the hessian and hoops which were used in the execution of the contracts were only incidental to the contracts and did not pass on the customers as on sale of chattels. After having considered the nature of the business activity of the assessee and the nature of the contracts entered into by the assessee with its customers and after having elaborately considered the arguments advanced and the authorities cited, this Court came to the conclusion that the contracts entered into by the assessee with its customers included a contract of supply of hessian and hoops for consideration and that such supply constituted a sale of goods and the assessee was, therefore, a dealer as defined in section 2(6) of the Act. 6. Mr. Joshi for the applicants....

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....e clear in their judgment that even a service contract may be divisible and it is possible that such a contract may be a composite contract consisting of separate and distinct contracts, one for the transfer of the materials for money consideration, and the other for payment of remuneration for service and work done. The Supreme Court decision, therefore, which is referred to by Mr. Joshi, does not affect the decision of this Court. The view taken by this Court is, as we have already stated, that in the business activity of the nature carried on by the applicants and in the transactions entered into by them with their customers for the ginning and pressing of their cotton, there is involved as a severable part of the transaction a sale of t....