MANCHANDA, J. - (1.) THIS is a case stated under section 11(1) of the U.P. Sales Tax Act (hereinafter referred to as the Act). The question referred is :- "Whether the giving of bullion by a dealer in exchange for purchase of ready-made ornaments manufactured by goldsmiths is a 'sale of bullion' within the meaning of the U.P. Sales Tax Act or is a barter or exchange transaction and, accordingly, does not come within the purview of the said Act ?"
(2.) THE facts lie within a narrow compass. The assessee is a dealer in bullion and ornaments. The relative assessment year is 1956-57. The assessee disclosed a turnover of Rs. 2,05,000 for ornaments and Rs. 1,60,014 for bullion. The Sales Tax Officer rejected the accounts and determined the turnover at Rs. 4,05,000 and apportioned this between the turnover of ornaments and bullion at Rs. 2,00,000 and Rs. 2,05,000, respectively. Aggrieved by that order, the assessee filed an appeal to the Judge, Sales Tax (Appeals), who reduced the turnover to Rs. 3,80,000 (Rs. 1,80,000 for ornaments and Rs. 2,00,000 for bouillon). Against this order both the department and the assessee went up in revision. According to the department the small reduction in the gross turnover was unjustified. On the other hand, the assessee reiterated its contention that on the facts found by the Judge (Appeals) that obtaining new ornaments by giving in exchange bullion from his own stock plus manufacturing charges to the goldsmiths did not amount to a sale of bullion and as such that part of the transaction was not liable to sales tax and the Judge (Appeals) had erred in treating the bullion so given in exchange for the ornaments as suppression of sales of bullion. The Judge (Revisions) rejected the appeal of the department, and accepting the contention and appeal of the assessee, reduced the turnover of bullion by Rs. 1,40,000. Hence, this reference at the instance of the Commissioner under section 11(1) of the Act. Mr. Raja Ram Agarwal, learned Junior Standing Counsel contends, that in the circumstances of the case, bullion given in exchange for gold ornaments manufactured by Sunars was a "sale" by the assessee and even if it was only an "exchange" or "barter" it should, in the circumstances of the case, have been treated as a sale. He relied upon a passage from Halsbury's Laws of England (Volume 34), Simonds Edition, page 5, paragraph 1. The relevant portion whereof reads :- "Sale is the transfer by mutual assent of the ownership of a thing from one person to another for a money price. Where the consideration for the transfer consists of other goods or some other valuable consideration not being money the transaction is called exchange or barter; but in certain circumstances it may be treated as one of sale." It was also contended that the definition of "sale" as given in the U.P. Sales Tax Act is much wider than that found under the Sale of Goods Act, and, therefore, even if no money consideration passed in the exchange of bullion for ornaments it would, nevertheless, be a "sale" within the meaning of section 2, clause (h), of the U.P. Sales Tax Act, as the transfer of bullion would be a valuable consideration for the transfer of the gold ornaments. Clause (h) of section 2 reads :- (h) Sale. - This means within its grammatical variations and cognate expressions any transfer of property for cash or deferred payment or other valuable consideration. Bullion was, undoubtedly, the stock-in-trade of the assessee's business and it was certainly not given as cash for the purchase of ornaments, and, as such, it might have been possible for the department to contend that bullion was given as "other valuable consideration" within the meaning of section 2(h) of the Act. The intention of inserting these words may have been to bring within the net of the Sales Tax Act all such transactions. Such a view would appear to have been accepted by Govinda Menon, J., as he then was, in Jayarama Chettiar, In re ([1948] 1 S.T.C. 168), by holding :- "Because of the words 'other valuable consideration' in the Madras General Sales Tax Act, 1939, the scope and amplitude of the word sale was such larger than under the Sale of Goods Act, 1930."
(3.) IT was further pointed out in that case that "every sale under the Sale of Goods Act was certainly a sale under the General Sales Tax Act, but every sale under the General Sales Tax Act will not come within the definition of the term under the Sale of Goods Act." The facts of that case were more or less similar to the facts of the present case and the department could well have taken advantage of it but for a subsequent decision of the Supreme Court in the State of Madras v. Gannon Dunkerley and Co. Madras ([1958] 9 S.T.C. 353). In that case the vires of the words "other valuable consideration" contained in the definition of "sale" in the Madras General Sales Tax Act came up for consideration. After tracing the evolution of the law relating to the sale of goods from Roman Law to the time of the promulgation of the Indian Sale of Goods Act, 1930, and the coming into existence of the Constitution of India, it was held :- "A power to enact a law with respect to tax on sale of goods under Entry 48 (in List II, Government of India Act, 1935) must, to be intra vires, be one relating in fact to sale of goods and, accordingly, the Provincial Legislature cannot, in the purported exercise of its power to tax sales, tax transactions which are not sales by merely enacting that they shall be deemed to be sale ........" "Sales tax was not a subject which came into vogue after the Government of India Act, 1935, It was known to the farmers of that statute and they made express provision for it under Entry 48. Then it becomes merely a question of interpreting the words, and on the principle, already stated, that words having known legal import should be construed on the sense which they had at the time of the enactment, the expression 'sale of goods' must be construed in the sense which it has in the Sale of Goods Act." ;