1974 (2) TMI 65 - HC - VAT and Sales Tax

Issues Involved:
1. Exigibility of Central Sales Tax on the transaction.
2. Mutuality and volition in the transaction under the Orissa Rice Procurement (Levy) Order, 1964.
3. Liability of the defendant to reimburse the plaintiff for the sales tax paid.

Detailed Analysis:

1. Exigibility of Central Sales Tax on the Transaction:
The primary issue was whether Central Sales Tax was exigible on the transaction between the plaintiff and the defendant under the Orissa Rice Procurement (Levy) Order, 1964. The court examined the relevant provisions of the Order, particularly Clause 3, which mandates that every licensed miller must sell a specified percentage of rice to the purchase officer at a controlled price. The court noted that the Order did not control mutuality in dealing in certain matters, such as the time, place, and manner of delivery, and the price was determined based on the quality of rice.

The court referred to the Supreme Court decision in *Salar Jung Sugar Mills Ltd. v. State of Mysore*, which established that statutory orders regulating supply and distribution do not completely eliminate the freedom to contract. The court concluded that there was some scope for volition between the parties, making the transaction a sale and thus exigible to sales tax.

2. Mutuality and Volition in the Transaction:
The court addressed the contention that there could not be mutual assent between the contracting parties under the Order since the price, quantity, and delivery were fixed, leaving no choice to the parties. The court referred to the decision in *Chittar Mal Narain Das v. Commissioner of Sales Tax*, which held that for a transaction to be a sale, there must be an agreement, money consideration, and the transfer of property in goods.

However, the court found that the Order did allow for some degree of mutual assent and volition, such as the ability to dispute the quality of rice and negotiate a higher price. The court concluded that the transaction had elements of a sale, as there was some volition, albeit limited, between the parties.

3. Liability of the Defendant to Reimburse the Plaintiff:
The plaintiff sought reimbursement for the sales tax paid, based on an undertaking given by the defendant. The trial court had decreed in favor of the plaintiff, and the learned single judge upheld this decision, stating that the defendant was liable to reimburse the plaintiff as per the undertaking. The court reiterated that since the transaction was exigible to sales tax, the defendant was bound to reimburse the plaintiff according to the terms of the undertaking.

The court also noted that it was unnecessary to examine whether the defendant would have been liable to reimburse the plaintiff solely based on the undertaking if the Central Sales Tax was not exigible.

Conclusion:
The court concluded that the transaction between the plaintiff and the defendant was exigible to sales tax, and the defendant was liable to reimburse the plaintiff for the sales tax paid. The appeal was dismissed with costs, affirming the trial court's decision. The judgment clarified that under the Orissa Rice Procurement (Levy) Order, there was some scope for mutual assent, making the transaction a sale. The court overruled the earlier decision in *Union of India v. Sales Tax Officer, Balasore Circle* and dismissed the appeal with costs.

Appendix:
The appendix contained a related judgment in *Union of India v. Sales Tax Officer, Balasore Circle*, where the court had examined whether transactions under the Orissa Rice Procurement (Levy) Order constituted sales. The court had concluded that compulsory acquisition of 50% of rice under the Order was not exigible to tax, but purchases over and above this amount were liable to purchase tax. The writ application in that case was dismissed, and the petitioner was required to submit returns and produce accounts before the assessing authority.

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