9911796707
TMI Blog1976 (2) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... dom of contract" or any choice in the matter or an agreement and that, therefore, they are not "sales" within the meaning of the Act. The said contention was, ultimately, overruled by the Sales Tax Appellate Tribunal, against which the present tax revision case is preferred. Before we deal with the contentions of the parties, it would be appropriate to refer to the relevant provisions of the Levy Order. The Andhra Pradesh Paddy Procurement (Levy) Order, 1967, has since been repealed and substitued by the A.P. Paddy Procurement (Levy) Order, 1972, and since the material provisions of both the orders are identical, the counsel referred to, and we may also set out, the said provisions from the 1972 Order. The expression "agent" has been defined by clause 2, which reads as follows: "2. (a) 'Agent' means the Food Corporation of India, or any other corporation, company, co-operative society, Gram Panchayat, miller, dealer or any other person nominated by the Government or the District Collector or by any other officer authorised by the Government, who purchases stocks of paddy from the cultivator directly or otherwise for cash; and includes a sub-agent appointed by such agent." C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government shall, on taking delivery of the paddy sold, pay for the quantity and variety of paddy delivered, at the notified price, subject to such deductions in the price, as are allowed in the Andhra Pradesh Paddy (Procurement Prices) Order, 1972, and obtain a receipt from the cultivator therefor. 7.. Every agent taking delivery of stocks of paddy under this Order shall be responsible for the said stocks and shall weigh and check the quality of the stocks and store the stocks with due care and diligence. He shall supply the stocks of paddy or an equivalent quantity of rice in lieu of paddy, to an officer of the Government, a dealer or other person nominated by the Government, for this purpose, at the price fixed by the Government after taking into account the notified price and the reasonable incidental charges incurred by the agent, including the charges incurred by him for the weighment, storage and transport of the stocks of paddy." It may also be mentioned that the petitioner is also a dealer holding a licence under the Andhra Pradesh Foodgrains Dealers' Licensing Order, 1964, and, before he was nominated as an agent under the said Levy Order, he was doing his own busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent sent detailed instructions regarding the mode of despatch of sugar to the factory owner, which were complied with. The question arose whether the sale of sugar, in those circumstances, amounted to a "sale" within the meaning of section 2(g) of the Bihar Sales Tax Act, 1947. It was held by Kapur and Shah, JJ. (Hidayatullah, J., dissenting), that the despatch of sugar in pursuance to the directions of the Sugar Controller was not the result of any contract of sale and that, therefore, there was no sale in the eye of law. It was held by the majority that there was no element of offer and acceptance, nor any contract between the seller and the purchaser and, therefore, the said transactions could not have been intended by the legislature to be taxed. Hidayatullah, J. (as he then was), however, held that there is no warrant for placing a narrow meaning upon the expression "sale" and that, the freedom of contract has, in recent times, been steadily eroded in several fields, and merely because of such curtailment or regulation of the freedom to contract, the said sales do not cease to be "sales". The learned Judge held that in effect and substance they are sales and were understood as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the agents (appellants) out of their own funds; the stocks were stored at their own cost; the risk of any deterioration and driage or short fall was upon them only; that they were the full owners of the paddy procured and that they were entitled to and did pledge the paddy for raising funds. In other words, it was found that they were full owners of the grains purchased by them and that the fact that they entered into agreements with the Government to sell rice at the controlled market prices showed that they were not mere agents. It was also pointed out that on the sales effected by them to the Government, sales tax was also payable. Notice was also taken of the fact that they were dealers under the Madras Foodgrains Control Order and that they were doing their business subject to the regulations prescribed by the said Control Order, and it was only a case of the Government employing normal trade channels for its own purposes. It was held that the entire scheme only amounted to a mere regulation and control of foodgrains by rendering every activity, connected with it, subject to licensing and to the directions to be issued in pursuance thereof and that it was not a case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .). The appellant before the Supreme Court was a sugar factory, which had to purchase sugarcane from the zone prescribed for that factory under the provisions of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961. Under the provisions of the said Act, the cane-growers within a particular zone were prohibited from supplying or selling cane to any factory or person other than the specified factory and such factory was obliged to purchase the cane so offered by the growers. Under the Rules framed under the said Act, the cane-growers or a cane-growers' co-operative society might, within fourteen days of the notification of the factory zone, offer to supply cane, grown in that area, to the factory and, if such an offer was made, the factory was bound to enter into an agreement for the purchase of the cane offered. The parties, thereupon, were obliged to enter into an agreement which provided for supply and purchase of the sugarcane at the minimum price notified by the Government from time to time and upon terms and conditions mentioned therein. Contravention of the provisions of the said Act or the Rules made thereunder was made punishable. Under section 21 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it cannot be assumed. We may then examine the decision of the Supreme Court in Salar Jung Sugar Mills Ltd. v. State of Mysore[1972] 29 S.T.C. 246 (S.C.). This was again a case of sale of sugarcane regulated by the Mysore Sugarcane (Regulation and Supply) Order, 1963. Under the said Order, a minimum price of sugarcane was fixed, areas where sugarcane was grown were reserved to the factories, the annual quantity of sugarcane required for the factories was determined, and the factories were made to secure the quantity of sugarcane so determined from the areas respectively reserved for them. The sugarcane growers in the reserved areas were to supply 95 per cent of the sugarcane grown by them to the respective factories. The growers and the factories were further required to enter into agreements for supply and purchase of sugarcane and the delivery was to be at the factory and in such lots, on such dates and at such times as may be agreed upon between the parties under the said agreement. The grower was entitled to ask for advance payment, and the sugarcane was to be accepted after inspection and there was also scope for rejection of goods by the factory on such inspection. The agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to ask for advance in cash and kind, and the freedom given to the factory owner to inspect and reject the goods, were all held to be elements indicating mutuality and, for that reason, it was held that the transactions in question were "sales" within the meaning of the said expression in the Mysore Sales Tax Act. Now coming to the decisions of this court, we may first notice the decision in Chigurupati Veeranna v. Special Commercial Tax Officer, Kakinada[1971] 28 S.T.C. 388., arising with reference to the provisions of the Andhra Pradesh Paddy and Rice (Declaration and Requisition of Stocks) Order, 1964, which provided that every stockholder should sell to the State Government or to the appointed agents, such quantity of paddy or rice in his possession or control as might be specified in the order served upon him, at the controlled price. The turnover relating to the stocks of rice so requisitioned by the Government were included in the turnover of the assessee which was objected to. It was held by this court that in the said transactions there was no element of contract and that they were made compulsorily and at controlled prices, without any option on the part of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /sells paddy to an officer of the Government, there cannot be a further sale by such officer to the Government. In those cases, it is a sale to the Government directly. But, in cases where a dealer or any other person is nominated as "agent" by the Government, the rules make it clear that the cultivator sells it, at the specified price, to such agent, and such agent, in turn, sells the paddy or its equivalent rice to the Government at the notified price, which is fixed providing a reasonable margin of profit, to such dealer. Rule 7 further makes it clear that the agent taking delivery of paddy shall be responsible for the said stocks, and shall weigh and check the quality of the stocks and store the same with due care and diligence. Further, he is not bound to supply the same paddy, which he has received from the cultivator. He is entitled to supply equivalent quantity of rice in lieu of paddy, and he is paid not only the price of such paddy or rice, but also the reasonable incidental charges incurred by him, including the charges towards weighment, storage, and transport of the stocks. These provisions make it clear that the dealer becomes the owner of the stocks purchased by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it does not mean that the mutuality is totally eliminated. So long as there is room for some mutuality, and so long as there is agreement, and scope for such agreement with respect to some aspects of the transactions, it cannot be said that there is no mutuality. As pointed out by Hidayatullah, J., in his dissenting judgment in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar[1963] 14 S.T.C. 316 (S.C.). , "the affairs of the world are very complicated, and sales are not always in their elementary forms. Due to short supply or non-distribution of goods, controls have to be imposed. There are permits, price controls, rationing, and shops which are licensed. Can it be said that there is no sale because mutuality is lost on one account or another?...... The entry should be interpreted in a liberal spirit and not cut down by narrow and technical considerations........ We may also refer to the decision in Ridge Nominees Ltd. v. Inland Revenue Commissioners[1962] Ch. 376., the principle of which decision has been referred to by the Supreme Court with approval in Salar Jung Sugar Mills Ltd. v. State of Mysore[1972] 29 S.T.C. 246 (S.C.). The question in that case was, whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, he may accept the paddy or not. The variety or quality of the paddy has to be determined by agreement between the parties. It is quite possible that, while the cultivator may claim that it is the best quality of paddy, the agent may not agree, and there may be bargaining on that aspect. In this context, it would be useful to refer to the provisions of the Andhra Pradesh Paddy (Procurement Prices) Order, 1972, which categorises and classifies the paddy under several heads, and provides for several varieties and grades of paddy and different prices therefor. There may also be cases where paddy of two different varieties or grades is mixed up, and a dispute may arise regarding its categorisation or classification. Further, if all the cultivators within the area specified for an agent, bring their stocks on a single day, he is not bound to, and he cannot accept the deliveries of, all such stocks on the same day. He has, necessarily, got to space them. In the circumstances, therefore, it is reasonable to presume that there has to be some understanding or agreement between the agent and the cultivators in the relevant area, regarding the time and mode of delivery. It may also happen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no longer good law in view of the decision of the Supreme Court in Salar Jung Sugar Mills Ltd. v. State of Mysore[1972] 29 S.T.C. 246 (S.C.)., which is, incidentally, a decision of a larger Bench of seven Judges. In Chigurupati Veeranna v. Special Commercial Tax Officer, Kakinada[1971] 28 S.T.C. 388., main reliance appears to be on the decision in Chittar Mal Narain Das v. Commissioner of Sales Tax, U.P.[1970] 26 S.T.C. 344 (S.C.)., arising under the U. P. Wheat Procurement (Levy) Order, 1959. But, it may be noted that, under the said order, the sale was directly to and in favour of the Government by the dealers, while that is not the case before us. Similarly, in Writ Petitions Nos. 610 and 614 of 1970 dated 4th March, 1971, again, the main reliance was upon the same case. The sales directly to and in favour of the Government do stand on a different footing; the distinction between the agent and the Government, which was emphasised in Venkata Subbarao v. State of Andhra PradeshA.I.R. 1965 S.C. 1773., was neither referred to nor kept in view. In Writ Petitions Nos. 3198 and 3981 of 1969 dated 22nd February, 1971, there is no discussion of the subject, and it was assumed, followin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
