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Commercial Tax Officer and ors. Vs. Vishnu Agencies (P.) Ltd. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Case Number A.O.D. No. 240 of 1974
Judge
Reported in[1975]36STC527(Cal)
AppellantCommercial Tax Officer and ors.
RespondentVishnu Agencies (P.) Ltd.
Appellant Advocate P.K. Sengupta and ; Samarendra Nath Dutta, Advs.
Respondent Advocate R. Chowdhury, ;R.C. Deb, ;S.C. Bose and ; Mukul Prokash Banerjee, Advs.
DispositionAppeal allowed
Cases ReferredMangaldas Raghavji Ruparel v. State of Maharashtra A.I.R.
Excerpt:
- s.k. roy chowdhury, j.1. this is an appeal from a judgment and order making a rule issued in the writ petition against the appellant absolute.2. the relevant facts of the case which are not very much in dispute are as follows:3. respondent no. 1, messrs. vishnu agencies private ltd., is a registered dealer under the bengal finance (sales tax) act, 1941, and a licensed stockist and dealer of cement, which is a controlled commodity and its distribution is completely regulated by the west bengal cement control act and the orders and notifications made thereunder.4. there is no dispute that respondent no. 1 is a licensed stockist under the said cement control act and the orders and notifications made thereunder from time to time.5. the only question raised in this appeal is whether the.....
Judgment:

S.K. Roy Chowdhury, J.

1. This is an appeal from a judgment and order making a rule issued in the writ petition against the appellant absolute.

2. The relevant facts of the case which are not very much in dispute are as follows:

3. Respondent No. 1, Messrs. Vishnu Agencies Private Ltd., is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, and a licensed stockist and dealer of cement, which is a controlled commodity and its distribution is completely regulated by the West Bengal Cement Control Act and the orders and notifications made thereunder.

4. There is no dispute that respondent No. 1 is a licensed stockist under the said Cement Control Act and the orders and notifications made thereunder from time to time.

5. The only question raised in this appeal is whether the transactions between respondent No. 1, Messrs. Vishnu Agencies Private Ltd., and the permit licence-holders for cement Issued by the Director of Textile and Consumer Goods, and West Bengal State Licensing Authority for Iron, Steel and Cement, constitute sale of goods under the Sale of Goods Act. In other words, are the provisions of the Bengal Finance (Sales Tax) Act, 1941, attracted in respect of transactions referred to by respondent No. 1 in the original writ petition by making supplies to the permit-holders for cement, which they allege are not voluntary sales but deliveries under compulsion made by the petitioners under the terms of the permit issued to the permit-holders and the said Cement Control Order and orders and notifications issued thereunder. Therefore, the only question in the appeal whether the transaction mentioned in the petition amounts to sale of goods so as to attract the provisions of the Bengal Finance (Sales Tax) Act, 1941. In order to appreciate the question which has been argued exhaustively by both the parties by citing large number of decisions mostly of the Supreme Court, it is first necessary to set out the relevant portions of the said Cement Control Act and the orders and notifications made thereunder, the terms of licence of a stockist and dealer of cement and also the form of licence for cement issued to permit-holders.

West Bengal Act 26 of 1948-The West Bengal Cement

Control Act, 1948

1. (1)...

2. (2) It extends to the whole of West Bengal...

3. (1) The State Government, so far as it appears to It to be necessary or expedient for maintaining or increasing the supply of cement, or for securing its equitable distribution and availability at fair prices, may, by order in the official Gazette, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein within West Bengal-

(2) Without prejudice to the generality of the powers conferred by Sub-section (1), an order made thereunder may provide-

(a) for regulating by licences, permits or otherwise the production or manufacture of cement;

(b) for regulating or controlling the prices at which cement may be purchased or sold and for prescribing the conditions of sale thereof ;

(c) for regulating by licences, permits or otherwise, the storage, transport, movement, possession, distribution, disposal, acquisition, use or consumption of cement;

(d) for prohibiting the withholding from sale of cement ordinarily kept for sale ;

(e) 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 ;

(f) for collecting any information or statistics with a view to regulating or prohibiting any of the aforesaid matters ;

(g) for requiring persons engaged in the production, supply or distribution of, or trade or commerce in, cement to maintain and produce for inspection such books, accounts and records relating to their business and to furnish such information relating thereto, as may be specified in the order;

If any person contravened any order made under Section 3, he shall be punishable 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 contravened shall be forfeited to Government.

Any person who attempts to contravene, or abets a contravention of, any order made under Section 3, shall be deemed to have contravened that order.

If the person contravening an order made under Section 3 is a company or other body corporate, every director, manager, secretary or other officer or agent thereof shall, unless he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention, foe deemed to be guilty of such contravention.

Order No. 1033 D. C. S. dated the 18th August, 1948.--In exercise of the powers conferred by Sub-section (1) of Section 3 of the West Bengal Cement Control Ordinance, 1948 (West Bengal Ordinance 9 of 1948), read with Clauses (b), (c), (d), (e), (f), (g) and (h) of Sub-section (2) of that section, the Governor is pleased to make the following order, namely :-

No person shall, after the commencement of this order, sell or store for sale any cement unless he holds a licence in this behalf under this order and except in accordance with the conditions specified in such licence obtained from the Director of Consumer Goods, West Bengal, of any officer authorised by him in writing in this behalf :

Provided that persons engaged in the sale or storage for sale of cement at the commencement of this order shall, with a view to obtaining such licence, apply within fifteen days from such commencement and such persons shall be allowed to carry on their business without licence until their licences are issued.

No person shall dispose of or agree to dispose of any cement except In accordance with the conditions contained in a written order of the Director of Consumer Goods, West Bengal, or the Regional Honorary Cement Adviser to the Government of India, Calcutta, or any officer authorised by the said Director or Adviser, as the case may be.

No person shall sell cement at a price higher than the notified price.

Explanation.-In this paragraph the expression 'notified price' means the price notified in the official Gazette from time to time by the Provincial Government of cement produced in India as well as imported from outside India.

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, and the seller shall deliver the cement to the buyer within a reasonable time after payment of the price.

(1) Applications for licences under paragraph 1 shall be made to the Director of Consumer Goods, West Bengal, or to any officer authorised in writing in this behalf by the said Director in form A and the licence shall be granted in form B appended to this order on payment of a fee of Rs. 50, which shall be paid in non-judicial stamps.

(2) Every licence shall specify the area in which the licensee shall carry on business and the premises or places where cement may be stored by the licensee.

(3) No licensee shall carry on his business or store any cement except in the premises, area or place as specified in the licence.

If the licensee carries on business at more than one place, a separate licence shall be taken out for every such place.

Every licence granted under this order shall be valid up to 31st March next following the date of its issue and may, at the discretion of the authority by which the licence was granted be renewed for successive periods of one year on application made on this behalf to such authority before expiry of the date of validity of the licence and on payment of fees similar to these paid for the original licence,

The Director of Consumer Goods, West Bengal, or any officer authorised by him in writing on this behalf may for reasons to be recorded in writing refuse to renew a licence.

The authority issuing the licence may cancel or suspend a licence if it is of opinion that the licensee has contravened any of the conditions specified in the licence granted to him or any direction given to him under the provisions of sub-paragraph (8) or for any other reason sufficient in the opinion of the authority issuing the licence.

Every licence or any person employed by him or acting on his behalf shall comply with any special or general directions issued in writing by the Director of Consumer Goods, West Bengal, for securing proper distribution of cement or for carrying out the purpose of this order and shall also comply with such conditions as may be specified in the licence.

6. The material portions of a pro forma application for grant of a licence are as follows :

Form A [See paragraph 13(1)]

[Application for the grant of a licence under the West Bengal Cement

Control Ordinance (9 of 1948).]

1. Name of applicant to whom the licence is to be issued with father's/husband's name...

2. ...

3. Address of the place where business is to be conducted...

4. Address of the place or places of storage...

5. ...

I/We hereby declare that the details given above are correct.

Date: Signature.-----------------------------------------------------------------------------

Note: A licence granted under this Ordinance is liable to be cancelled if the information supplied in this form is found to be incorrect or incomplete.

Form B [See paragraph 13(1)]

Licence under the West Bengal Cement Control Ordinance, 1948

[West Bengal Ordinance (9 of 1948).]

1. Licence No....

2. Area...

3. Address where the business is carried on...

4. Address of godown or other premises where cement is stored....

Date : Signature of the Licensing Authority.The licence shall be held by the licensee subject to the following conditions :-

Conditions of licence,

1. The licence is being issued subject to the provisions of the West Bengal Cement Control Ordinance, 1948 (West Bengal Ordinance 9 of 1948).

2...

3...

4. The licensee shall comply with all directions which may be given by the Provincial Government under Section 3 of the West Bengal Cement Control Ordinance, 1948 (West Bengal Ordinance 9 of 1948), or by any officer to whom the powers of the Provincial Government may be delegated under Section 4 of the said Ordinance.

5. The licensee shall issue to every customer a true cash memorandum or credit note, as the case may be, giving his name, licence number and address, the date of the transaction, the quantity sold, the rate at which sold, the number and date of the written order under which sold and the salesman's signature and shall keep duplicate carbon copies of all such cash memoranda and credit notes arranged serially and chronologically to be available for inspection on demand by the Director of Consumer Goods, West Bengal, or any officer authorised by him in writing in this behalf and shall preserve such duplicate copies of cash memoranda or credit notes for one year from the date of issue.

'If the licensee contravenes any of the provisions of the West Bengal Cement Control Ordinance, 1948 (West Bengal Ordinance 9 of 1948), or any orders passed under Section 3 of that Ordinance or any of the conditions subject to which he holds the licence, then without prejudice to any other action that may be taken against him his licence may be cancelled by the authority by which the licence was granted.'

And a specimen form of the licence for cement, a large number of which has been annexed to the writ petition of respondent No. 1 and including annexure 'A' is set out hereunder :

Annexure 'A' referred to in the petition, paragraph 4(b), solemnly affirmed by Badrilal Todi before me this the...day of April, 1972.

Serial No. 176921.

Commissioner

Government of West Bengal

Department of Food, Relief & Supplies (Supplies)

Directorate of Consumer Goods, 11 A, Free School Street, Calcutta.

Permit No. 71-M. Date of issue 9-1-63.Licence for cement

The quantities of cement detailed below are hereby allotted to M/s. Bijoy Industrial Works, 8, Mahatma Gandhi Road, P.S. Paschim Patiari, Calcutta-41, to be supplied by M/s. Vishnu Agencies Pvt. Ltd., 3, Chittaranjan Avenue, Calcutta-13, on conditions detailed below. The price of material involved must be deposited with the stockist within 15 days and the actual delivery must be taken within 15 days from the date of issue of the permit. The licence is issued only for the purpose of shed covering tape department, wire department.

Repair to the existing casting and godowns at the above address. Under no circumstances will the validity of the permits be extended beyond the period of 15 days from the date of its issue.

Cement: Total tonnage at Rs. 136.41 per M.T. Ton. Cwt.Excluding S.T. 10.00 M. T. (Ten M. T. only).Director of Textiles and Consumer Goods and State Licensing Authority for Iron, Steel and Cement, West Bengal.

Conditions:

1. The godown from which the actual stocks will be delivered will be noted by the suppliers mentioned above.

2. The supplies noted above will have to verify the 'original' permit with the 'duplicate'.

3. Loss of the permit and failure to utilise it must be reported to the licensing authority. Any material not utilised for the purpose mentioned above must be surrendered to the licensing authority.

7. In the writ petition the case made out by respondent No. 1 is that it is a licensed stockist under the said Cement Control Act and used to supply cement to permit-holders at stipulated price in accordance with these permits which were issued by the authorities concerned, a specimen of which is mentioned hereinbefore. Respondent No. 1 further alleged that there was no element of volition or any bargaining power left to it in the course of dealing between it as a registered stockist and the permit-holder. Respondent No. 1 had no option regarding selection of parties, fixation of price or willingness to sell the commodities and, as a matter of fact, there was no element of mutual assent which is a condition precedent for constituting the transaction as a sale within the meaning of the Bengal Finance (Sales Tax) Act, 1941, and it was contended by respondent No. 1 in the writ petition that if the transactions are sales within the meaning of the said Bengal Finance (Sales Tax) Act, 1941, in that event, the said Act is ultra vires the legislative competency of the Provincial Legislature under the Government of India Act, 1933, and the State Legislature under the Constitution of India. It is alleged that in the sales tax assessment for the quarter ending on 31st January, 1956,31st January, 1957, 31st January, 1958, and 31st January, 1959, the appellant has Imposed sale tax on the said transactions and respondent No. 1 bona fide under mistake of fact and law believed that such transactions were sales and could be lawfully taxed under the Bengal Finance (Sales Tax) Act, 1941. It is alleged by respondent No. 1 that such mistake was discovered by it in 1963 upon perusal of the decision of the Supreme Court in the case of New India Sugar Mills A.I.R. 1963 S.C. 1207. Thereafter the petitioner preferred several appeals from the said assessment orders before the Assistant Commissioner of Sales Tax and as the appeals were not disposed of, the petitioner moved a writ petition in this court and by an order dated 11th December, 1970, the rule issued in the said writ petition was made absolute directing the appellant to deal with and dispose of the said appeals after giving respondent No. 1 an opportunity of being heard. Thereafter the said matters were remanded and the Assistant Commissioner of Commercial Taxes, Dharmatala Circle, disposed of the said appeals holding that the sales made by respondent No. 1 under the Cement Control Order were taxable under the Sales Tax Act. The order made in the appeal by the said Assistant Commissioner of Commercial Taxes was dated 22nd December, 1971, a copy of which is also annexed to the writ petition of respondent No. 1. Thereafter the present writ petition, out of which the present appeal arises, was filed and the rule nisi was issued on 21st April, 1972, which rule was made absolute by the order and judgment dated 18th December, 1972, which is the subject-matter of this appeal.

8. Mr. Provat Kumar Sengupta with Mr. Samarendra Nath Dutta appearing for the appellants after drawing our attention to the relevant provisions of the said Cement Control Act and the orders, notifications and conditions of licence issued to the stockist and dealers and also the conditions of licence for cement to the consumer submitted that all the elements of sale are present in the transactions. There are contracting parties competent to enter into contracts. There are goods, property in respect whereof is being transferred, that is, property in goods 3s passing by the transactions. Mr. Sengupta submitted that there is consensus between the parties and volition is there; when the dealer takes the licence for selling the goods he makes an offer to sell the goods on the conditions of licence issued to him. When the purchaser comes to purchase for valuable consideration he has full option to purchase or not to purchase. When the seller (stockist and dealer of cement under the said Cement Control Act) applies for a licence he agress to make an offer for sale on the terms and conditions prescribed by the licence. When the purchaser applies for a permit he also agrees to buy from a licensed dealer on the terms and conditions to be offered by the licensed dealer. Therefore, Mr. Sengupta rightly submits that there is volition both on the part of the seller and the purchaser.

9. In the transactions in question there is also an offer and acceptance. Mr. Sengupta submits that only the distribution and supply of cement is controlled by certain laws of land being the said Cement Control Act and the orders made thereunder. Thereafter Mr. Sengupta referred to a large number of cases. Those are :

10. State of Madras v. Gannon Dunkerley & Co. {Madras) Ltd. A.I.R. 1958 S.C. 560, New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar A.I.R. 1963 S.C. 1207, Indian Steel and Wire Products Ltd. v. State of Madras A.I.R. 1968 S.C. 478, Andhra Sugars Ltd. v. State of Andhra Pradesh A.I.R. 1968 S.C. 599, State of Rajasthan v. Karam Chand Thappar and Brothers A.I.R. 1969 S.C. 343, Chittar Mal Narain Das v. Commissioner of Sales Tax A.I.R. 1970 S.C. 2000, Raghunandan Prasad Mohan Lal v. State of U.P. A.I.R. 1971 S.C. 2089, Cement Marketing Co. of India, Bangalore v. State of Mysore [1971] 27 S.T.C. 159 (S.C), Kotha Narasimham Amburi v. State of Andhra Pradesh [1971] 27 S.T.C. 191, Excise and Taxation Officer, Hissar v. Jaswant Singh [1971] 27 S.T.C. 582, Salar Jung Sugar Mills Ltd. v. State of Mysore A.I.R. 1972 S.C. 87, Chowringhee Sales Bureau P. Ltd. v. Commissioner of Income-tax, West Bengal 87 I.T.R. 542 (S.C), State of Tamil Nadu v. Cement Distributors P. Ltd. A.I.R. 1973 S.C. 668, Deputy Commissioner of Agricultural Income-tax and Sales Tax, Kozmkode v. V. Sreedhara Shenoy [1973] 32 S.T.C. 181, and Maheswar Mahapatro v. State of Orissa [1972] 29 S.T.C. 52.

11. Relying on the principles laid down in those decisions, Mr. Sengupta analysed the facts of this case and submitted that only the production, supply and distribution of, and trade and commerce in, cement in West Bengal has been controlled by the Cement Control Act. Freedom of contract regarding sale of cement is not completely taken away but. only control within certain limits is imposed. As for example, supply can only be made to permit-holders for cement issued by the appropriate authority, maximum price of the cement is fixed, which is exclusive of sales tax payable on such sale and the quantity is also limited by the permit with a view to ensure equitable distribution of cement in the State. Mr. Sengupta rightly submitted that the stockist and distributor of cement are agreeable to carry on their trade and commerce on the terms and conditions of the licence issued under the said Act by applying to the appropriate authority under the Cement Control Act for grant of a permit to the stockist and dealer to which category the respondent belonged. Therefore, It cannot be said that there is no offer to the buyer by the seller as to the terms on which contract for sale is to be entered Into. The terms of licence which have been set out before clearly indicate that the dealer and stockist of cement makes an offer for sale to the person who would be granted permit for cement by the appropriate authority on the terms and conditions mentioned in such permit. Therefore, it cannot be urged that there is no element of volition on the part of the buyers and sellers of cement under the said Cement Control Act. The licence under which the dealer and stockist carry on their business and the terms of permit Issued to the buyer constitutes offer and acceptance and gives the transaction the character of a contract. Mr. Sengupta rightly submitted that this is not a case of compulsory acquisition of property and payment of compensation. He analysed the terms of the licence and the terms of the stockist and dealer of cement and terms of the permit granted to the buyer of cement and very rightly submitted that it still retains fair amount of volition in the field of contract, as for example, parties may agree as to the mode of payment either in cash or in credit, deliveries by instalments and mode of delivery and time of delivery. Delivery may be postponed on various circumstances- like stock of cement exhausted or the permit-holders of cement do not want to take up the entire quantity under the permit within the time specified- subject only to this that necessary endorsement or variation has to be notified and sanctioned by the appropriate authority under the said Cement Control Act. Mr. Sengupta analysing those aspects of the transactions Involved under the Cement Control Act between a stockist and a permit-holder submitted that it is not completely denuded of all the elements of a contract but retained fair amount of volition to the parties entering into the said transaction so as to constitute a sale of goods within the meaning of the Indian Sale of Goods Act as laid down by the catena of Supreme Court decisions referred to by both the parties. Mr. Sengupta summarised his contentions as follows :

(1) That under the transactions the maximum price has been fixed. The seller is entitled to sell even at a lower price than to the highest price fixed by the said permit issued under the Cement Control Act.

(2) The purchaser might take delivery of the goods immediately or within a period of 15 days as he chooses and to be agreed between the parties and, therefore, there is a volition as to the same.

(3) The purchaser may either pay in cash or he can arrange for deferred payment, the stipulation is that he is to deposit within 15 days. Supposing the purchaser has an account with the seller, the seller may give the purchaser credit and, as such, there is the same amount of volition left to the parties so as to constitute the said transaction as a sale. In order to constitute a sale there must be an agreement for sale of goods for a price and the passing of property therein and all these elements are present in those transactions.

(4) Sale is defined in Section 2(g) of the Bengal Finance (Sales Tax) Act, 1941, and a sale is complete as soon as the goods are transferred and price Is paid or deferred payment is arranged for. Such transfers of goods are sales within the meaning of the said Act. The vires of the said Bengal Finance (Sales Tax) Act, 1941, have not been challenged in this case.

12. Therefore, Mr. Sengupta submitted that the appeal should be allowed and it should be held that the transactions relating to supply and delivery of cement by respondent No. 1 to the permit-holders for the relevant years which are the subject-matter of this appeal are 'sales' within the meaning of the Bengal Finance (Sales Tax) Act, 1941, and as such liable to sales tax.

13. Mr. Ranadeb Chowdhury with Mr. R. C. Deb, Mr. Soumendra Chandra Bose and Mr. Mukul Prakash Banerjee appearing for the respondent raised the question whether the type of sale covered by the licence issued from time to time read in the background of Section 3(2)(e) of the Cement Control Act can be made liable to taxation under the Bengal Finance (Sales Tax) Act, 1941. Mr. Chowdhury submitted that reading Section 3(2)(a) and (e) along with the penal consequences under the Act it is quite clear that the volition or freedom to contract is completely taken away and the transaction pursuant to the said Cement Control Order by supplying the permit-holders is not a contract for sale within the meaning of the Sale of Goods Act. Mr. Chowdhury submitted that in the said transaction there is no element of volition at all. There is no offer, no acceptance and no meeting of minds of purchaser and seller in the said transactions. Mr. Chowdhury very strongly relied on various passages from the Supreme Court decision in New India Sugar Mills Ltd. A.I.R. 1963 S.C. 1207. Mr. Chowdhury thereafter submitted that the Bengal Finance (Sales Tax) Act, 1941, has no bearing on the subject. The transactions in order to be a sale must be under entry 54 of List II in the Seventh Schedule to the Constitution corresponding to the Government of India Act, 1935, item 48. In order to be a sale of goods it must be a sale within the meaning of the Sale of Goods Act. Mr. Chowdhury submitted that whether, on the facts and in the circumstances of this case, the disposal of cement pursuant to directions contained in annexure A to the writ petition of the respondent is liable to be taxed under the Bengal Finance (Sales Tax) Act, 1941. Thereafter, Mr. Chowdhury submitted that in order to be a contract there must be four elements, viz., (1) willingness to contract, (2) mutuality, that is, volition of both the parties to a contract and meeting of minds to enter into an agreement and a contract, (3) price in cash not barter or exchange, mode of payment being not material, and (4) transfer of property. Mr. Chowdhury referred to Section 5 of the Sale of Goods Act and submitted that in order to be a contract for sale there must be offer and acceptance. In short his submission is that It must be a sale within the meaning of the Sale of Goods Act. Mr. Chowdhury referred to the decisions in Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash A.I.R. 1964 S.C. 459, J.K. Jute Mills Co. Ltd. v. State of Uttar Pradesh A.I.R. 1961 S.C. 1534, Carl Still G.m.b.H. v. State of Bihar A.I.R. 1961 S.C. 1615, George Oakes (P.) Ltd. v. State of Madras A.I.R. 1962 S.C. 1037, Bhopal Sugar Industries Ltd. v. D.P. Dube, Sales Tax Officer A.I.R. 1964 S.C. 1037, Deputy Commercial Tax Officer, Saidapet, Madras v. Enfield India Ltd. Co-operative Canteen Ltd. A.I.R. 1968 S.C. 838, State of Maharashtra v. Champalal Kishanlal Mohta A.I.R. 1871 S.C. 908, in addition to the decisions cited by Mr. Sengupta for the appellants. Mr. Chowdhury's submission was that those Supreme Court decisions have laid down that in order to constitute 'sale' which can be taxed by any State Legislature, such 'sale' must constitute a sale within the meaning of the Sale of Goods Act. Mr. Chowdhury thereafter referred to the Defence of India Rules, Rule 81(2), Industries (Development and Regulation) Act, 1951, Section 18G(2)(a), Essential Commodities Act, 1955, Section 2, which are the various Acts dealt with by the Supreme Court in some of the said decisions and submitted that the provisions of the West Bengal Cement Control Act, 1948, Section 3(2)(e), are of the same pattern and conform to the same provisions as in the various Acts referred to by him. Mr. Chowdhury also referred to Section 4 of the Sale of Goods Act which provides that there must be an agreement for sale before a contract of sale can come into effect. And relying on those provisions and decisions of the Supreme Court, Mr. Chowdhury submitted that any transfer of property in goods for money pursuant to a statutory right to demand such goods and statutory obligations to deliver them when demanded without any need of any offer or acceptance, expressed or implied, is not a 'sale' within the meaning of entry 48, List II of the Government of India Act, 1935, and entry 54 of List II of the Seventh Schedule to the Constitution of India read with Section 4 of the Sale of Goods Act. There must be offer to buy made by the purchaser to the seller or vice versa and there must be acceptance of such offer by the respective parties, as the case may be ; they are the essentials of a contract. When there is no requirement of the law to make an offer or to accept an offer and the passing of property in the goods and there is only statutory rights and statutory obligations and there being no offer and acceptance a compulsory sale is effected, it is not a sale at all within the meaning of the Sale of Goods Act as no freedom of contract to enter into an agreement between the parties is left in the types of transactions which are involved in this appeal. Mr. Chowdhury further submitted that if the amount of freedom which is left to the parties does not relate to offer and acceptance, it is not freedom at all and cannot amount to a sale within the meaning of the Sale of Goods Act. He strongly relied on the passages in Solar Jung Sugar Mills Ltd. v. State of Mysore A.I.R. 1972 S.C. 87, paras 43 and 44. He submitted that in order to constitute an agreement the parties must sign the same and offer and acceptance must be according to the free will of the parties. Mr. Chowdhury submitted that the transactions which are the subject-matter of this appeal are not sales but those are sales of a compulsory nature similar to transactions under the Defence of India Rules, Essential Commodities Act, where there is a fixed price under the control order and it is not a question of maximum or minimum price. He again relied on the line of the Supreme Court decisions which have held that those transactions are not sales within the meaning of the Sale of Goods Act and as such beyond the competency of the State Legislature to impose sales tax on such transactions and, therefore, the Bengal Finance (Sales Tax) Act, 1941, is not applicable to those transactions as those are not voluntary sales pursuant to an agreement entered into between the purchaser and the seller but a compulsory sale to a permit-holder under the said control order. The respondent had no option but to deliver the goods at the fixed price within the fixed time of fixed quantity. Mr. Chowdhury further highlighted the provisions for penalties in the the said Cement Control Act in Sections 6, 7, 8 and 9 and submitted that those penal provisions make it clear that the transactions in question are not sales under an agreement of sale but compulsory sales. Mr. Chowdhury thereafter referred to the Supreme Court decision in New India Sugar Mills Ltd. A.I.R. 1963 S.C. 1207, where the four conditions of sales have been laid down. Mr. Chowdhury also referred to the decision in State of Tamil Nadu v. Cement Distributors A.I.R. 1973 S.C. 668, which arose out of the Cement Control Act in respect of sale of cement to State Trading Corporation in gunny bags and it was held that those are not sales of cement including gunny bags. Mr. Chowdhury again referred to the decision in Chittar Mal Narain Das v. Commissioner of Sales Tax A.I.R. 1970 S.C. 2000, where the question arose whether under the U. P. Levy Order there was a sale by the licensed dealer pursuant to an order to deliver the wheat under the said levy order. Relying on those decisions in particular, Mr. Chowdhury submitted that the present transactions also cannot be held to be 'sales' within the meaning of the Sale of Goods Act and as such are not liable to sales tax under the Bengal Finance (Sales Tax) Act, 1941.

14. Mr. R.C. Deb also appearing for the respondent submitted that in order to constitute a sale it must precede by an agreement for sale. He referred to Sections 4 and 5 of the Sale of Goods Act, 1930, and contended that offer and acceptance must be there and the property in goods must pass. But where there is any transfer of property in goods for money pursuant to statutory right to demand such goods and such statutory obligations to deliver, such transaction is not a 'sale' within the meaning of entry 48 of List II of the Government of India Act, 1935, and entry 54 of List II of the Seventh Schedule to the Constitution of India read with Section 4 of the Sale of Goods Act, 1930. Mr. Deb relied on Gannon Dunkerley & Co. {Madras) Ltd.'s series of cases A.I.R. 1958 S.C. 560. He submitted that the transactions in question are compulsory sales and are not sales within the meaning of the Sale of Goods Act. There is no amount of freedom left in these transactions as the said Control Act does not provide that the transactions should not be entered into with offer and acceptance; as such there is no sale. He submitted that in the present case the allotment order gives no choice to the respondent and as such it cannot amount to sale. There is an obligation under the Cement Control Act on the respondent to deliver ; in default penal consequences would visit the respondent under the relevant provisions of the said Control Act. Mr. Deb submitted that there is no volition left between the parties and as such there cannot be any contravention. He also referred to the decisions in Chittar Mal Narain Das v. Commissioner of Sales Tax A.I.R. 1970 S.C. 2000, Salar Jung Sugar Mills Ltd. v. State of Mysore A.I.R. 1972 S.C. 87 and the English Appeal Court decision in Kirkness v. John Hudson & Co. Ltd. [1955] A.C. 696.

15. Mr. P.K. Sengupta in reply submitted that in these transactions there is an implied agreement between the stockist and permit-holder of cement under the said Control Act and orders made thereunder. He submitted that so far as the cement is concerned the stockist applies for licence under the Control Act agreeing to sell cement under certain limited conditions as prescribed under the terms of the licence and thereby offers cement for sale on those terms. The purchaser also agrees to buy on certain terms cement from the seller by applying for a permit to the authorities under the Cement Control Act. In such transactions, the controlling authorities under the said Cement Control Act only acts as a conduit pipe for putting the seller and purchaser together and, as such, there is offer and acceptance implied in such transactions to constitute a contract. He again submitted that there is purchaser and seller and the controlling authority only controls the quantity and the maximum price for equitable distribution to bona fide consumer of cement and prevent black market. Mr. Sengupta finally summarised that there are enough volitions left to the parties in order to enter into an agreement for sale and a contract for sale within the meaning of the Sale of Goods Act. Those volitions are : (1) The maximum price is fixed but freedom to sell at a lower price than the maximum price is not taken away and the parties can agree to any price below the maximum price. (2) Delivery can be taken at any time within 15 days from the date of the permit and the parties can agree to take and give delivery by instalments and, as such, there is also a freedom in respect of the same. (3) The price can be paid either by instalments and by cash or credit note as the parties may agree between themselves. (4) Licence is taken by the stockist and dealer who is the seller agreeing to offer for sale of cement and the permit-holder also agrees to purchase from the licensed stockist and dealer of cement on the terms and conditions prescribed. Mr. Sengupta thereafter submitted that the Controller merely controls the flow of cement for equitable and fair distribution at a maximum price fixed for supply of cement which is in short supply. Therefore Mr. Sengupta submitted that there is an implied contract between the seller and the buyer. (5) There is a transfer of property in the goods by the agreement which is involved in these transactions. (6) The parties are free to come through the Controller in respect of the said transactions for cement either to buy cement or to sell cement according to their volitions, that is, the seller obtaining a licence for selling cement within the limits and terms prescribed by the Control Act and the orders made thereunder and the permit-holder also agrees to buy cement from the stockist and dealer of cement on the terms prescribed under the said Act and the orders. Mr. Sengupta again referred to the decision in Indian Steel and Wire Products Ltd. v. State of Madras A.I.R. 1968 S.C. 478, in support of his contention and submitted that the transactions in question must be held to be sale within the meaning of the Sale of Goods Act and liable to sales tax under the Bengal Finance (Sales Tax) Act, 1941. He submitted that in the transactions, it cannot be said that there is no amount of volition left with the parties to enter into the said transactions so as to take it out of an agreement for sale resulting in a contract for sale as analysed before.

16. Considering the respective contentions very carefully it appears to us that the question involved in this appeal has to be decided solely on the interpretation of the relevant provisions of the West Bengal Cement Control Act, 1948, under which the respondent is a licensed stockist and dealer of cement and also the licences for cement to consumers are issued under the said Act. It is now well-settled by the catena of Supreme Court decisions cited by both the parties, particularly, the decision in Gannon Dunkerley A.I.R. 1958 S.C. 560, that the State can only impose sales tax on transactions which are 'sales' within the meaning of the Sale of Goods Act, that is, there must be an agreement for sale followed by a contract for sale where all the four elements of sale formulated by Benjamin on Sale and approved by the Supreme Court, viz., (1) parties competent to contract, (2) mutual assent, (3) things, absolute or general property in which is transferred from the seller to the buyer and (4) price in money paid or promised, are satisfied. Therefore, the question boils down to this, that it has to be examined whether under the relevant provisions of the said Cement Control Act, transactions of delivery of cement by a licensed stockist to a consumer, in whose favour licence for cement has been issued under the said Act on the terms and conditions of the respective licences of the stockists and the consumers, constitute 'sale' within the meaning and conditions as laid down by the Supreme Court in the said series of decisions. The relevant provisions of the said Cement Control Act, and also the relevant terms and conditions of the licence issued to the stockist and the consumers pursuant to their application to the prescribed authorities under the said Act have been set out before.

17. It appears from the short title of the Act that it is for control of the transaction in cement in West Bengal, and from the preamble it appears that the object of the Act is to confer powers on the State Government to control the production, supply and distribution of, trade and commerce In, cement in West Bengal. Section 1 gives the short title, extent and the date of commencement of the said Act in West Bengal. Section 2 defines 'cement'. Sub-section (1) of Section 3 gives power to the State Government to promulgate orders by publication in the official Gazette regarding regulation or prohibition of the production, supply and distribution of, trade and commerce in, cement within the State of West Bengal with a view to maintain or increase the supply of cement or in securing suitable distribution and fair price. Sub-section (2) of Section 3 provides in addition to the general powers of the State to promulgate orders for the purposes mentioned therein which, inter alia, included regulating licences, permits or otherwise the production or manufacture of cement, fixing price at which the cement may be purchased or sold and prescribing conditions for the sale thereof, also regulation about storage, transport, movement, etc., and other relevant matters. Sub-section (3) of Section 3 gives power of seizure of cement and proceedings under the Code of Civil Procedure. Section 4 provides for power of delegation by the State Government to make order under Section 3 to such officers stated therein. Section 5 provides for overriding effect of orders made under Section 3 of the said Act. Section 6 provides for penalties which can be imposed on a person contravening any order made under Section 3 of the said Act. Section 7 provides similar penalties to the person aiding and abetting the contravention of any order under Section 3 of the said Act. Section 8 extends the penalties for contravention of any order passed under Section 3 of the said Act to a company and other body corporate, every director, manager, secretary or other officers or agents thereof on the conditions prescribed therein. Section 9 provides that any person making any false statement or information will become punishable under the said Act. Section 10 provides for the procedure for cognizance of offences under the said Act. Section 12 of the said Act provides for imposition of fine for contravention of an order under Section 3 of the said Act. Section 13 contains certain savings under the said Act and Section 14 provides for protection to the officers and the State Government against suit and other legal proceedings. Section 15 provides power to the State Government to exempt any variety of cement from the provisions of the said Act. Section 16 continued any order or direction or action taken under the West Bengal Cement Control Ordinance, 1948.

18. From the analysis of the provisions of the said Act it is abundantly clear that the scope and object of the said Act is to control, inter alia, trade and commerce in cement in West Bengal which clearly include sale and purchase of cement. It is true that the mere use of the word 'sale' in Sub-section (2) of Section 3 of the said Act would not make the transaction of delivery of cement pursuant to licences and permits issued under the said Act a 'sale' within the meaning of the Sale of Goods Act, ipso facto, unless the four elements as laid down by the Supreme Court to constitute a sale are satisfied. But certainly when the legislature designedly and deliberately has used the word 'sale' particularly in Sub-section (2) of Section 3 of Clauses (b), (d), and (e), it must be given a meaning and a legislative purpose. The said Act appears to be a comprehensive one and covering a wide range regarding control over production and transactions in cement in West Bengal. The State Government, if it appears to it necessary and expedient, can pass any order for the purposes and object of the said Act which, inter alia, includes sale of cement by a licensed stockist to a consumer to whom licence has been issued under the said Act. As it has already been laid down by the Supreme Court through the said series of decisions mentioned hereinbefore in order to enable the State Government to impose sales tax the transaction must be a 'sale' of goods within the meaning of the Sale of Goods Act as interpreted by the said decisions. In the instant case, it is an admitted position that the respondent is a licensed stockist who has applied for licence under the said Control Act to sell cement on the terms and conditions of the licence issued to it. The application form, the relevant terms of which has been set out before, makes it abundantly clear that any person who is agreeable on the conditions set out in the said licence issued to him, can sell cement to customers. Relevant portion of clause 5 of the conditions of licence once again may be set out for convenience sake at this stage :

The licensee shall issue to every customer a true cash memorandum or credit note, as the case may be, giving his name, licence number and address, the date of the transaction, the quantity sold, the rate at which sold, the number and date of the written order under which sold and the salesman's signature....

19. There is no compulsion on anybody to apply for licence under the said Act for doing business in cement. It is purely a voluntary act and any person is free to apply for such licence under the said Act and licences would be issued to persons under the said Act provided the conditions are fulfilled. Therefore, it appears that by applying for a licence under the said Act, a person voluntarily agrees to do business in cement as a licensed stockist by complying, with the terms of the said Act regarding sale of cement to customers to whom the licence for cement would be issued by the prescribed authority under the said Act. Correspondingly any person who requires cement for his own consumption or purpose may apply for issue of a licence for cement to the prescribed authority under the said Act and also agrees to purchase cement from the licensed stockist under the said Act under the terms and conditions prescribed therein. The said act of the customer who applies for licence of cement is entirely voluntary and he is free to apply for required quantity of cement to the prescribed authority under the said Act. Therefore, there seems to be an offer within the meaning of the Contract Act by the consumer who is the purchaser of cement to the licensed stockist under the said Act. Therefore, the first element to constitute a sale is satisfied. That is, there are parties competent to contract in respect of purchase and sale of cement, viz., licensed stockist who offers cement for sale on the terms and conditions of his licence issued under the said Act and the customer in whose favour licence for cement has been issued under the said Act accepted the said offer of the licensed stockist through the prescribed authorities under the said Act. Therefore, it appears that the first element Is satisfied.

20. Now the second element constituting sale being the mutual consent of the parties seems to have been satisfied in this case, as it cannot be said that there is any compulsion under the law to apply under the said Act for a licence both on the part of the licensed stockist of cement and the consumers of cement. What is prescribed is only a control of such contract which must comply with the provisions of the said Act and order made thereunder. It cannot be said in the circumstances that it is wholly controlled eliminating consent or volition of the parties altogether. A party who has voluntarily and freely according to his sweet will and requirement applied under the Act for issue of a licence as stockist or a consumer of cement agreeing to have dealings and transactions in purchase and sale of cement under the terms and conditions of licences issued under the said Act. Therefore, it must be held that there is no question of total elimination of volition or mutual consent of the parties in the transaction of delivery of cement, as in this instant case, by the respondent to the customer in whose favour the said licence for cement has been issued under the said Act. There is no question about satisfying the third element to constitute a sale within the meaning of the Sale of Goods Act, that is, transfer of property from the seller to the buyer. It is nobody's case that the licensed stockist is not the owner of the said cement and as such by delivery of the said cement to the customer holding a licence for cement which has been issued under the said Act against valuable consideration which is fixed under the said licence, there is certainly a transfer of property in the cement from the licensed stockist to the customer presenting the licence for cement under the said Act to the licensed stockist. The fourth element being the price in money paid or promised is satisfied as the price is mentioned in the licence itself which is issued in favour of the customer and there is no dispute that the same has been paid to the licensed stockist. Reference may also be made to the licence for cement, which is annexed to the paper book and set out before, that the price of cement mentioned therein excludes sales tax, indicating that sales tax is payable and can be charged by respondent No. 1, according to the provisions of the Bengal Finance (Sales Tax) Act, 1941, under which respondent No. 1 is a registered dealer.

21. The general scheme of promulgating orders under the provisions of the Defence of India Act, Essential Commodities Act, and the various control orders seems to be more or less on similar lines and for common objects of regulating, inter alia, supply, trade and commerce, manufacture, distribution, etc., of various goods. The necessity of passing an order under the said Act depends on the circumstances and conditions at different stages and places as the Central Government or the State Government may think necessary to cope with the situation and problem which may arise from time to time. In the interest of the country's development this type of Orders has become necessary, inter alia, for regulation of community life and commerce.

22. As it has been observed a transaction on which sales tax can be imposed by a State Government must amount to a sale within the meaning of the Sale of Goods Act, 1930. What amounts to such sale has been clearly laid down by the series of Supreme Court decisions which have been referred to by both the parties and have been summarised before. It has been further laid down that the transactions like forward contract, claim for damages, supply of refreshment to members of a club or a co-operative society, consumption by the owner of goods and compulsory acquisitions of goods are not 'sales' within the meaning of the Sale of Goods Act.

23. It is needless for us to discuss and consider all the decisions cited at the Bar, as from the facts of this case and on the analysis of the scope and object of the West Bengal Cement Control Act, 1948, enumerated hereinbefore, it is abundantly clear that the transaction involved in the supply of cement by the respondent as a licensed stockist under the said Cement Control Act and a registered dealer under the Bengal Finance (Sales Tax) Act by supplying cement to the holder of licence for cement, being the consumers and customers, is certainly a sale within the meaning of the Sale of Goods Act. It is immaterial that there are provisions for penalty and prosecution for non-compliance of the provisions of the said Cement Control Orders and the terms of the licence by the parties having dealings and transactions under the said Act. What is material is whether the transaction amounts to 'sale' within the meaning of the Sale of Goods Act or not, The principle to be applied in the present case having regard to the facts and the scope and object of the Cement Control Act seems to have been well-established by the four decisions of the Supreme Court, being those in Indian Steel and Wire Products Ltd. v. State of Madras A.I.R. 1968 S.C. 478, Andhra Sugars Ltd. v. State of Andhra Pradesh A.I.R. 1968 S.C. 599, State of Rajasthan v. Karam Chand Thappar and Brothers (Coal Sales) Ltd. A.I.R. 1969 S.C. 343 and Salar Jung Sugar Mills Ltd. v. State of Mysore A.I.R. 1972 S C.87.

24. All the decisions which were relied on by the respondent are mostly cases of compulsory acquistions or transactions which do not amount to 'sale' under the Sale of Goods Act. Particularly the decision in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar A.I.R. 1983 S.C. 1207, which acted as a source of revelation and inspiration to the respondent of its legal right to challenge the decisions of the sales tax authorities imposing sales tax on the said transactions of supply of cement to licence-holders by the respondent, is a clear case of compulsory acquisition of goods under the Sugar and Sugar Products Control Order, 1946. Therefore, all the decisions relied on by the respondent are decided on the peculiar facts of such particular case and have no application to the present case.

25. The decision in Andhra Sugars Ltd. v. State of Andhra Pradesh A.I.R. 1968 S.C. 599 arose out of a writ petition under Article 32 of the Constitution before the Supreme Court, where the vires of Section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961, was challenged. After considering, inter alia, the relevant provisions of the Sale of Goods Act and the Contract Act, the Supreme Court held as follows :

Now, under Act No. 45 of 1961 and the Rules framed under it, the cane-grower in the factory zone is free to make or not to make an offer of sale of cane to the occupier of the factory. But, if he makes an offer, the occupier of the factory is bound to accept it. The resulting agreement is recorded in writing and is signed by the parties. The consent of the occupier of the factory to the agreement is not caused by coercion, undue influence, fraud, misrepresentation or mistake. His consent is free as defined in Section 14 of the Indian Contract Act though he is obliged by law to enter into the agreement. The compulsion of law is not coercion as defined in Section 15 of the Act. In spite of the compulsion, the agreement is neither void nor voidable. In the eye of the law, the agreement is freely made. The parties are competent to contract. The agreement is made for a lawful consideration and with a lawful object and is not void under any provisions of law. The agreements are enforceable by law and are contracts of sale of sugarcane as defined in Section 4 of the Indian Sale of Goods Act. The purchases of sugarcane under the agreement can be taxed by the State Legislature under entry 54, List II.

26. In that decision, it was observed that in Kirkness v. John Hudson and Co. Ltd. [1955] A.C. 696 and New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar A.I.R. 1963 S.C. 1207, on the special facts of those cases the transactions were not 'sales' as no contract resulted and those decisions are not treated as an authority for the proposition that 'there can be no contract of sale under compulsion of a statute. It depends upon the facts of each case and the terms of the particular statute regulating the dealings whether the parties have entered into a contract of sale of goods'. In the said decision, the Supreme Court held that cane-grower makes an offer to the occupier of the factory directly and the latter accepts the offer. The parties then make and sign an agreement in writing. There is thus a direct privity of contract between the parties. The contract is a contract of sale and purchase of cane, though the buyer is obliged to give his assent under compulsion of a statute. The State Legislature is competent to tax purchases of canes made by such a contract.

27. In the Supreme Court decision in Indian Steel and Wire Products Ltd. v. State of Madras A.I.R. 1968 S.C. 478, the appellant contested the right of the State of Madras to levy tax on the turnover of supply of certain steel products by it to various persons in the State of Madras on the basis that the said transactions were not 'sales' and were made under compulsion of law and as such there was no agreement between the appellant and the parties to whom the goods were delivered pursuant to the order of the Steel Controller exercising powers under the Iron and Steel (Control of Production and Distribution) Order, 1941, issued under the Defence of India Act, 1939. In that case also, similar argument as advanced in this case was also made before the Supreme Court, i e., 'that every facet of those transactions were prescribed by the Controller and therefore those transactions cannot be considered as 'sales' on the basis of the said decisions in Kirkness v. John Hudson & Co. Ltd. (3) [1965] A.C. 696, New India Sugar Mills Ltd. v. Commissioner of Sales Tax A.I.R. 1963 S.C. 1207 and other decisions. In the said decision, the Supreme Court analysed the correspondence between the parties acquiring the iron and steel products, the Controller and the appellant-company, and also the relevant provisions of the said Iron and Steel Control Order and held that from the materials all that could be gathered is that the Controller fixed the base price of steel products and determined the buyers. In other respects, the parties were free to decide their own terms by consent. The appellant could supply the goods in question at its convenience. It was open to the appellant to agree with its customers as to the date on which the goods were to be supplied. It was also open to the appellant to fix the time and mode of payment of the price of the goods supplied. Therefore, It was held that the transactions were not completely regulated and controlled by the Controller leaving no room for mutual assent. It was also held that the said Control Order reduced the area within which there can be bargaining between a prospective buyer and an intending seller of steel products. Both of them have to conform to the requirements of the order and to comply with the terms and conditions contained in the order of the Controller. Therefore, they could negotiate only in respect of matters not controlled by the order or prescribed by the Controller. That does not mean that there is no freedom to contract. The concept of freedom of contract has undergone a great deal of change even in those countries where it was considered as one of the basic economic requirements of a democratic life. Full freedom to contract was never there at any time. Law invariably imposed some restrictions on freedom to contract. But due to change in political outlook and as a result of economic compulsions, the freedom to contract is now being confined gradually to narrower and narrower limits : see Indian Steel and Wire Products Ltd. v. State of Madras A.I.R. 1968 S.C. 478 at 484-485 (paras 10, 11), 487.

28. The Supreme Court further observed in that case that 'it would be incorrect to contend that because law imposes some restrictions on freedom to contract, there is no contract at all. So long as mutual assent is not completely excluded in any dealing, in law it is a contract' : see Indian Steel and Wire Proudcts Ltd. v. State of Madras A.I.R. 1968 S.C. 478 at 484-485 (paras 10, 11), 487.

29. It was also held by the Supreme Court that the Controller's directions were confined to narrow limits and there were several matters which the parties could decide by mutual assent. The Supreme Court finally concluded in Indian Steel and Wire Products Ltd. v. State of Madras A.I.R. 1968 S.C. 478 at 484-485 (paras 10, 11), 487 'that the the transactions were those of sales as out of four elements to constitute a sale three were admittedly established, namely, the parties were competent to contract, the property in the goods was transferred from the seller to the buyer and price in money was paid. The only controversy was whether there was mutual assent, and the finding was that there was mutual assent in several respects and the transaction was that of sale'. It appears to us that the said decision is in all fours with the present case before us under the West Bengal Cement Control Act, 1948.

30. In the decision in State of Rajasthan v. Karam Chand Thappar and Brothers (Coal Sales) Ltd. A.I.R. 1969 S.C. 343 at 345, para 7, the Supreme Court was dealing with the provisions of the Colliery Control Order, 1945, in a writ petition for quashing an order of assessment.

31. The Supreme Court after analysing the provisions of the Colliery Control Order which may be said to have analogous provisions like that of the present Cement Control Act before us observed in State of Rajasthan v. Karam Chand Thappar and Brothers (Coal Sales) Ltd. A.I.R. 1969 S.C. 343 at 345, para 7, as follows:

Under the Colliery Control Order, coal may be supplied under directions issued by the Central Government upon the colliery owner to any person without an agreement, express or implied, between the colliery owner and such other person : coal may also be supplied under a contract between the colliery (sic) to a purchaser at the price fixed by the Central Government. In the present case, there was between the State of Rajasthan and the assessee acting as an agent of the Equitable Coal Company an agreement to sell coal. The price chargeable was fixed under the Colliery Control Order. The effect of the Control Order was only to superimpose upon the agreement between the parties the rate fixed under the Order. But on that account it cannot be said that the relation between the supplier and the person to whom the coal was supplied was not contractual. The contract between the parties was only modified by the statutory provisions.

32. In dealing with New India Sugar Mills Ltd.'s case A.I.R. 1963 S.C. 1207, the Supreme Court observed that when goods, supply of which was controlled by statutory orders, are delivered pursuant to contract of sale, the principles of the decision in New India Sugar Mills Ltd.'s case A.I.R. 1963 S.C. 1207 had no application.

33. The latest Supreme Court decision is Salar Jung Sugar Mills Ltd. v. State of Mysore A.I.R. 1972 S.C. 87 at 98, para. 38, where in a writ petition the question arose whether there was a purchase or sale of sugarcane arising under the Mysore Sugarcane (Regulation of Supply) Order, 1963, which was passed in exercise of powers conferred by Section 3 of the Defence of India Act, 1962, and Rule 125-B of the Defence of India 'Rules, 1962. The Supreme Court after analysing the relevant provisions of the Act and the Order and the decision cited, Ray, J. (as he then was), observed as follows :

These decisions establish that statutory orders regulating the supply and distribution of goods by and between the parties under Control Orders in a State do not absolutely impinge on the freedom to enter into contract. Legislative measures or statutory provisions fixing the price, delivery, supply, restricting areas for transactions are all within the realm of planning economic needs ensuring production and distribution of essential commodities and basic necessities of community....The individual freedom is to be reconciled with adequate performance by the Government of its functions in a highly organised society. Delimiting areas for transactions or parties or denoting price for transactions are all within the area of individual freedom of contract with limited choice by reason of ensuring the greatest good for the greatest number by achieving proper supply at standard or fair price to eliminate the evils of hoarding and scarcity on the one hand and availability on the other.

34. In that case, it was held that the transaction was a sale and sales tax was leviable.

35. Applying those principles to the facts of this case there cannot be any doubt that all the four elements required for constituting a 'sale' within the meaning of the Sale of Goods Act are present in the transactions between the respondent as licensed stockist and the customers holding licence for cement under the West Bengal Cement Control Act, 1948. There are parties competent to contract and, as such, the first condition is satisfied. Mutual assent of the parties is not totally excluded regarding the time for payment, mode of payment, price below the maximum price fixed, place of delivery, quantities for delivery, time for delivery, charges for delivery and the packing. Therefore, mutual assent is not totally excluded and as such the second condition is also satisfied. There is no dispute that the respondent is the owner of the cement which is delivered to the customers holding a permit to whom the property passes on the terms and conditions as to payment to the respondent. As such the third condition Is also satisfied. There is no dispute that the money for the price of the said quantities of cement have been: paid by the customers to respondent No. 1 and, as such, the fourth condition is also satisfied. In fact the respondent charged sales tax and realised the same from the customers.

36. It is true that there is no separate writing evidencing an agreement for sale or a contract for sale, at least nothing has been disclosed by the parties, but a contract can be expressed or implied and, in the facts and circumstances of this case, presenting the licence for cement by the customer to the licensed stockist being the respondent and his acceptance of the same by supplying cement and receiving payment of the price mentioned therein, clearly constitute a contract for sale within the meaning of the Sale of Goods Act read with the Contract Act.

37. The Supreme Court in a recent decision in Instalment Supply Ltd. v. Sales Tax Officer, Ahmedabad A.I.R. 1974 S.C. 1105 at 1108, para 6, while dealing with the question as to when a ''sale' liable to sales tax takes place under a hire-purchase agreement laid down the legal incidence of a 'sale'. After setting out Section 4 of the Sale of Goods Act, Alagiriswami, J., observed as follows :

The definition is the same as in the English Sale of Goods Act, 1893. The points to be noticed are that the essence of sale is the transfer of the property in a thing from one person to another for a price. The terms 'contract of sale' includes an agreement to sell. An agreement to sell is known as an executory contract of sale, while a sale is known as an executed contract of sale. The term 'contract of sale' thus includes both actual sales and agreements for sale. It is important to distinguish clearly between the two classes of contract. An agreement to sell is a contract, pure and simple, whereas a sale is a contract plus a conveyance. By an agreement to sell a jus in personam is created, by a sale a jus in rem also is transferred. Where goods have been sold and the buyer makes default, the seller may sue for the contract price on the count of 'goods bargained and sold', but where an agreement to buy is broken, the seller's normal remedy is an action for unliquidated damages. If an agreement to sell be broken by the seller, the buyer has only a personal remedy against the seller. The goods are still the property of the seller, and he can dispose of them as he likes. But if there has been a sale, and the seller breaks his engagement to deliver the goods, the buyer has not only a personal remedy against the seller, but also the usual proprietary remedies in respect of the goods themselves. In many cases, too, he can follow the goods into the hands of third parties. Again, if there be an agreement for sale, and the goods are destroyed, the loss as a rule falls on the seller, while if there has been a sale, the loss as a rule falls upon the buyer though the goods have never come into his possession.

38. The above legal proposition describing the incidence of a 'sale' makes it clear that the essence of a sale is the transfer of a property in the goods from one person to another for a price and a sale is a contract plus a conveyance. In the instant case before us, as has been analysed before, while examining the question as to whether it satisfies the four elements of sale, it must be held that the property in the goods has passed from one person to another for a price and there is a contract plus conveyance. The said Cement Control Act only imposes certain conditions on such sales for attaining the scope and object of the said Act in respect of equitable distribution of cement at a fair price, to prevent black market and ensure fair and equitable distribution of cement at a fair price in the State of West Bengal.

39. The sole and only contention exhaustively argued on behalf of the respondent is that there was no volition on the part of the respondent but to accept the permit for cement of the customer and supply the goods on the terms and conditions of the respective licences issued under the said Cement Control Act. In short, there was no consensus between the parties which has been voluntarily arrived at. As has been laid down in the Supreme Court decisions discussed above, unless the transaction amounts to compulsory acquisition of property, which completely eliminates all the four element of sale, there may be sale even under compulsion or when the terms of such sales are controlled by legislation for the purpose and object laid down therein. The identical question came up before the Supreme Court in relation to a case under the Prevention of Food Adulteration Act, 1954, where a dealer of spices was convicted after a Food Inspector purchased a sample of the goods from him under the provisions of the said Act and the question arose whether the sale under the compulsion of the said Act was a 'sale'. In the said decision in Mangaldas Raghavji Ruparel v. State of Maharashtra A.I.R. 1966 S.C. 128 at 134-135, para. 18, Mudholkar, J., observed :

No doubt a contract comes into existence by the acceptance of a proposal made by one person to another by that other person. That other person is not bound to accept the proposal but it may not necessarily follow that where that other person had no choice but to accept the proposal the transaction would never amount to a contract.

40. The said observation also makes it clear that it is the scope, object and intention of a particular Act under which a transaction takes place as to whether that would amount to a 'sale' within the meaning of the Sale of Goods Act as laid down by the various decisions of the Supreme Court referred to above. Sale under compulsion of, or under the control of, a statutory authority laying down statutory terms which would be incorporated in the contract for sale would not take such transaction out of the definition of 'sale' within the meaning of the Sale of Goods Act as laid down by the aforesaid decisions of the Supreme Court. It is only when the transaction amounts to compulsory acquisition of property by an order of a statutory authority under any Act, that the transaction would not be a 'sale'.

41. From any view of the matter the transactions which are involved in this appeal are undoubtedly ''sales' within the meaning of the Sale of Goods Act as has been already held by us hereinbefore.

42. In view of the above, we cannot but hold that the transactions in question are 'sales' within the meaning of the Sale of Goods Act and the assessment orders imposing sales tax under the Bengal Finance (Sales Tax) Act, 1941, on the transactions are valid, legal and within the jurisdiction of the sales tax authorities.

43. In the result, the appeal is allowed. The rule is discharged and all interim orders vacated. No order as to costs.

S.P. Mitra, C.J.

44. I agree.


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