Bhargava, J. - (1.) By this petition under Article 226 of the Constitution the petitioner challenges imposition of sales tax on a turnover of a sum of Rs. 1,27,733.46 representing the proceeds of rice sold by the petitioner to the State Government under the provisions of the Uttar Pradesh Rice Procurement (Levy) Order, 1958. This assessment on this turnover was made in pursuance of a notice issued under Section 21 of the Sales Tax Act on the ground that, in the original assessment, this amount had escaped assessment because of an incorrect representation made by the petitioner.
(2.) The petition as argued before us according to the Learned Counsel for the petitioner raises two points. The first point urged by learned counsel was that the sale of rice by the petitioner to the State Government under the provisions of the U. P. Rice Procurement (Levy) Order did not amount to a sale within the meaning of the word as used in the U. P. Sales Tax Act and consequently this amount has been wrongly taxed as taxable turnover under that Act. For this proposition learned counsel relied on certain remarks of their Lordships of the Supreme Court in Madras State v. G. Dunkerly & Co., A.I.R. 1958 SC 560 . One part of the judgment on which reliance was placed is to the following effect: "....according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale. Thus, if merely title to the goods passes but not as a result of any contract between the parties, express or implied, there is no sale. So also if the consideration for the transfer was not money but other valuable consideration, it may then be exchange or barter but not a sale. And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell and not a completed sale."
(3.) We fail to see how these comments of their Lordships of the Supreme Court are in any way relevant to the case before us. In this case all that the petitioner was required to do by the U. P, Rice Procurement (Levy) Order was to sell a certain percentage of his goods which were his stock-in-trade to the Government. This direction to sell wasf not a case of compulsory acquisition by the Government. It was a case where the petitioner carrying on the business of a dealer in rice had the option to procure stocks for purposes of sale and if he did so and he wanted to Sell those stocks in the course of his business the law required him to sell 65% of the stocks to the Government. This was, therefore, not a case of any compulsory acquisition where there was no volition on the part of the petitioner to sell the goods. In fact the case before us is much more alike in facts to the case of Commissioner's of Inland Revenue v. Newcastle Breweries Ltd., (1927) 12 Tax Cases 927 . That case was noticed by their Lordships of the Supreme Court in the case cited above and their Lordships related the facts of that case pointing out that in that case the point for decision was whether payments made by the Admiralty to the respondent Company which was carrying on business as brewers, on account of stocks of rum taken over by it compulsorily under the Defence of Realm Regulations were liable to be assessed as trade receipts to excess profits duty. The contention of the Company was that the acquisition by the Admiralty was not a sale, that the payments made were not price of goods sold but compensation for interference with the carrying on of business by it, and that accordingly the amounts could not be held to have been received in the course of trade or business. In rejecting this contention Viscount Cave L. C. observed: "If the raw rum had been voluntarily sold to other traders, the price must clearly have come into the computation of the Appellants profits, and the circumstance that the sale was compulsory and was to the Crown makes no difference in principle.";