Decided on December 18,1972



- (1.)The petitioner is an existing company under the Companies Act and carries on business as agent and distributor of cement in the State of West Bengal. The petitioner is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941), hereinafter referred to as the Sales Tax Act, and deals in cement. According to its case, since 1948 cement has been and is a controlled commodity and its distribution is completely regulated by the West Bengal Cement Control Act, 1948 (XXVI of 1948) hereinafter referred to as the Cement Control Act and the orders thereunder made under section 3 (2). Section 3 (1) inter alia provides for regulation of production, supply and distribution of cement for ensuring equitable supply and distribution of cement at fair prices in West Bengal. By the Cement Control Order 1948 framed thereunder no sale or purchase of cement should be made except in accordance with conditions contained in the written order, issued by the Director of Consumer Goods, West Bengal Regional Honorary Adviser to the Government of India at Calcutta or officers authorized by them, at prices not exceeding the notified price. The petitioner is a licensed stockist of cement and is permitted to stock cement in its godown to be supplied to parties at stipulated price in accordance with permit as may be issued by authorities of Government. The authorities used to issue permits (specimens annexed to the petition and marked 'A') by which a specified quantity of cement is allotted to a permit holder to be delivered by the petitioner at the price specified therein. The validity of the permit is for 15 days and as soon as the amount of price of cement is deposited with the stockist, he is bound to deliver to such permit holder the specified quantity of cement at the specified price. The petitioner contends that no volition or bargaining power to left to the petitioner in such transactions and there is no element of mutual assent or agreement between the registered stockist and permit holder which would make the transaction a sale under the Sales Tax Act. If however it is contended that such transactions are sales within the meaning of the Sales Tax Act, the definition of sale in the said Act is ultra vires the legislative competency of the provincial legislature under the Government of India Act, 1935 or of the State legislature under the Constitution.
(2.)The petitioner states that it was assessed under the Sales Tax Act in respect of transactions as such stockist under the said Act and its orders as aforesaid for assessment periods by quarters ending on January 31, of each year from 1956 to 1959 by the respondent No. 1 who held such transactions to be sales. The petitioner also mistakenly believed the transactions as sales and lawfully taxable. On perusal of the decision of the Supreme Court in (1) New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar A.I.R. 1963 S.C. 1207 the petitioner realized his mistake. The petitioner accordingly filed appeal against the assessments mentioned above and the Assistant Commissioner of Commercial Taxes disposed of the appeals holding that the sales made by the petitioner were taxable, as there were several other factors in such transactions regarding which the parties could decide themselves by mutual contract. The permit only indicated the base price of the cement while the petitioner also charged sales tax on value of cement in such transactions and also in certain cases loading charges. The petitioner, it was held, was free to decide with the customer the amount to be paid as sales tax and also to refuse delivery of goods if the customer failed to pay the amount of sales tax. It was also open to the petitioner to agree with its customer about the date or place of delivery and loading charges which predicated mutual consent. Following the decision in (2) Indian Steel & Wire Products Ltd. v. State of Madras A.I.R. 1968 S.C 478 it was held that the p arties were free to decide in other respects their own terms of contract and the transactions under consideration are accordingly sales liable to tax under the Act. The appeal was accordingly rejected. The said judgment is annexure 'B' to the petition. The petitioner has preferred revision petitions against the said decisions which are pending.
(3.)The petitioner was assessed for sales tax for supplies of cement under provisions of the Cement Control Act for assessment periods by quarters ending with 31st January of each year from 1963 to 1966 (annexure 'C') and the appeals therefrom are pending. In view of the decision of the Sales Tax Authority referred to above, the petitioner submitted that there will be no scope for obtaining any relief from the authorities in the department and such authorities again cannot decide the question of vires of the Sales tax Act.

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