CHIGURUPATI VEERANNA AND EGALAPATI PATTABHIRAMANA Vs. SPECIAL COMMERCIAL TAX OFFICER EVASIONS KAKINADA

JUDGEMENT

(1.) THE petitioner in this writ petition is a firm doing business in rice. For the assessment year 1964-65, the firm was assessed to sales tax under the provisions of the Central Sales Tax Act (hereinafter referred to as "the Central Act") on a turnover of Rs. 5,58,662. 19 as representing inter-State sales of rice and a tax of Rs. 7,045. 40 was levied thereof. Out of that total turnover, a turnover representing an amount of Rs. 4,82,986. 12 relates to supplies of rice made to the State Government as provided under clause 4 of the Andhra Pradesh Paddy and Rice (Declaration and Requisition of Stocks) Order, 1964 (hereinafter referred to as "the Requisition Order" ). On appeal, the Assistant Commissioner of Commercial Taxes confirmed the assessment order with regard to this turnover. The contention of the petitioner is that the transactions relating to this turnover cannot be said to be sales and therefore they are not exigible to any sales tax. Though in the writ petition the liability of the petitioner to pay additional tax of one-fourth per cent. on the entire turnover as provided under section 5-A of the Andhra Pradesh General Sales Tax Act was questioned that contention was not pressed before us by the learned counsel appearing for the petitioner at the time of arguments. Therefore, nothing need be considered about it in this judgment. The only point that was argued before us is with regard to the liability of the petitioner to pay sales tax on the turnover of Rs. 4,82,986. 12 as mentioned above.

(2.) THE transactions in question relating to the said turnover of Rs. 4,82,986. 12 have taken place as a result of the requisitioning under the Requisition Order referred to above. In that Requisition Order the expression "stockholder" is described as meaning every person who has in his possession or control forty quintals or more of paddy or twenty-five quintals or more of rice. It is provided under clause 3 of the Requisition Order that every stockholder shall make a declaration of the quantity of paddy and rice in his possession or control to the officer specified. Clause 4 of the Requisition Order may be read completely which is in the following terms :

(3.) THE above clause in the U. P. Wheat Procurement (Levy) Order and clause 4 of the Requisition Order with which we are now concerned are in similar terms so far as the liability of the dealers is concerned to supply the requisitioned stocks at controlled prices. The question that arose in that case before the Supreme Court was whether the assessees, who were dealers in foodgrains, were liable to sales tax under the U. P. Sales Tax Act, 1948, on the value of the quantities of wheat supplied by them to the Regional Food Controller in compliance with the Order. The Supreme Court held that the Order ignored the volition of the dealer, and the source of the obligation to deliver the specified quantities of wheat and to pay for them was not in any contract but in the statutory Order. The Supreme Court said that assuming that the Controller might designate the place of delivery and place of payment of price at the controlled rate, and the licensed dealer acquiesced in them, the transaction of supply of wheat pursuant to clause 3 of the Order and acceptance thereof did not result in a contract of sale. The supplies of wheat made by the assessees under the Order were not sales within the meaning of the definition in section 2 (h) of the U. P. Sales Tax Act, 1948, and the assessees were not liable to pay sales tax thereon. The Supreme Court further observed that a sale predicates a contract of sale of goods between persons competent to contract for a price paid or promised; a transaction in which an obligation to supply goods is imposed, and which does not involve an obligation to enter into a contract, cannot be called a "sale", even if the person supplying goods is declared entitled to the value of goods, which is determined or determinable in the manner prescribed. In the present case also from clause 4 of the Requisition Order, it is clear that it does not require the State Government to enter into even an informal contract with the dealers. The dealers have no volition either in the matter of supply or with regard to its price. They are bound to supply rice at the requisitioned quantities and at prices arrived at, not as a result of bargain between the dealers and the Government but at prices fixed by the Government. If that is so, the supplies made by the assessee to the State Government or to persons appointed as their agents, as per the provision contained in clause 4 of the Requisition Order cannot be termed as "sales" because the very essential conditions of a sale are not present. In the Central Sales Tax Act with which we are concerned in the present case the term "sale" is defined as follows :