1976 (2) TMI 152 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the purchase of levy paddy by the petitioner is liable to tax under the Andhra Pradesh General Sales Tax Act, 1957.
2. Interpretation of "sale" under the Andhra Pradesh General Sales Tax Act, 1957, and its applicability to transactions under the Andhra Pradesh Paddy Procurement (Levy) Order, 1967 and 1972.

Issue-wise Detailed Analysis:

1. Tax Liability on Purchase of Levy Paddy:
The petitioner, a rice miller, contended that the purchase of levy paddy should not be liable to tax because it was made under compulsion, lacking "freedom of contract" or any choice, and thus should not be considered a "sale" under the Andhra Pradesh General Sales Tax Act, 1957. The Sales Tax Appellate Tribunal overruled this contention, leading to the present tax revision case.

2. Interpretation of "Sale" and Applicability:
The court examined various provisions of the Andhra Pradesh Paddy Procurement (Levy) Orders of 1967 and 1972, which were substantially identical. The key provisions included:
- Definition of "agent" (Clause 2).
- Obligations of cultivators to sell paddy to agents or government officers at notified prices (Clause 3).
- Responsibilities of agents, including taking delivery, storage, and subsequent sale to the government (Clauses 6 and 7).

The term "sale" under Section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957, was defined to include every transfer of property in goods for consideration, excluding mortgages, hypothecations, or pledges.

Examination of Precedents:
The court reviewed several Supreme Court decisions to determine the applicable principles:
- New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar: Held that transactions under compulsion without mutual assent were not "sales."
- Venkata Subbarao v. State of Andhra Pradesh: Determined that agents purchasing paddy from cultivators and selling to the government were not merely agents but owners of the stocks, making the transactions taxable.
- Indian Steel & Wire Products Ltd. v. State of Madras: Found that mutual consent in transactions regulated by the Iron and Steel Controller indicated a taxable sale.
- Andhra Sugars Ltd. v. State of Andhra Pradesh: Upheld that agreements entered into under statutory compulsion could still constitute "sales."
- Chittar Mal Narain Das v. Commissioner of Sales Tax, U.P.: Held that transactions under statutory compulsion without mutual agreement were not "sales."
- Salar Jung Sugar Mills Ltd. v. State of Mysore: Affirmed that statutory regulation of transactions did not eliminate mutuality, making such transactions taxable sales.

Analysis of the Present Case:
The court distinguished between sales to government officers and sales to agents nominated by the government. It emphasized that agents, unlike government officers, became owners of the stocks and were responsible for their storage, weighment, and transport. The agents paid for the paddy from their own funds and sold it to the government at a notified price, including incidental charges, indicating ownership and mutuality.

The court concluded that the transactions between cultivators and agents involved mutual agreement on aspects like quality, time, and mode of delivery, and thus constituted "sales" under the Andhra Pradesh General Sales Tax Act, 1957. The court held that the regulation of trade did not eliminate mutuality and upheld the tax liability on such transactions.

Conclusion:
The court dismissed the tax revision cases, affirming that the purchase of levy paddy by the petitioner constituted taxable "sales" under the Andhra Pradesh General Sales Tax Act, 1957, due to the presence of mutual agreement and ownership by the agents. The court did not find it necessary to refer the matter to a Full Bench, as the decision was consistent with the Supreme Court's ruling in Salar Jung Sugar Mills Ltd. v. State of Mysore. The petitions were dismissed without costs, with an advocate's fee of Rs. 100 in each case.