TMI Blog1960 (11) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... ol 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 pensation 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.. The Corporation is a private company incorporated under the Indian Companies Act. The memorandum of association of the said company was filed before this Court by the learned Advocate-General and, on a scrutiny of the same it is apparent that though nominally a private incorporated company, it is, for all practical purposes, an organization completely controlled by the Government of India. The capital of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus the scheme of the Order is clear. The entire cement produced in the country by the various manufacturing concerns (described as "producers" in the Act) was pooled under one central organization, namely the Corporation, controlled by the Government of India. The distribution of cement to the various dealers was made by the Corporation at the prices fixed in the Order, and the dealers were further required to sell cement within each State at the price fixed by the State Governments. Thus the manufacturing concerns were given no discretion either as regards the person to whom they were required to sell or the price at which they may sell cement. They were compelled to sell the entire cement to the Corporation at the price fixed in the Order notwithstanding any contract to the contrary which they might have entered into with third parties. Sub-clause (2) of clause 3 expressly prohibits them from disposing of cement in contravention of the main provisions of that clause. It is true that clause 3 contains the word "sale" and similarly sub-clause (1) of clause 6 refers to the "price" at which the purchaser may "sell" cement. But these words have no special significance when the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of the expression 'sale of goods' there must be an agreement between the parties for the sale of the very goods in which eventually the property passed." 6.. The aforesaid decision of the Supreme Court is directly applicable here. There is no possibility of any contract, express or implied, being entered into between the petitioner (producer) on the one hand and the Corporation on the other. Neither of them has any discretion to act for himself in the matter. By virtue of the Cement Control Order the firm is directed to hand over all the cement produced by it to the Corporation at the price fixed in the Order. The element of bargaining which is essential for the purpose of sale is completely absent. Some reliance was placed by the Advocate-General on the use of the expression "the price at which the producer may sell the cement shall be specified in the statute" in clause 6(1) of the Order, and he urged that the use of the word "may" would indicate that some discretion was left with the producer. But if this clause is read with the other clauses it will be found that there is absolutely no discretion as regards the quantity of cement that the producer is required to sell t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Cement Control Order there was still some contractual nexus between the producer and the Corporation and that, to that limited extent, there was an implied contract preceding the transfer of title to the goods, so as to make the transaction a "sale" within the meaning of the Sales Tax Act. The judgment of the Andhra High Court was delivered prior to the judgment of the Supreme Court in Gannon Dunkerley's case(9) and some of the wide observations contained therein may require modification in view of the decision of the Supreme Court. Moreover, the judgment of the Andhra High Court may be distinguished on facts. There the limited question for consideration was whether there was a contractual relationship between the representative dealer on the one hand and quota holder on the other who were both creatures of a scheme drawn up by the Provincial Textile Commissioner under the provisions of the Cloth Control Order, 1946. The scheme of that Order appears to be that every manufacturer of cloth was required to sell the manufactured goods to certain persons known as representative dealers appointed by the Textile Commissioner under the Act. These persons in their turn, were di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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