BAGALKOT UDYOG LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) WHETHER the compulsory sale of cement by a manufacturer to the State Trading Corporation (hereinafter referred to as the STC) as regulated under the Cement Control Orders promulgated by the Central Government under section 18G of the Industries (Development and Regulation) Act, 1951, amounts to a sale as defined in section 2(t) of the Karnataka Sales Act, 1957 (hereinafter referred to as the Act), and consequently liable to sales tax under section 5(3)(a) of the Act, is the precise question that arises for consideration in these five revision petitions presented by a cement manufacturer under section 23(1) of the Act against the order of the Karnataka Sales Tax Appellate Tribunal.

(2.) THE brief facts of the case are as follows : The petitioner in all these petitions is Messrs. Bagalkot Udyog Ltd., Bagalkot, which is a manufacturer of cement. Under section 5(3)(a) of the Act, sales tax is made payable at the earliest sale of commodities specified in column (2) of the Second Schedule to the Act at the rates specified against the corresponding entry in column (3) of the said schedule. The Central Government in exercise of its power under section 18G of the Industries (Development and Regulation) Act, 1951, promulgated an Order dated 30th June, 1958, called the Cement Control Order, 1958. According to that order, every manufacturer of cement was required to sell the entire quantity of cement manufactured by him to the State Trading Corporation (hereinafter referred to as the STC) and at the price fixed in the schedule to the said Order except such quantity as may be mutually agreed upon between the concerned manufacturer and the Central Government. The said Order was replaced by a subsequent Order dated 31st October, 1961. The price fixed under the 1958 Cement Control Order for the sale of cement by the manufacturer to the STC was at Rs. 62.50 per metric tonne and for the sale of cement by the STC was at Rs. 117.50 per metric tonne and the corresponding prices under the 1961 Cement Control Order was Rs. 69.50 and Rs. 97.00, respectively. There is no dispute that the clauses which are relevant for these cases in both these Cement Control Orders are substantially similar. The STC in turn appointed the petitioner -manufacturer as their agent under an agreement for the sale of cement to the customers. The petitioner, in accordance with the Cement Control Orders, sold the cement to STC in the first instance at the prescribed price and thereafter sold the cement to others as directed by the STC and as their agent in accordance with the price specified by the STC. The Commercial Tax Officer, Bagalkot, who is the assessing officer, made assessment for the five assessment years in question and levied sales tax at the rates prevailing during the relevant period. He fixed the sales turnover of the assessee taking into account the sale price of the cement sold by the assessee as the agent of the STC. In other words, the assessing officer declined to consider the first sale by the assessee in favour of the STC as required under the Cement Control Orders as sale for purposes of the Act and treated the sale by the petitioner as agent of the STC in favour of others as the first sale and fixed the sales turnover and tax liability on that basis. The relevant particulars to the five assessment years, which are the subject -matter of the five revision petitions, are as follows :

(3.) THOUGH , on the question as to what are the essential ingredients which render the transfer of property in the form of goods from one person to another, for a price, a sale, the decisions of the Supreme Court disclose divergence of views on certain aspects, a detailed discussion of those decisions with reference to the relevant criteria to be applied, in deciding the question is rendered unnecessary in view of the latest decision of the Supreme Court in Vishnu Agents v. Commercial Tax Officer : [1978]2SCR433 . The said decision fully supports the contentions urged on behalf of the assessee. Therefore, it would have been sufficient to set out only the ratio in Vishnu Agencies' case : [1978]2SCR433 and to proceed to answer the questions arising for consideration in these cases. But as the learned counsel for the department maintained that the question arising for consideration in these cases was not covered by the said judgment, in order to make the order a self -contained one, we proceed to summarise briefly the views expressed by the Supreme Court in several earlier decisions and the view taken in Vishnu Agencies' case : [1978]2SCR433 , either approving or dissenting from those views, as follows :