M/S. DAMODAR VALLEY CORPORATION vs THE STATE OF BIHAR

The Supreme Court upheld the High Court's ruling that the transaction between the appellant Corporation and the contractors constituted a sale under Section 2(g) of the Bihar Sales Tax Act, 1947. The Court established that the two-fold test for determining whether an agreement is a contract of hiring or a sale on deferred payments focuses on the obligation to purchase and the right to return goods. The Court concluded that the agreement was a sale with an option to repurchase, rather than a mere hiring contract, affirming the assessment of sales tax under Section 13(5) of the Act.