Law: Sales Tax Act, 1990

Section: 2,(16)(33)(41),3(1)

Law: Contract Act, 1872

Section: 148

(a) Sales Tax Act (VII of 1990)---Ss. 2(16)(33)(41) & 3(1)---Contract Act (IX of 1872), S. 148---Assessee engaged in business of receiving ship plates from principal, then converting same into M.S. twisted bars and returning such bars to principal on payment of conversion charges---Charging of sales tax at standard rate on value of supplies instead of on conversion charges received by assessee---Validity---Sales tax would be payable on value of supplies---Transaction between assessee and its principal could not be termed as sale or lease---Returning of such bars by assessee after processing ship plates would not amount to "disposition of goods"--- Processing of ships plates by assessee was surely a manufacturing process---Pre-condition to include goods acquired, produced or manufactured in the course of business was the "use" of goods by the person, who acquired, produced or manufactured goods---Assessee did not use goods to attract consequence of "supply"---Goods in the present case were delivered by bailor (principal) to bailee (assessee) for specific purpose and bailee (assessee) was bound to return goods to bailor after accomplishment of purpose for which goods were delivered---Returning of goods by assessee, in such circumstances, could not be termed as supply to attract charging provisions---If such goods were disposed of by bailee (assessee) at bailor/principal's instructions, then such disposition of goods would amount to supply, but in such case, supplier would be bailor and not bailee and purchaser would be to whom goods were disposed of at bailor's instructions---Manufacturing in course of business could not be termed as supply as manufacturing would not attract charging provision, but its sale, lease, disposition or use---Such transaction between assessee and its principal could be termed as a contract of bailment and not "supply"' as envisaged in S.3 of Sales Tax Act, 1990---No sales tax would be payable by assessee either on value of goods returned to principal or on charges received for conversion, which was in the nature of consideration for providing services---Amount of sales tax received by revenue on conversion charges was refundable to…

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