Srinivasan, J.@mdashThe petitioner in these two revisions is the proprietor of a construction company. He had acquired the right of removing sand
from certain areas of Cooum river in an auction conducted by the Revenue Department. Instead of working out his right by the removal of sand,
what he did was to permit the removal of the sand by other persons on payment of Re.1.50 nP. per lorry load. He made no return under the
General Sales Tax Act. On a check of his accounts, it was held that the amounts realised by the petitioner in connection with the removal of sand
represented realisations out of sale of sand and that the turnover in this regard was assessable to tax. Assessments were made upon him
accordingly for the two years 1959-60 and 1960-61. The petitioner appealed objecting to the levy of sales tax, his principal contention before the
appellate authority being that he had only leased out his right to various buyers, who quarried the sand and took it away. According to him, the
sales were involved in such quarrying contracts and were exempt under the relevant notification issued by the Government. This contention was not
however accepted. The Appellate Assistant Commissioner observed that the petitioner had in effect purchased sand lying in the river bank, and as
the sand is in a readily removable state, no quarrying was involved. He himself did not use the sand in any of his works, but he sold it to others. It
was also held by the appellate authority that there was no sub-lease at all, either oral or written. The exemption was held not to apply.
2. There were further appeals to the Tribunal. The Tribunal accepted the view of the Appellate Assistant Commissioner and dismissed the appeals.
3. In these revision petitions, Mr. C. Venkataraman, learned Counsel for the petitioner, has put forward the very same contentions. It has again
been pressed before us that the authorities below should have accepted the contention of the petitioner that he had only sublet his right of removal
of sand. According to the learned Counsel, it was only a licence, that was given to the purchasers, such licence covering the right to quarry the
sand and take it away. It would therefore follow, so it is argued, that if at all any sale is involved, it is involved in a quarrying contract and that the
relevant exemption must apply. We are unable to accept this contention. In the first place, it is not in dispute that the petitioner had obtained at an
auction the right to remove sand from certain portions of the Cooum river. It is not the petitioner''s case that that right covered any quarrying
contract. What the petitioner subsequently did was to permit persons who required sand to remove the sand from the area over which he had
obtained the right referred to and he charged a sum of Re. 1.50 nP. in respect of every lorry-load of sand so removed. It is perfectly plain that
what the petitioner did was to sell one lorry-load of sand for a specified figure. Virtually, what he told the purchasers was, ""here is sand belonging
to me. You can remove it on payment of this sum for every lorry load."" This is not different from the case of persons in possession of goods
offering to sell the goods to purchasers at a price fixed. But learned Counsel seeks to complicate this perfectly simple transaction by claiming that
for the purpose of the removal of the sand, quarrying has to be done. Therefore it becomes a quarrying contract and the sale of sand involved in a
quarrying contract, according to the exemption order of the Government, is not liable to sales tax. What is meant by a sale involved in a quarrying
contract is by no means easy to explain in general terms. Each case will have to be considered in order to decide whether there is a quarrying
contract and whether a sale of material is involved in such a contract. But broadly stated, it certainly does postulate that a contract of some
description necessitating quarrying as part of the contractual obligation exists between the ""seller"" and the ""buyer"" and it is only when in the
fulfilment of that contract, a sale of the material is involved, that sale stands exempted by the Government. To our minds, the matter is quite clear
that unless between these two parties there is a contract which calls upon the one party to do some quarrying work, the transaction cannot come
within the scope of a quarrying contract referred to in the exemption notification. Mr. Venkataraman is unable to state that there was any such
contract between the petitioner and the persons who removed the sand.
4. We would have been prepared to agree that the removal of sand would not have been subject to the general sales tax if the agreement between
the petitioner and his buyers was one which only conferred a right upon them in the nature of a sub-lease. The petitioner himself had taken only a
lease of the area for the removal of sand, and if it was only a right of removal by way of sub-lease that had been granted, then one could say that it
was a species of transfer of immovable property that was involved and not a sale of goods. But that, as a matter of fact, had been found against by
both the Department and the Tribunal.
5. Some decisions were referred to, but these decisions relate to the exemption notification under the 1939 Act, but nevertheless the underlying
principle is not different. In Gopala Mining and Mineral Works v. State of Andhra [1957] 8S.T.C. 4, the learned Judges of the Andhra High Court
observe:
What is exempted is quarrying contracts of those materials but not the out and out sale of those materials. It may be that the Government thought it
fit to exempt contracts whereunder the lessee or other contracting party agrees to quarry materials mentioned in the notification, leaving untouched
the right of the State to tax the subsequent sale of the material quarried....
6. This decision supports the observation we have made earlier that the quarrying contract referred to in the exemption notification requires that
quarrying must be done by one of the parties to the contract as a necessary obligation under that contract. In Baktavatsalu v. State of Madras
[1963] 14 S.T.G. 832, to which one of us was a party, the notification under the 1939 Act was again in question. In that case, there was a
contract for the supply of material. Though the contractor in order to supply the material as per the contract had to do quarrying work, the contract
itself did not specify quarrying as part of the work to be done by the contractor. In order to secure the proper quality of the materials, certain
quarries were indicated as the source from which the materials should be produced. It was open to the contractor to acquire the material from the
quarry owners or to engage in quarrying operations himself. But in so far as his own contract was concerned, it was not a quarrying contract, and
in that view, it was decided that the exemption did not apply in that case.
7. In the light of the facts we have set out, we are satisfied that the arguments advanced by the learned Counsel fail. On facts, it was not a case of a
sub-lease of a right acquired by the petitioner; it was really a sale of sand. Secondly, the exemption in terms will not apply, for no quarrying
contract of any description was involved. Both the petitions fail and are dismissed with costs. Counsel''s fee (one set) Rs. 100.
