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TMI Blog1977 (12) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-97) and P. Parameshwara Rao, Senior Advocate (A.K. Ganguli and T.V.S. Narasimhachari, Advocates, with them), for the respondent in C.A. Nos. 2488-2497 of 1972. -------------------------------------------------- The judgment of CHANDRACHUD, BHAGWATI, KRISHNA IYER, UNTWALIA, MURTAZA FAZAL ALI and KAILASAM, JJ., was delivered by CHANDRACHUD, J. BEG, C.J., delivered a separate judgment. BEG, C. J.-I am in general agreement with my learned brother Chandrachud, J., who has discussed all the authorities so admirably and comprehensively. I, however, would like to add a few observations stating the general conclusion, as I see it, emerging from an application of general principles and accumulation of case-law on the subject of what may be called "statutory" or "compulsory" sales. Are they sales at all so as to be exigible to sales tax or purchase tax under the relevant statutory provisions. The term "sale" is defined as follows in Benjamin on Sale (Eighth Edn.): "To constitute a valid sale there must be a concurrence of the following elements, namely: (1) parties competent to contract; (2) mutual assent; (3) a thing, the absolute or general property in which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstance of the concept of a sale, as found under our law, itself disappears because the transaction is nothing more than the execution of an order. Deprivation of property for a compensation, which may even be described as "price", does not amount to a sale when all that is done is to carry out an order so that the transaction is substantially a compulsory acquisition. On the other hand, a merely regulatory law, even if it circumscribes the area of free choice, does not take away the basic character or core of sale from the transaction. Such a law, which governs a class, may oblige sellers to deal only with parties holding licences who may buy particular or allotted quantities of goods at specified prices, but an essential element of choice is still left to the parties between whom agreements take place. The agreement, despite considerable compulsive elements regulating or restricting the area of free choice, may still retain the basic character of a transaction of sale. This was the position in Indian Steel and Wire Products Ltd. v. State of Madras [1968] 21 S.T.C. 138 (S.C.) [1968] 1 S.C.R. 479., Andhra Sugars Ltd. v. State of Andhra Pradesh [1968] 21 S.T.C. 212 (S.C.) [1968] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of conditions In which there is scarcity of goods. I think that the regulation or restriction of the area of choice cannot be held to take away the legal character of the transactions which take place within the legally restricted field. It is too late in the day, when so much of the nation's social and economic activities are guided and governed by control orders, allotment orders, and statutory contracts, to contend that mere State regulation of the economic sphere of life results in the destruction of the nature of the transactions which take place within that sphere." In Roman Law the contract of sale was classed as a "consensual" contract. The consent could, no doubt, be express or implied. I find that Hidayatullah, J., in his very learned dissenting judgment in New India Sugar Mills' case [1963] 14 S.T.C. 316 (S.C.); [1963] Supp. 2 S.C.R. 459; A.I.R. 1963 S.C. 1207., where some Roman Law is referred to, thought that even in a case of a specific order directing delivery of goods there could be an implied consent so as to constitute a sale. I find it, with great respect, difficult to go so far as that. What could be implied, upon the facts of a particular case, must still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity like cement, cotton, coal or iron and steel must apply to the prescribed authority for a permit for obtaining the commodity. Those wanting to engage in the business of supplying the commodity are also required to possess a dealer's licence. The permit-holder can obtain the supply of goods, to the extent of the quantity specified in the permit, from the named dealer only and at a controlled price. The dealer who is asked to supply the stated quantity to the particular permit-holder has no option but to supply the stated quantity of goods at the controlled price. The question for our consideration, not easy to decide, is whether such a transaction amounts to a sale in the language of the law. We will refer to the facts of Civil Appeal No. 724 of 1976, in which a company called M/s. Vishnu Agencies (Pvt.) Ltd., is the appellant. It carries on business as an agent and distributor of cement in the State of West Bengal and is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, referred to hereinafter as the Bengal Sales Tax Act. Cement being a controlled commodity, its distribution is regulated by the West Bengal Cement Control Act (26 of 1948), referred to hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant supplied cement to various allottees from time to time in pursuance of the allotment orders issued by the appropriate authorities and in accordance with the terms of the licence obtained by it for dealing in cement. The appellant was assessed to sales tax by the first respondent, the Commercial Tax Officer, Sealdah Charge, in respect of these transactions. It paid the tax but discovered on perusal of the decision of this court in New India Sugar Mills Ltd. v. Commissioner of Sales Tax' [1963] 14 S.T.C. 316 (S.C.); [1963] Supp. 2 S.C.R. 459., that the transactions were not exigible to sales tax. Pleading that the payment was made under a mistake of law, it filed appeals against the orders of assessment passed by respondent No. 1. It contended in appeals before the Assistant Commissioner of Commercial Taxes that by virtue of the provisions of the Cement Control Act and the Cement Control Order, no volition or bargaining power was left to it and since there was no element of mutual consent or agreement between it and the allottees, the transactions were not sales within the meaning of the Sales Tax Act. The appellant further contended that if the transactions were treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empowers the Provincial Government to provide, by Order in the official Gazette, for regulating the supply and distribution of cement and trade and commerce therein. Section 3(2) provides by clauses (b) to (h) that an Order made under sub-section (1) may provide for regulating or controlling the prices at which cement may be purchased or sold and for prescribing the conditions of sale thereof; regulating by licences, permits or otherwise, the storage, transport, movement, possession, distribution, disposal, acquisition, use or consumption of cement; prohibiting the withholding from sale of cement ordinarily kept for sale; and for requiring any person holding stock of cement to sell the whole or specified part of the stock at such prices and to such persons or classes of persons or in such circumstances, as may be specified in the Order. If any person contravenes an order made under section 3, he is punishable under section 6 with imprisonment for a term which may extend to three years or with fine or with both, and, if the order so provides, any court, trying such contravention, may direct that any property in respect of which the court is satisfied that the order has been contrave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the procuring agents were assessed to purchase tax, while the others to sales tax under the Andhra Pradesh General Sales Tax Act, 1957. By virtue of the provisions of the Andhra Pradesh Paddy Procurement (Levy) Orders, the paddy growers can sell their paddy to licensed procuring agents appointed by the State Government only and at the prices fixed by the Government. The agriculturist has the choice to select his own procuring agent but he cannot sell paddy to a private purchaser. The procuring agents in their turn have to supply paddy to the rice millers at controlled prices. The millers, after converting paddy into rice, have to declare their stocks to the civil supplies department. Pursuant to the orders issued by the department, the rice millers have to supply a requisite quantity of rice to the wholesale or retail dealers at prices fixed by the department. Orders for such supply by the millers are passed by the authorities under the A. P. Procurement (Levy) and Restriction on Sale Order, 1967. Under this Order, every miller carrying on rice-milling operations is required to sell to the agent or officer duly authorised by the Government the minimum quantities fixed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deferred payment, or for any other valuable consideration ....." Section 5 of that Act is the charging section. According to these definitions of "sale" in the West Bengal and Andhra Pradesh Sales Tax Acts, transactions between the appellants on the one hand and the allottees or nominees on the other are patently sales because, indisputably, in one case the property in cement and in the other, property in paddy and rice was transferred for cash consideration by the appellants; and in so far as the West Bengal case is concerned, property in the goods did not pass to the transferees by way of mortgage, hypothecation, charge or pledge. But that is over-simplification. To counteract what appears on the surface plain enough, learned counsel for the appellants have advanced a twofold contention. They contend, in the first place, that the word "sale" in the Sales Tax Acts passed by the Provincial or State Legislatures must receive the same meaning as in the Sale of Goods Act, 1930; or else, the definition of "sale" in these Sales Tax Acts will be beyond the legislative competence of the Provincial and State Legislatures. Secondly, the appellants contend that since under the Sale of Good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s courts, including this court, and is too firmly established to merit reconsideration. Some of the leading cases on this point are the Privy Council decisions in British Coal Corporation v. King [1935] A.C. 500., Edwards v. A.-G. for Canada [1930] A.C. 124., and James v. Commonwealth of Australia [1936] A.C. 578.; the Australian decisions in Morgan v. Deputy Federal Commissioner of Land Tax, N.S.W.[1912] 15 C.L.R. 661., and Broken Hill South Ltd. v. Commissioner of Taxation, N.S.W. [1937] 56 C.L.R. 337.; the Federal Court decisions in In re the Central Provinces and Berar Act No. 14 of 19386 and United Provinces v. Atiqa Begum [1940] F.C.R. 1 10.; and the decisions of this court in Navinchandra Mafatlal v. Commissioner of Income-tax, Bombay City [1954 126 I.T.R. 758 (S.C.); [1955] 1 S.C.R. 829., and State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1958] 9 S.T.C. 353 (S.C.); [1959] S.C.R. 379. These decisions have taken the view that a Constitution must not be construed in a narrow and pedantic sense, that a broad and liberal spirit should inspire those whose duty it is to interpret it, that a Constitution of a Government is a living and organic thing which of all ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supposes capacity to contract, that the contract must be supported by valuable consideration and that as a result of the transaction property must actually pass in the goods. "Unless all these elements are present, there can be no sale." Basing itself on this position, the court finally concluded in Gannon Dunkerley [1958] 9 S.T.C. 353 (S.C.); [19591 S.C.R. 379., that the expression "sale of goods" was, at the time when the Government of India Act was enacted, a term of well-recognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic both in England and in India and, therefore, that expression, occurring in entry 48, must be interpreted in the sense which it bears in the Sale of Goods Act, 1930. In coming to this conclusion, the court relied upon the American decisions in United States v. Wong Kim, Ark [1898] 169 U. S. 649., South Carolina v. United states [1905] 199 U.S. 437., and Ex Parte Grossman [1925] 267 U.S. 87.; the Privy Council decisions in L'Union St. Jacquess De Montreal v. Be Lisle [1874] L.R. 6 P.C. 31. L.R. 75 I.A. 86., Royal Bank of Canada v. Laure[1928] A.C. 187. , Labour Relations Board of Saskatchew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine whether the words "sale of goods" which occur in entry 48 should not be construed so as to extend the competence of the legislature to enacting laws in respect of matters which might be unknown in 1935 when the Government of India Act was passed but which may have come into existence later, as a result of a social and economic evolution. In Attorney-General v. Edison Telephone Company of London [1880] L.R. 6 Q.B.D 24., a question arose whether the Edison Telephone Company, London, infringed by installation of telephones, the exclusive privilege of transmit- ting telegrams which was conferred upon the Postmaster-General under an Act of 1869. The decision depended on the meaning of the word "telegraph" in the Acts of 1863 and 1869. The company contended that since telephones were unknown at the time when those Acts were passed, the definition of "telegraph" could not comprehend "telephones". That contention was negatived by an English Court. In Regulation and Control of Radio Communication in Canada, In re [1932] A.C. 304., a similar question arose as to whether "broadcasting" was covered by the expression "telegraph and other works and undertakings" in section 92(10)(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cement except in accordance with the conditions contained in a written order of the Director of Consumer Goods or the authorities specified in that paragraph. That is a limitation on the dealer's right to supply cement. Correspondingly by paragraph 3, no person can acquire or agree to acquire cement from any person except in accordance with the conditions contained in a written order of the Director of Consumer Goods or the authorities specified in that paragraph. That is a limitation on the consumer's right to obtain cement. Paragraph 4 puts a restriction on the price which a dealer may charge for the commodity by providing that no person shall sell cement at a price higher than the notified price. Paragraph 8 imposes on the dealer the obligation to supply cement by providing that no person or stockist who has any stock of cement in his possession and to whom a written order has been issued under paragraph 2 shall refuse to sell the same at a price not exceeding the notified price. A person who contravenes the provisions of the Cement Control Order is punishable under section 6 of the West Bengal Cement Control Act, 1948, with imprisonment for a term which may extend to three ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, he impliedly agrees to supply the commodity to the allottee on the terms by which he has voluntarily bound himself to trade in the commodity. His conduct too reflects his consent. Thus, though both parties are bound to comply with the legal requirements governing the transaction, they agree as between themselves to enter into the transaction on statutory terms, one agreeing to supply the commodity to the other on those terms and the other agreeing to accept it from him on the very terms. It is, therefore, not correct to say that the transactions between the appellant and the allottees are not consensual. They, with their free consent, agreed to enter into the transactions. We are also of the opinion that though the terms of the transaction are mostly predetermined by law, it cannot be said that there is no area at all in which there is no scope for the parties to bargain. The West Bengal Cement Control Act, 1948, empowers the Government by section 3 to regulate or control the prices at which cement may be purchased or sold. The Cement Control Order, 1948, provides by paragraph 4 that no person shall sell cement at a "higher than notified price", leaving it open to the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined the buyers, the parties were still free to decide the other terms of the bargain, as for example, the time and date of delivery and the time and mode of payment and, therefore, it could not be said that there was no agreement between the parties to sell and buy the goods. It was held that though the area within which it was possible for the parties to bargain was greatly relieved on account of the Iron and Steel Control Order, it was not correct to contend that because law imposes restrictions on freedom of contract, there could be no contract at all. "So long as mutual assent is not completely excluded in any dealing, in law it is a contract." The second decision is reported in Andhra Sugars Ltd. v. State of Andhra Pradesh [1968] 21 S.T.C. 212 (S.C.); [1968] 1 S.C.R. 705. In that case, the occupier of a sugar factory had to buy sugar- cane from cane-growers in conformity with the directions of the Cane Commissioner issued under the Andhra Pradesh (Regulation of Supply and Purchase) Act, 1961. Under section 21 of that Act, sales and purchases of sugarcane were exempt from tax under the Andhra Pradesh General Sales Tax Act, 1957, but under section 21(1) of the Act of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulsion of law is not coercion as defined in section 15 of the Act" and "in the eye of the law, the agreement is freely made". Since the parties were competent to contract, the agreement was made for a lawful consideration and with a lawful object, the agreement was not void under any provision of law and it was enforceable at law; the court held that the purchases of sugarcane were taxable by the State Legislature under entry 54, List II, of the Seventh Schedule of the Constitution. Strong reliance was placed by the factory owners in Andhra Sugars [1968] 21 S.T.C. 212 (S.C.); [1968] 1 S.C.R. 705., on the majority judgment of Kapur and Shah, JJ., in New India Sugar Mills Ltd. v. Commissioner of Sales Tax [1963] 14 S.T.C. 316 (S.C.); [1963] Supp. 2 S.C.R. 459., to which we must refer here. The "admitted course of dealing" between the parties in that case was that the Governments of various consuming States used to intimate to the Sugar Controller of India, from time to time, their requirements of sugar and similarly, the factory owners used to send to the Sugar Controller of India statements of stocks of sugar held by them. On a consideration of the requests received from the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emerged and consent must be implied on both sides though not expressed antecedently to the permit". The Controller brought the seller and the purchaser together, gave them permission to supply and receive sugar leading thereby to an implied contract of sale between the parties. The learned judge accepted that there was an element of compulsion in both selling and buying, perhaps more for the supplier than for the receiver, but, according to him, "a compelled sale is nevertheless a sale" and "sales often take place without volition of a party". The learned judge summed up the matter pithily thus: "So long as the parties trade under controls at fixed price and accept these as any other law of the realm because they must, the contract is at the fixed price both sides having or deemed to have agreed to such a price. Consent under the law of contract need not be express, it can be implied ..... The present is just another example of an implied contract with an implied offer and implied acceptance by the parties." Adverting to the construction of the legislative entry 48 of List II, Seventh Schedule to the Government of India Act, 1935, the learned judge observed that the entry had to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building, contracts could be included within the taxable turnover of the company. It was contended on behalf of the company that the power of the Madras Legislature to impose a tax on sales under entry 48, List II, of the Seventh Schedule of the Government of India Act, 1935, did not extend to imposing a tax on the value of materials used in construction works, as there was no transaction of sale in respect of those goods, and that the provisions introduced in the Madras General Sales Tax Act, 1939, by the Madras General Sales Tax (Amendment) Act, 1947, authorising the imposition of such tax were ultra vires. Venkatarama Aiyar, J., posed the question thus: "The sole question for determination in this appeal is whether the provisions of the Madras General Sales Tax Act are ultra vires, in so far as they seek to impose a tax on the supply of materials in execution of works contract treating it as a sale of goods by the contractors ....." The court accepted that building materials were "goods" and limited the inquiry to whether there was "a sale of those materials within the meaning of that word in entry 48". Reference was then made to Benjamin on Sale in which it is said that in orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty passing therein pursuant to that agreement. In a building contract which is, as in the present case, one, entire and indivisible-and that is its norm, there is no sale of goods, and it is not within the competence of the Provincial Legislature under entry 48 to impose a tax on the supply of the materials used in such a contract treating it as a sale." Thus, the two reasons given by the court in support of its conclusion were, firstly, that in a building contract there was no agreement, express or implied, to sell "goods" and secondly, that property in the building materials does not pass in the materials regarded as "goods" but it passes as part of immovable property. In New India Sugar Mills [1963] 14 S.T.C. 316 (S.C.); [1963] Supp. 2 S.C.R. 459., the commodity with which the court was concerned was sugar and was delivered as sugar just as in the instant case, the commodity with which we are concerned is cement which was delivered as cement. That meets the first reason in Gannon Dunkerley [1958] 9 S.T.C. 353 at 377 (S.C.); [1959] S.C.R. 379 at 412. As regards the second, it is quite clear that the tax was demand- ed after the commodity had changed hands or, putting it in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impossible to say that the only construction which can fairly be given to the word 'sold' in section 17(1)(a) of the Income Tax Act, 1945, is to limit it to a transaction in which the element of mutual assent is present". But the majority of the House came to a different conclusion, and held that the element of bargain was essential to constitute a sale, and to describe compulsory taking over of property as a sale was a misuse of that word. We are not concerned in these appeals with "compulsory acquisition" of goods nor indeed, was the court concerned with it in Gannon Dunkerley [1958] 9 S.T.C. 353 (S.C.); [1959] S.C.R. 379. The majority in New India Sugar Mills [1963] 14 S.T.C. 316 (S.C.); [1963] Supp. 2 S.C.R. 459. was right in saying that the decision in Kirkness [1955] A.C. 696., and the "observations made therein have little relevance in determining the limits of the legislative power of the Provincial Legislature under the Government of India Act, 1935, and the interpretation of statutes enacted in exercise of that power". In fact, if we may say so with great respect, the observation in Gannon Dunkerley [1958] 9 S.T.C. 353 (S.C.); [1959] S.C.R. 379. that the decision in Kirkn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 209 of the Companies Act empowered the transferee-company to appoint an agent on behalf of a dissenting shareholder for the purpose of executing a transfer of his shares against a price to be paid to the transferor-company and held in trust for the dissenting shareholder, it was clearly ignoring his dissent and putting him in the same position as if he had assented. For the purpose of considering whether the transaction amounted to a sale, one must, according to the learned Judge, regard the dissent of the shareholder as overrides by an assent which the statute imposed upon him, fictional though it may be. Danckwerts, L.J., also by a concurring judgment, said that a sale may not always require the consensual element and that there may, in truth, be a compulsory sale of property in which the owner is compelled to part with his property for a price, against his will. We will proceed to refer to the other decisions of this court bearing on the point under discussion. In State of Rajasthan v. Karam Chand Thappar & Bros. Ltd. [1969] 23 S.T.C. 210 (S.C.); [1969] 1 S.C.R. 861., the respondent-assessee which was registered as a dealer under the Rajasthan Sales Tax Act, 1951, enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was exigible to sales tax. In appeal to this court it was held by a Bench consisting of Shah and Hegde, JJ., that clause 3 of the U.P. Procurement (Levy) Order, 1959, sets up a machinery for compulsory acquisition by the State Government of stocks of wheat belonging to the licensed dealers, that the Order contains a bald injunction to supply wheat of the specified quantity day after day, that it did not envisage any consensual arrangement and that the Order did not even require the State Government to enter into an informal contract with the supplier. Delivering the judgment of the Bench, Shah, J., observed that the transaction in which an obligation to supply goods is imposed, and which does not involve an obligation to enter into a contract, cannot be called a "sale", even if the person supplying goods is declared entitled to the value of goods which is determined in the prescribed manner. It was observed that the decision in Indian Steel and Wire Products [1968] 21 S.T.C. 138 (S.C.); [1968] 1 S.C.R. 479., does not justify the view that even if the liberty of contract in relation to the fundamentals of the transaction is completely excluded, a transaction of supply of goods pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 228., which was decided by a Bench of seven learned Judges, the appellants were subjected to levy of tax on purchase of sugarcane after the inclusion of sugarcane in the Third Schedule to the Mysore Sales Tax Act, 1957. They challenged the levy on the ground that on account of the Central and State Control Orders applicable to the transactions, there was no mutual assent between them and the growers of sugarcane in regard to supply of sugarcane by the latter and since there was no purchase and sale of sugarcane, they were not dealers within the meaning of section 2(k) of the Mysore Sales Tax Act. After referring to the cases which we have considered above, it was held by the court that the decisions relating to "compulsory sales" establish that statutory orders regulating the supply and distribution of goods do not absolutely impinge on the freedom of contract. In spite of the fact that under the relevant Control Orders the parties, the minimum price and the minimum quantity of supply were determined or regulated, the Court held that the Control Orders left to the parties the option in regard to a higher quantity than was stipulated in the Orders, a higher price than the minimum a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sales in view of the Cement Control Order, 1958. On the question whether the gunny bags, in which the cement was supplied, can be considered to have been sold, it was observed that there was "no dispute" that if the price of gunny bags was held to have been wholly controlled, then the supply of gunny bags also could not be considered as sales. This position was held to have been concluded by the decisions in New India Sugar Mills Ltd.(1) and Chittar Mal Narain Das [1970] 26 S.T.C. 344 (S.C.); [1971] 1 S.C.R. 671. The only question which the court considered was whether, in fact, the price of gunny bags in which cement was supplied to the State Trading Corporation was controlled by the Cement Control Order of 1958. On that question it was held that since the Central Government had fixed the actual price of the gunny bags also, the supply of gunny bags did not amount to sales. In the first place, the decision proceeds on a concession in so far as the supply of cement is concerned as is shown by the statement that there was "no dispute" that "the same cannot be considered as sales". As regards the other question concerning gunny bags, the court did not allow the Advocate-General o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the undertaking or the promise led the earlier writers on legal theories to lay particular emphasis on the consensual nature of contractual obligations. It was out of the importance which political philosophers of the eighteenth century gave to human liberty that the doctrine was evolved that every person should be free to pursue his own interest in the way he thinks best and therefore law ought to give effect to the will of the parties as expressed in their agreement. Adam Smith in his famous work on "The Wealth of Nations" propounded in 1776 the view that the freedom of contract must as far as possible be left unimpaired. Gradually, as would appear from Friedmann's Statement in Law in a Changing Society (1959), Ch. 4, freedom of contract-the freedom to contract on whatever terms might seem most advantageous to the individual became a cornerstone of nineteenth century laissez faire economics. Champions of individualist social philosophy who protested against legal and social restrictions in order to advance the policies of expansion and exploitation pursued by industry and commerce won their battle and "freedom of contract was one of the trophies of victory" (see Anson's Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction Acts, prevent one party to a contract from enforcing his rights under it; or it may empower a tribunal either to reduce or to increase the rent payable under a lease. In many instances a statute prescribes the contents of the contract. The Moneylenders Act, 1927, dictates the terms of any loan caught by its provisions; the Carriage of Goods by Sea Act, 1924, contains 6 pages of rules to be incorporated in every contract for 'the carriage of goods by sea from any port in Great Britain or Northern Ireland to any other port; the Hire-Purchase Act, 1965, inserts into hire-purchase contracts a number of terms which the parties are forbidden to exclude; successive Landlord and Tenant Acts from 1927 to 1954 contain provisions expressed to apply 'notwithstanding any agreement to the contrary'. The erosion of contract by statute continues briskly; and there are no immediate signs of a reaction" (Cheshire and Fifoot's Law of Contract, 8th Edn., pages 21-22). In the words of Anson,- "Freedom of contract is a reasonable social ideal only to the extent that equality of bargaining power between contracting parties can be assumed, and no injury is done to the economic interests of the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Mills [1963] 14 S.T.C. 316 at 323, 352 (S.C.); [1963] Supp. 2 S.C.R. 459 at 467, 510., also derives sustenance from the same passage in Benjamin's 8th edition. But as observed by Hidayatullah, J., in his dissenting judgment in that case, consent may be express or implied and offer and acceptance need not be in an elementary form. It is interesting that the General Editor of the 1974 edition of "Benjamin's Sale of Goods" says in the preface that the editors decided to produce an entirely new work partly because commercial institutions, modes of transport and of payment, forms of contract, types of goods, market areas and marketing methods, and the extent of legislative and governmental regulation and intervention had changed considerably since 1868, when the 1st edition of the book was published. The formulations in Benjamin's 2nd edition relating to the conditions of a valid "sale" of goods, which are reproduced in the 8th edition, evidently require modification in the light of regulatory measures of social control. Hidayatullah, J., in his minority judgment referred to above, struck the new path; and Bachawat, J., who spoke for the court in Andhra Sugars [1968] 21 S.T.C. 212 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 459., is not good law. The true legal position is as is stated in the minority judgment in that case and in Indian Steel and Wire Products [1968] 21 S.T.C. 138 (S.C.); [1968] 1 S.C.R. 479., Andhra Sugars [1968] 21 S.T.C. 212 (S.C.); [1968] 1 S.C.R. 705., Salar Jung Sugar Mills [1972] 29 S.T.C. 246 (S.C.); [1972] 2 S.C. R. 228., and Oil and Natural Gas Commission [1976] 38 S.T.C. 435 (S.C.); [1977] 1 S.C.R. 354. To the extent to which Cement Distributors Pvt. Ltd. [1973] 31 S.T.C. 309 (S.C.); [1973] 2 S.C.R. 1019., is inconsistent with these judgments, it is also, with respect, not good law. The conclusion which therefore emerges is that the transactions between the appellant, M/s. Vishnu Agencies (Pvt.) Ltd., and the allottees are sales within the meaning of section 2(g) of the Bengal Finance (Sales Tax) Act, 1941. For the same reasons, transactions between the growers and procuring agents as also those between the rice millers on the one hand and the wholesalers or retailers on the other are sales within the meaning of section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957. The turnover is accordingly exigible to sales tax or purchase tax as the case may be. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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