TMI Blog1970 (3) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... in hoarding the essential articles with the ulterior object of selling them at soaring prices, the Central and State Legislatures and the Governments have stepped in and promulgated the Essential Commodities Supplies Act and various Control Orders to control and regulate the supply and distribution of those articles at fair prices. The Andhra Pradesh Paddy Procurement (Levy) Orders and the Andhra Pradesh Paddy and Rice (Declaration and Requisition of Stocks) Order, 1964, are two such control orders. By virtue of the provisions of the former orders, the paddy growers in the State are compelled to sell their paddy only to the licensed procuring agents appointed by the State Government at the prices fixed by it. The agriculturist has a choice to select his own procuring agent, but cannot sell to any private purchaser. The procuring agents in their turn have to supply to the rice millers in the State at controlled prices. The millers after converting paddy into rice in their mills have to declare their stocks to the Civil Supplies Department. Pursuant to the orders issued by the Civil Supplies Department the rice millers have to supply the requisite quantity of rice to the wholesale or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble consideration....." Section 5 of the Act is the charging section. Paddy is liable to tax at the first point of purchase whereas rice is liable to tax at the point of first sale in the State. It is settled law that the concept of sale under the Act has to be understood as a "sale of goods" within the meaning of section 4 of the Sale of Goods Act. In order to constitute "sale of goods" within the meaning of section 4 of the Sale of Goods Act, there must exist ingredients of (1) a bargain, or agreement of sale; (2) the payment or promise of payment of price; (3) the delivery of goods and (4) the transfer of property to the buyer from the seller. Everyone of the aforesaid ingredients is essential to the transaction being termed as "sale of goods" completed or concluded. See Poppatlal Shah v. State of Madras[1953] 4 S.T.C. 188 (S.C.); A.I.R. 1953 S.C. 274 at 276., State of Madras v. Gannon Dunkerley[1958] 9 S.T.C. 353 (S.C.); A.I.R. 1958 S.C. 560., Bhopal Sugar Industries v. D.P. Dube[1963] 14 S.T.C. 406 (S.C.); A.I.R. 1964 S.C. 1037. and I. S. W. Products v. State of Madras[1968] 21 S.T.C. 138 (S.C.); A.I.R. 1968 S.C, 478 at 480. Where all the requisite ingredients or element ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and steel products by the Indian Steel and Wire Products Ltd., to various buyers pursuant to the orders of the Iron and Steel Controller in exercise of his powers under the Iron and Steel (Control of Production and Distribution) Order, 1941, was exigible to sales tax under the Madras General Sales Tax Act, as on a construction of various provisions of control orders it was found that the parties can negotiate in respect of the manner and place of delivery of stocks and the payment of price though in other respects the control orders prevail. The learned judge, Hegde, J., who spoke for the Court ruled at page 485 thus: "It would be incorrect to contend that because law imposes some restrictions on freedom to contract, there is no contract at all. So long as mutual assent is not completely excluded in any dealing, in law it is a contract." In Andhra Sugars Ltd. v. State of A.P.[1968] 21 S.T.C. 212 (S.C.); A.I.R. 1968 S.C. 599. , compulsory purchase of sugarcane from a grower within the factory zone, by the occupier of the factory pursuant to the provisions of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act (45 of 1961) was held to be a "sale" exigible to sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods Act. In that case, the assessee-manufacturer of sugar in Bihar who supplied sugar to the State of Madras at controlled prices pursuant to the orders of the Sugar Controller did not enter into any agreement with the purchaser of the sugar. In those circumstances, it was held that the despatches of sugar by the Bihar manufacturer to the State of Madras did not amount to "sales" liable to sales tax under the Bihar Sales Tax Act. The decision of the Privy Council in Kirkness (Inspector of Taxes) v. John Hudson Co. Ltd.[1955] A.C. 696 (P.C.). is a case where it was found on the facts that the transaction in question was a "compulsory acquisition" but not a "sale". The aforesaid discussion yields the following results: (1) The concept of sale within the meaning of section 2(n) of the A.P. General Sales Tax Act is that "sale of goods" specified in section 4 of the Sale of Goods Act. (2) In order to constitute "sale of goods" the requisite elements or ingredients of sale, viz., a bargain or agreement of sale, the payment or promise of payment of price, the delivery of goods and the transfer of property to the buyer from the sellers, must be present. (3) No transaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eree have been determined as per the orders issued by the Civil Supplies Department. Clauses 6 and 7 of the Control Order provide for levy of penalties on the stock-holder if he fails to comply with the orders of the Controller relating to the supply of rice. We are concerned in these writ petitions with similar control orders for the years 1964, 1965, 1966 and 1967. The provisions of the control orders for the subsequent years are similar to those of the Control Order 1964 referred to above. The effect of the control orders, therefore, is that the rice miller has to sell the rice only to the Government up to 1965 and thereafter certain percentage to the Food Corporation, a statutory body, or its agents and the balance to the persons as per the orders of the District Collector at such prices as fixed by the State Government under the control orders. Though the miller cannot sell to whomsoever he likes except to the State Government, Food Corporation or its agents at prices fixed by the control orders, he has a choice with regard to the mode of payment of the price and delivery to be effected in respect of these transactions. The contracting parties, i.e., the rice miller and the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointer or factor by which it can be held that the parties at the time of entering into the contract knew full well and in fact proceeded on the footing that the transaction in question was a "sale" exigible to sales tax under the Act. As the procuring agents are admittedly the first purchasers of paddy from the ryots and their case stands on the same footing as that of the rice millers, they must be held to be liable to pay sales tax on their first purchases of paddy within the State, just as the rice millers are liable to pay sales tax on their first sales of rice to the retail dealers within the State. For these reasons, we answer question No. (1) in the affirmative. and against the petitioners. In this view, it is unnecessary for us to decide the next question as the retail dealers would not be liable to pay sales tax on their sales of rice to the customers or the ration cardholders as the same would not be first sales within the State liable to tax under the provisions of the Act. The contention of Mr. S. Venkata Reddy for the appellants in Special Appeals Nos. 1 and 2 of 1969 that the Revenue Board, instead of remitting the matter to the assessing authority erred in dispo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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