CHANDRACHUD - (1.) THESE appeals have been placed for hearing before a seven-Judgt bench in order to set at rest to the extent foreseeable, the controversy whether what is conveniently, though somewhat loosely, called a compulsory sale' is exigible to sales tax. When essential goods are in short supply, various types of orders are issued under the Essential Commodities Act, 1955 with a view to making the goods available to the consumer at a fair price. Such orders sometimes provide that a person in need of an essential commodity like cement, cotton, coal or iron and steel must apply to the prescribed authority for a permit for obtaining the commodity. Those wanting to engage in the business of supplying the commodity are also required to possess a dealer's licence. The permit-holder can obtain the supply of goods,to the extent of the quantity specified in the permit, from the named dealer only and at a controlled price. The dealer who is asked to supply the stated quantity to the particular permit holder has no option but to supply the stated quantity of goods at the controlled price. The question for our consideration, not easy to decide, is whether such a transaction amounts to a sale in the language of the law.
(2.) WE will refer to the facts of Civil 724 of 1976, in which a company called M/s. Vishnu Agencies (Pvt.) Ltd., is the appellant. It carries on business as an agent and distributor of cement in the State of WEst Bengal and is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, referred to hereinafter as the Bengal Sales Tax Act. Cement be ing a controlled commodity, its distribution is regulated by the WEst Bengal Cement Control Act, 26 of 1948, referred to hereinafter as the Cement Control Act, and by the orders made under S. 3(2) of that Act. S. 3(1) of the Cement Control Act provides, Intel alia, for regulation of production, supply and distribution of cement for ensuring equitable supply and distribution thereof at a fair price. 525 By the Cement Control Order, 1948 framed under the Cement Control Act, no sale or purchase of cement can be made, except in accordance with the conditions contained in the written order issued by the Director of Consumer Goods, WEst Bengal or the Regional Honorary Adviser to the government of India at Calcutta or by officers authorised by them, at prices not exceeding the notified price. The appellant is a licensed stockist of cement and is permitted to stock cement in its godown, to be supplied to persons in whose favour allotment orders are issued, at the price stipulated and in accordance with the conditions of permit issuedby the authorities concerned. The authorities designated under the Cement Control Order issue permits under which a specified quantity of cement is allotted to a named permitholder, to be delivered by a named dealer at the price mentioned in the permit. A permit is generally valid for 15 days and as soon as the price of cement allotted in favour of an allottee is deposited with the dealer, he is bound to deliver to the former the specified quantity of cement at the specified price. A specimen order issued in favour of an allottee, under which the appellant had to supply 10 metric tons of cement at Rs. 144.58 per m.t., exclusive of sales tax, reads thus : LICENCE FOR CEMENT The quantities of cement detailed below are hereby allotted to M/s. Marble and Cement Products Co. (Pvt.) Ltd., 2 Brabourne Road, Calcutta-1 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 manufacturing of mosaic tiles at 183, Netaji Subhas Road, Calcutta-40. Under no circumstances will the validity of the permit be extended beyond the period of 15 days from the date of its issue. JUDGEMENT_520_1_1978Html1.htm
(3.) THE appellant supplied cement to various allottees from time to time in pursuance of the allotment orders issued by appropriate authorities and in accordance with the terms of the licence obtained by it for dealing in cement. THE appellant was assessed to sales tax by the first respondent, the Commercial Tax Officer, Sealdah Charge, in respect of these transactions. It paid the tax but discovered on perusal of the decision of this court in New India Sugar Mills Ltd. v. Commr. of Sales Tax that the transactions were not exigible to sales tax Pleading that the payment was made under a mistake of law, it filed 526 appeals against the orders of assessment passed by respondent 1. It contended in appeals before the Assistant Commissioner of Commercial Taxes that by virtue of the provisions of the Cement Control Act and the Cement Control Order, no volition or bargaining power was left to it and since there was no element of mutual consent or agreement between it and the lottees, the transactions were not sales within the meaning of the Sales Tax Act. THE appellant further contended that if the transactions were treated as sales, the definition of "sale" in the Sales Tax Act was ultra vires the legislative competency of the Provincial Legislature under the government of India Act, 1935 and of the State Legislature under the Constitution. THE appellate authority rejected the first contention and upheld the assessments. It did not,as it could not, go into the second contention regarding legislative ompetence.THE appellant adopted the statutory remedies open to it but since the arrears of tax were mounting up and had already exceeded a sum of rupees eight lacs, it filed a writ petition in the Calcutta High court praying that the various assessment orders referred to in the etition be quashed and a writ of prohibition be issued directing the sales tax authorities to refrain from making any further assessments for the purpose of sales tax on the transactions between the appellant and the allottees. A learned single Judge of the High court allowed the writ petition and issued a writ of mandamus restraining the respondents from imposing sales tax on the transactions between the appellant and the allottees. That judgment having been set aside in appeal by a division bench of the High court by its judgment dated 13/12/1974, the appellant has filed appeal 724 of 1976 by special leave.;