- (1.) THE petitioner company, inter alia, carries on business in manufacturing iron and steel products. For the period August 10, 1955 to June 30, 1957, the gross turn over of the petitioner company was assessed, for the purposes of sales tax, at the figure of Rs. 1,98. 96,717. 65 np. and its taxable turn over was assessed at Rs. 1,58,16,360. 62 np. The petitioner company contended that all its sale transactions were compulsory sales, controlled by Iron and Steel (Control of Production and Distribution) Order, 1941, and as such the sales could not be taxed under the Bengal Finance (Sales Tax) Act. The petitioner company further contended that the sales effected by it were inter-States sales and were exempted from taxation.
(2.) AGGRIEVED by the order of assessment, petitioner company moved this court, under Article. 226 of the Constitution for a writ in the nature of Certiorari for the quashing of the order of assessment and for a Writ of Mandamus restraining the respondents from giving effect to the order of assessment and obtained this Rule. At the hearing of this Rule, Mr. Nirmal Chandra Chakravarty, learned Government Pleader, conceded that he was not in a position to support taxation of the sales made by the petitioner company from September 7, 1955 to December, 12, 1959. He, however, contended that tax imposed on sales effected by the petitioner company between the period August 10, 1955 to September 6, 1955 were sales salvaged under the provisions of Sales Tax Laws Validation Act, 1956, and to that extent the assessment order must be upheld. In trying to repel the argument of Mr. Chakravarty, Mr. Sudhir Ranjan Banerjee, learned advocate for the petitioner company, contended that all sales made during this period were compulsory sales under the provisions of Iron and Steel (Control of Production and Distribution) Order, 1941, and those sales must not be made the subject matter of taxation. In support of his argument Mr. Banerjee relied upon a recent decision of the Supreme Court in the case of New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar, (193) 14 S. T. C. 316, in which Kapur and Shah, JJ. (Hidayatullah, J. dissenting) held that the power conferred by Entry 48, List II, Schedule VII of the Government of India Act, 1935, was restricted to enacting legislation imposing tax liability in respect of sale of goods as understood in the Sale of Goods Act, 1930, and the Provincial Legislature, under the government of India Act, 1935, had no power to tax a transaction which was not a sale of goods as understood in the Sale of Goods Act, 1930. According to section 4 of the Sale of Goods Act, to constitute a sale of goods, property in the goods must be transferred from the seller to the buyer under a contract of sale. A contract of sale between the parties, their Lordships observed, was, therefore, a pre-requisite to a sale and it postulated exercise of volition on the part of the contracting parties. Their Lordships further observed that the despatches of sugar by the assessees, pursuant to the directions of the Sugar Controller, were not the result of any contract of sale and, therefore, there was no sale and the assessees were not liable to pay sales tax on the amount received by them for sugar supplied.
(3.) THE provisions of the Iron and Steel (Control of Production and Distribution) Order, 1941, are almost in pari materia with the provisions of the sugar and Sugar Products Control Order. Clause 3 of the Sugar Control Order approximates clauses 4 and 5 of the Iron and Steel (Control of Production and Distribution) Order, regarding the acquisition and disposal of iron and steel products. Similarly, clause 6 of the Sugar and Sugar Products Control Order approximates Clause 11 (b) of the Iron and Steel (Control of Production and Distribution) Order relating to power of the Controller to fix prices. That being the position in law, all sales effected by the petitioner company during the period August 10, 1955 to September 6, 1955, under the Iron and Steel (Control of Production and Distribution) Order are not liable to taxation.;