MESSRS CEMENT LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) THE following question of law has been referred to this Court by the Sales Tax Tribunal, Orissa, under section 24(1) of the Orissa Sales Tax Act, 1947 (hereinafter referred to as the Act).

(2.) THE petitioner is a limited company manufacturing cement and other products, at a place known as Rajgangpur in the State of Orissa. The company has been registered as a dealer under the Act and holds registration certificate No. S.A. 1999. For the quarter ending 30th September, 1956, the total turnover on the sale of cement by the said firm amounted to Rs. 30,39,017-25 nP. The "sale" was made and delivery of cement effected in favour of the State Trading Corporation (hereinafter referred to as the Corporation) under the provisions of the Cement Control Order. The Sales Tax Authorities assessed the petitioner to sales tax, holding that there was sale of cement by the firm to the Corporation within the meaning of the Act. The petitioner however contended that there was no "sale" within meaning of the Act, and that under the provisions of the Cement Control Order, the firm was compelled to deliver all the cement produced and stocked in the premises of the firm and also cement that was manufactured later on to the Corporation, at the price fixed in the Order. According to the petitioner, therefore, this was an instance of compulsory acquisition of movable property and the money that was paid was, in essence, compensation for such acquisition. Hence, according to the petitioner, the firm was not liable to pay sales tax.

(3.) IN 1951 the Parliament passed an Act known as the Industries Regulation and Development Act, for the purpose of providing for the regulation and development of certain Industries in India. Section 18-G of that Act conferred power on the Central Government, by a notified order, to provide for the equitable distribution and availability, at fair prices, and for regulating the supply and distribution, of certain articles, which included cement. In exercise of the power conferred by this section, the Government of India made the Cement Control Order on the 26th June, 1956. The Order consists only of 6 clauses of which the most important clause is clause 3 which may be quoted in full :-