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TMI Blog1970 (7) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be penalized. To ensure that he carried out his obligation his premises were liable to be searched and his property sequestered. The Order ignored the volition of the dealer. - Civil Appeal No. 2483, & 2484 of 1969, - - - Dated:- 21-7-1970 - SHAH J.C. AND HEGDE K.S. JJ. J.P. Goyal and Sobhagmal Jain, Advocates, for the appellant. C.B. Agarwala, Senior Advocate, (O.P. Rana Advocate, with him), for the respondent. -------------------------------------------------- The judgment of the court was delivered by SHAH, J.- The appellants who are dealers in foodgrains supplied to the Regional Food Controller diverse quantities of wheat in compliance with the provisions of the U.P. Wheat Procurement (Levy) Order, 1959. The Sales Tax Officer levied tax under the U.P. Sales Tax Act on the aggregate of the price of wheat by the appellants, rejecting the contention raised by the appellants that the wheat supplied was not sold by them to the Controller. In appeal the Assistant Commissioner (Judicial) Sales Tax held that the turnover resulting from supplies of wheat was not taxable since there was no "sale" within the meaning of the U.P. Sales Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods to the buyer for a price. 'Price' by clause (10) of section 2 means the money consideration for sale of goods, and 'where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale; but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell [sub-section (3) of section (4)]. It is manifest that under the Sale of Goods Act a transaction is called sale only where for money consideration property in goods is transferred under a contract of sale. Section 4 of the Sale of Goods Act was borrowed almost verbatim from section 1 of the English Sale of Goods Act, 56 57 Vict. c. 71. As observed by Benjamin in the 8th Edn. of his work on "Sale", 'to constitute a valid sale there must be a concurrence of the following elements, viz., (1) parties competent to contract; (2) mutual assent; (3) a thing, the absolute or general property in which is transferred from the seller to the buyer; and (4) a price in money paid or promised.' " It was also observed that the expression "sale of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine any books or documents; (iv) search any premises, vehicles, vessels and air-craft and seize wheat in respect of which he has reasons to believe that a contravention of the Order has been, is being, or is about to be committed and thereafter take or authorise the taking of all measures necessary for securing the production of stocks so seized in a court and for their safe custody, pending such production..." By clause 3 of the Order every licensed dealer is directed to "sell" to the State Government 50 per cent. of the wheat held in stock by him on the date of the commencement of the Order at the "controlled prices". Again out of the stock of wheat procured or purchased by him every day beginning with the date of commencement of the Order he is directed to "sell" 50 per cent. of that stock. The Order enjoins the licensed dealer to deliver the quantities specified in sub-clause (1) of clause 3 either to the Controller or to such other person as may be authorised by the Controller to take delivery on his behalf. To ensure that the licensed dealer carries out his obligation the Enforcement Officers may enter any premises where they have reason to believe that wheat is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .L.J. 424.: "Analysing clause 3 of the Levy Order it is clear that a licensed dealer is obliged to sell to the State Government fifty per cent. of the wheat held in stock by him at the commencement of the Order, and thereafter fifty per cent. of the wheat daily procured or purchased by him beginning with the date of commencement of the Order until such time as the State Government otherwise directs. The price at which the wheat is sold is the maximum price fixed in the Wheat (Uttar Pradesh) Price Control Order, 1959, as notified by the Government of India. Delivery of the wheat has to be given by the dealer to the Regional Food Controller or a person authorised by him in that behalf. The dealer has no option but to sell the specified percentage of wheat to the State Government. The State Government has also no option but to purchase fifty per cent. of the wheat held in stock by the dealer at the commencement of the Levy Order. As regards the wheat procured or purchased daily by the dealer thereafter, it is open to the State Government to say that from any particular date it will not purchase any or all of the specified percentage of wheat. Therefore, as regards that wheat the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to supply sugar to the States in question in accordance with the despatch instructions from the State Governments. Under the allotment orders, M/s. New India Sugar Mills Ltd. in Bihar despatched stocks of sugar to the State of Madras. The State of Bihar treated the transaction as a sale and levied tax thereon under the Bihar Sales Tax Act, 1947. The taxpayer contended that the supplies of sugar, pursuant to the directions of the Controller, did not result in sales, and that no tax was exigible on such transactions. A majority of the court observed that despatches of sugar pursuant to the directions of the Controller were not made in pursuance of any contract of sale. There was no offer by the taxpayer to the State of Madras, and no acceptance by the latter; the taxpayer was under the Control Order compelled to carry out the directions of the Controller and it had no volition in the matter. Intimation by the State of its requirements of sugar to the Controller or communication of the allotment order to the assessee did not amount to an offer. Nor did the mere compliance with despatch instructions issued by the Controller, which the assessee had not the option to refuse to comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lass of persons and on such terms and conditions as may be specified in the order." Comparing the terms of clause 5 with the terms of clause 10B, the court observed that liberty of contract in a large measure was reserved to the producer or stockholder and to the purchaser in the matter of disposal of iron and steel. The obligation imposed by clause 5 was, it was said, not to dispose of or agree to dispose of or export or agree to export any iron or steel except in accordance with the conditions contained or incorporated in the order of the Controller and that since there was liberty of contract between the parties but subject to restrictions, the transaction could be regarded as a sale. It was observed at page 489: "But under clause 5 he can authorise a producer or a stockholder to dispose of any iron or steel whether the same is in stock or not in accordance with the conditions contained or incorporated in a special or general written order issued by him. In the instant case, as can be gathered from the correspondence already referred to, the order issued by the Controller could be complied with only after manufacturing the required material. Hence, the order issued by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Constitution. This court held that under Act 45 of 1961 and the rules framed thereunder, the cane-grower in the factory zone was free to make or not to make an offer of sale of cane to the occupier of the factory: if the cane-grower made an offer, the occupier of the factory was bound to accept it, and the agreement resulting there from was recorded in writing and was signed by the parties. The consent of the occupier of the factory was free as defined in section 14 of the Indian Contract Act. The compulsion of law is, it was said, not coercion as defined in section 15 of the Act. The agreements were enforceable by law and were regarded as contracts of sale as defined in section 4 of the Indian Sales of Goods Act. In a later decision of this court, State of Rajasthan v. Karam Chand Thappar Bros. Ltd., the assessee who had acquired monopoly rights to supply coal in Rajasthan had sold coal to the State of Rajasthan. The Sales Tax Officer sought to tax the turnover from supplies of coal made to the State of Rajasthan. It was held by this court that the Colliery Control Order superimposed upon the agreement between the parties the rate fixed by the Control Order and by r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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