A.P. Sen, J.
1. These three reference applications filed by the Commercial Taxes Officer, Special Circle-I, Jaipur for requiring the Board of Revenue to state a case, raise common question and, therefore, they are disposed of by this common order.
2. The following facts are taken from the order of the Board of Revenue : M/s Assam Roller Flour Mills, Jaipur, which will hereinafter be referred to as 'the assessee', is a registered dealer for purposes of the Rajasthan Sales Tax Act, 1951 and is engaged in milling wheat into flour, maida and suji Toe assessee was required to supply flour, maida and suji and bran under the orders of the D strict Supply Officer, Jaipur, purported to have been issued under the provisions of the Rajasthan Food Grains Licensing Order, 1964 to the permit holders in, whose favour permit was granted by the District Supply Officer. The assessee could not supply its milled products to any-body who did not hold a permit from the District Supply Officer, Jaipur and it was prohibited from disposing of its milled stock except at the control rates fixed by the permit granting authority.
3. The point of determination, as formulated by the Board of Revenue, was whether the disposal of the flour, maida, suji and bran by the assessee in such circumstances, tantamount to sale and consequently sales tax is attracted to such transactions under the provisions of the Rajasthan Sales Tax Act. 1954. The Boat d of Revenue guided by the principles laid down by the Supreme Court in the State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd. (1958) 9 STC 353. The New India Sugar Mills Ltd. v. Commissioner of Sale-tax Bihar (1963) 14 STC 316 and Chittarmal Naraindass v. Commissioner of Sales Tax, U.P. (1970) 26 STC 344, observed:
The essential elements constituting a sale in accordance with the provisions of the Sales of Goods Act, 1930 do not exist in the present case and so the transaction entered into by the applicants cannot be deemed to be a sale as defined in Section 2(o) of the Rajasthan Sales Tax Act 1954. There is so volition to contract and there is no mutuai asset in the present case and the permit granting authority has not given any freedom to the applicants to enter into contract....
The Board of Revenue then concludes, stating:
Consequently, relying on (1963) 18 STC 316 and (1970) 26 STC 344 we held that there has been no sales as in the transactions conducted by the applicants in the present case and herce they are not liable to pay sales tax under the provisions of the Rajasthan Sales Tax Act, 1954.
The Board has nowhere referred to the later decision of a larger Bench of the Supreme Court in Salar Jung Sugar Mills Ltd. v. State of Mysore and Ors. (1972) 29 STC 246.
4. In declining to make a reference, the Board of Revenue states that no doubt there is a point of law involved, but the legal position was clear in view of the decision of the Supreme Court in Chhittarmal Naraindass v. Commissioner of Sales Tax (1970) 26 STC 344 and the Division Bench of the Board felt no doubt about it and, therefore, it did not feel the necessity of making a reference to the High Court; We are satisfied that the Board of Revenue was not justified In refuting to make a reference. When a question of law arises, the Board is bound to draw a statement of the case and refer the question to the High Court for its opinion.
5. In cur opinion, the order of the Board of Revenue does give rise to a question of law, In Salar Jung Sugar Mills Ltd. v. State of Mysore and Ors. (1972) 29 STC 246, their Lordships of the Supreme Court in their seven Judges' judgment have reviewed their earlier decisions and stated that statutory orders regulating supply and distribution of goods under Control Orders in State r-id cot absolutely impinge on the freedom jointer into contract. Delimiting areas for transactions or partus or denoting prices for transactions under all within the area of individual freedom of contract with limited choice. Their Lordships after adverting to their decisions in Tata Iron and Steel Co. Ltd. v. State of Bihar (1958) 9 STC 267, Indian Steel and Wire Products Ltd. v. State of Madras (1968) 21 STC 138. Andhra Sugars Ltd. v. State of Andhra Pradesh (1968) 21 STC 212 and State of Rajasthan v. Karam Chand Thapparn and Bros, Ltd. (1969) 23 STC 210 and to some English decisions on the point, laid down the following propositions:
First statutory orders regulating the supply and distribution of goods by & between the parties under the Control Orders in a State do not absolutely impinge on the freedom to enter into contract. Second, directions, and decisions and orders of agencies of the Government to control production and supply of commodities, may fix the parties to whom the goods are to be supplied, the price at which these are to be supplied, the time during which these are to be supplied and the person who has to carry out these directions. Third, such a transaction is neither a gift nor an exchange nor a hypothecation nor a loan. It is a transfer of property from one person to another. There is consideration for the transfer. There is assent, The law presumes the assent when there is transfer of goods from one to the other. Fourth, a sale may not require the consensual element and that there may, in truth, be a compulsory sale of property with which the owner is compelled to part for a price against his will and the effect of the statute in such a case is to say that the absence of the transferor's consent does not matter and the sale is to proceed without it. In truth, transfer is brought into being which ex facie in all its essential characteristics is a transfer of sale. Fifth, delimiting areas for transactions or denoting parties or denoting price for transactions are all within the area of individual freedom of contract with limited choice by reason of ensunag the greatest good for the greatest number of achieving proper supply at standard or fair price to eliminate the evils of hoarding and scarcity on the one hand and ensuring availability on the other. Sixth, after all the transactions in substance represent the outgoing of the business and the price would come into the computation of profits.
6. These propositions have been enuniciated by Ray, C.J. in the rescent judgment of their Lordships in Oil and Natural Gas Commission v. State of Bihar and Ors. (1976) 38 STC 435 where the same view has been re-affirmed.
7. In the present case, the parties are certain. The parties are defined. The property in the goods is transferred from the assessee to the permit-holders. The transaction is not a gift, nor exchange, nor hypothecation nor a loan. There as a consideration for the transfer. There was mutual assent between the assessee and its buyers for the assessee could have refused to sell unless the buyers were prepared to pay the price of the goods supplied. The buyers also had a right of inspection of goads. The transactions in question were nothing but sales taxable in the hands of the assessee under the Rajasthan Sales Tax Act, 1954. The matter is, therefore, squarely covered by the decision of their Lordships in Salar J log Sugar Mills Ltd. v. State of Mysore (1972) 29 STC 246.
8. The contention of the assessee that the source of the obligation to deliver the goods was not in any contract, but in the statutory order and, therefore, the transactions did not result in sales, based on Chittarmal Naraindass v. Commissioner of Sales Tax U.P. (1970) 26 STC 344 which prevailed with the Board of Revenue, does not seem to be correct. This has all been considered by their Lordships in the later decision in Salar Jung Sugir Mills Ltd. of State of Mysore (1972) 29 STC 246 as the assent between the buyer and seller need not as a general rule be express. It may be implied from their conduct.
9. The further contention that the question of mutual COD sent was a question of fact, based on State of Tamil Nadu v. Cement Distriputors Pvt. Ltd. (1973) 31 STC 309 and, therefore, the Board of Revenue cannot be required to make a reference, cannot also be accepted The question whether there was mutual consent or not in a case, depends on the acts and circumstances of each case.
10. The transactions in question, in our opinion, were nothing but sales taxable in the hands of the assessee. The assessee is admittedly a registered dealer under the Rajasthan Sales Tax Act, 1954, engaged in the business of selling or supplying flour, maida. suji and bran. The mere fact that be sales of these commodities were controlled by directions issued under the Rajasthan Foodgraics Dealers Licensing Order, 1964, to the effect:
1. You will not sell foodgrains Including Atta, Maida, Suji and Bran without prior permission of this Office,
2. You will sell the above commodities only on the permits or authority issued from this office on the food Department.
3. You will send your daily opening balance of Wheat, Atta, Suji, Maida and Bran to this effice so that no stock will be a lowed to accumulate in your Mill la other words, this effice will dispose of your stocks under control rates without any delay
would nonetheless make the transaction anything but sale. The effect of the Control order was only to superimpose the buyer upon the assessee and it was not free to trade in the commodities in the open market.
11. Three High Courts, namaly, the High Court of Kerala, Orissa and Andhra Pradesh in the Deputy Commissioner of Agricultural Income Tax and Sales tax, Kozhikode v. Shreedhara Shenoy (1973) 32 STC 181 (SC), BL Choudhary and Sons v. State of Orissa (1973) 32 STC 271 and Vijaylakshmi Rice Mill Contractors v. State of A.P. (1976) 38 STC 19 have held that in the light of the principles laid down by their Lordships ID the later decision in Salar Jung Sugar Mills Ltd. v. State of Mysore (1972) 29 STC 246, the testlaid down in their earlier decision in The New InHia Sugar Mills Ltd. v. Commissioner of Sales Tax Bihar (1963) 14 STC 316 and Chittar Mai Naraindass v. Commissioner of Sales Tax U.P. (1970) 26 STC 344 no longer hold good.
12. The applications for reference must, therefore, be allowed under Section 15(3) of the Rajasthan Sales Tax Act, 1951, as we are satisfied that the refusal of the Board of Revenue to state a case was not justified.
13. In D.B. Civil Sales Tax Case (Reference) No. 128 of 1974, there is an additional point la the assessment year 1965 66, the contention that the transactions were not taxable since there was no sale as defined in Section 2(o) of the Rajasthan Sales Tax Act, 1951 was not raised by the assessee before the Deputy Commissioner (Appeals). The contention of the assessee was confound to the question weather or not Batdana was taxable. In revision, the Biard of Revenue set aside the assessment of tax on the transactions in question on the ground that they were not sales. The Board of Revenue could not have set aside the assessment of tax on the transaction when it was not challenged in appeal. In refusing to make a reference, the Biard wrongly observed.-
Suffice it to say that the ground of imposition of tax was taken in the appeal and a mention of it was made in the impugned order of the Deputy Commissioner (Appeals).
This is apparently wrong The Deputy Commissioner (Appeals) nowhere mentions in his order that the question was ever raised in appeal The order of the Board of Revenue in interfering with the assessment when the point was not taken in appeal, again gives rise to a question of law, viz., whether the Bjard of Revenue could interfere in revision with the assessment on the ground that the transactions in question were not sales.
14. The applications for reference are accordingly allowed under Section 16(3) of the Rajasthan Sales Tax Act, 1954. The Biard of Revenue is directed to draw up a statement of a case and refer the following questions to the High Court for its opinion:
D.B. Sales Tax Case (Reference) No. 126/74:
Whether in the facts and circumstances of the case the turnover of Rs. 54, 21, 795.57 of wheat products amounted to sale and was liable to tax under the Rajasthan Sales Tax Act?
D.B. Sales Tax Case (Riference) No. 127/74:
Whether on the facts and circumstances of the case the turnover of Rs. 29,68,884/ of wheat products amounted to sale and Is liable to tax under the Rajasthan Sales Tex Act?
D.B. Sales Tax Case (Reference) No. 128/74:
1. Whether on the facts and circumstances of the case, the turnover of Rs. 81,40,590.52 of wheat products amounted to sale and was liable to tax under the Rajasthan Sales Tax Act?
2. Whether the Board of Revenue could entertain the revition when the assessment order dated 329 4 67 had become final (Since the non-petitioner No. 1 had not raised the question about the nature of the transaction in appeal proceedings) and decide it without any material having been brought on record by toe non petitioner No. 1 in support of his version?
The Commercial Taxes Officer, Special Circle I, Jaipur that be entitled to his costs of these proceedings. Hearing fee Rs. 200/- in each case.