UNION OF INDIA Vs. SHRI JAGANNATHPUR RICE MILL

JUDGEMENT

(1.) PLAINTIFF is the owner of a mill. Under the Orissa Rice Procurement (Levy) Order, 1964 (hereinafter to be referred to as the Order), the Assistant Director (Food) on behalf of the President of India took delivery of two consignments of rice under exhibits 9 and 9-a on 19th November, 1965, and under exhibits 8 and 8-a on 14th January, 1966. An undertaking was given in those documents that if the consignor (plaintiff) was made liable to pay any purchase or sales tax in accordance with the provision of law in force at a future date, the President of India would reimburse the amount of tax to the party. By exhibits 11, 12 and 13 dated 28th February, 1966, the plaintiff was served with demand notices for payment of Central sales tax for quarters ending 31st December, 1965, 30th september, 1965, and 30th June, 1965, respectively. Assessments had been made despite contest of the plaintiff. The plaintiff did not carry any appeal against the assessment orders but paid sales tax of Rs. 9,825. 24, which constituted the total demand for the three quarters. On 1st March, 1966, the plaintiff asked the defendant by letter, exhibit 7, to reimburse the tax demanded from him for payment. On 17th March, 1966, the plaintiff paid the sales tax by chalan, exhibit 2. By several letters - exhibit 5 dated 27th May, 1966, exhibit 3 dated 10th June, 1966, and exhibit 4 dated 6th July, 1966 - the plaintiff asked the defendant to reimburse the sales tax so paid. As there was no response from the defendant a notice (exhibit 1) under section 80, Civil Procedure Code, was served on 22nd August, 1966, and the suit was filed on 23rd December, 1966. Facts averred in the plaint are not disputed in the written statement. The suit was contested on the ground that the alleged transaction did not constitute a sale and sales tax was not exigible thereon. Plaintiff should have carried the matter higher up challenging the imposition of Central sales tax and despite the undertaking given, the defendant is not liable to reimburse the plaintiff as he paid the sales tax, which is not leviable in law. The trial court decreed the suit holding that the defendant was liable to reimburse the plaintiff in terms of the undertaking. Our learned brother R. N. Misra, J. , held that the transaction between the plaintiff and the defendant did not constitute a sale and sales tax was not exigible thereon. He, however, dismissed the appeal of the defendant holding that the defendant was liable to reimburse the plaintiff on account of the undertaking. The A. H. O. has been filed against the judgment of the learned single Judge.

(2.) MR . Das contends that sales tax is not exigible on the transaction and there being no consideration behind the undertaking the defendant is not bound to reimburse the plaintiff.

(3.) IT will thus be seen that the Order did not control mutuality in dealing in certain matters. The Order is silent about the time, place and manner of delivery. The price payable is on the basis of the analysis made as to quality of rice. It is open to the purchase officer to reject the goods if they are found unsuitable. If the conditions prescribed in the Order cause hardship, it is open to the licensed miller not to mill or procure rice at all. The Order does not compel any miller to produce, manufacture or procure any fixed quantity of rice. As a result of raising a dispute to the quality of the rice and the correctness of the analysis, the miller has some freedom of having price for a particular class of rice.