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TMI Blog1976 (6) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed, to the petitioners, and they have to sell only such rice, wheat, sugar, etc., to the consumers of the area who hold ration cards at the price and the quantity fixed by the Government and strictly in accordance with the directions issued by the Government from time to time. The petitioners are not at liberty to sell commodities obtained from any other source. It is also averred that the petitioners have no right to claim continuance of the allotment of the commodities supplied to them as the officers concerned have the full right to cancel the allotment at their discretion without assigning any reason or without giving any notice to them and they are not entitled to claim any damage or compensation for such cancellation or variation in the allotment. As between them and the Government on the one hand and between them and the consumers on the other, there was or is no mutual assent as a result of negotiations, express or implied, and, as such, these transactions are not "sale" within the meaning of the Sale of Goods Act, 1930, and, accordingly, they are not "sale" as defined in the Bihar Sales Tax Act, 1959. According to the petitioners, they cannot decline to carry out the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retailer's margin as per instructions of the Government in that regard. Government in the supply department merely determines the wholesale price, which includes sales tax and additional tax at the prescribed rate, and they are also paid at source along with the price of the foodgrains, to which Rs. 1.80 per quintal as retailer's commission is added and then at the aggregate price the foodgrains are sold to the ration card holders. It is also stated therein that the notice (annexure 1) has been issued only for the purpose of levy of additional tax in accordance with the provisions contained in section 3B of the Act on the gross turnover of the sales of the commodities by the petitioners other than exempted commodities such as sugar and, as the additional tax is legally payable on the gross turnover of the concerned commodities, it was necessary to issue the impugned notices to the petitioners and to ask them to get themselves registered under the Act. 4.. The principal question that arises for determination, therefore, is whether the petitioners' transactions are "sales" and the petitioners are "dealers" within the meaning of the Act as also whether the definition of "sale" un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to be a sale or purchase." 6.. It is now settled law that the concept of "sale" under the sales tax laws enacted by various States in pursuance of entry No. 54 of List II of the Seventh Schedule to the Constitution has to be understood as "sale of goods" within the meaning of section 4 of the Sale of Goods Act: vide State of Madras v. Gannon Dunkerley Co.[1958] 9 S.T.C. 353 (S.C.); A.I.R. 1958 S.C. 560. Section 4 of the Sale of Goods Act reads as follows: "4. (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional. (3) 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. (4) An agreement to sell becomes a sale, when the time elapses or the conditions are fulfilled, subject to which the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssent is completely excluded, it will in law be a contract for sale. In the instant case, a copy of the agreement entered into by the petitioners with the Governor of Bihar under which they were allowed to run fair price shops has not been filed. From what is stated in the writ petition, it appears that under the agreement, the price of the goods, which includes the commission the petitioners will get, the purchasers and the quantity of the goods to be supplied to the latter are fixed. It is not disputed that the goods supplied to the petitioners by the Government are to be sold to the ration card holders on payment of price fixed by the Government and the petitioners cannot charge higher price than the price fixed by the Government from the ration card holders and the quantity of the goods to be supplied to each of the ration card holders is also fixed. There is, however, some amount of volition left to the ration card holders. A ration card holder may not purchase a particular commodity from the fair price shop as he may not need it or due to its being of inferior quality or the like, and it is not known what the petitioners would do, in that circumstance, with the goods which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so similar in nature to that of New India Sugar Mills[1963] 14 S.T.C. 316 (S.C.); A.I.R. 1963 S.C. 1207. In that case, under clause 3 of the U.P. Wheat Procurement (Levy) Order a licensed dealer is compelled to deliver the Controller or his authorised agent every day fifty per cent of the wheat procured or purchased by him and it was, therefore, held that there was no scope for negotiation and that supply of wheat pursuant to that clause and acceptance thereof did not result in a contract of sale. 8.. Once it is held that the petitioners' transactions are "sale", they are liable to pay additional sales tax under section 3B of the Act, provided that the other conditions laid down therein are satisfied. The relevant portion of section 3B may be usefully quoted here: "Notwithstanding anything contained in sub-section (3) of section 4, or section 5, 6, 6A or 7 or in any notification issued thereunder, every dealer liable to pay tax under section 3 or section 3A shall, with effect from the 1st December, 1971, pay an additional tax at such rate, not exceeding one per centum of his gross turnover, as the State Government may from time to time, by notification in the official Gazette, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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