Excel two Sheets

Sheet1 Cell A1 has in it =sheet2!$C1 (sheet 2 C1 holds text)

I select the cell for auto fill ie along the column every cells gets the
same formula.

Drag it down the column and C on is fixed but the numeric part increments
as it should do - why does it not work when I pull it right across the row?

Any insight would be most appreciated