RADHA PRASAD SAH Vs. STATE OF BIHAR

JUDGEMENT

(1.) In this writ application the petitioners have prayed for issuance of writs or directions to the respondents not to compel the petitioners to get registered as a "dealer" under the Bihar Sales Tax Act, 1959 and to pay tax under the said Act and also to quash the notice (annexure 1) asking them to produce their books of account and the order dated 6th March, 1974 (annexure 2), of the Commissioner of Commercial Taxes rejecting the prayer of the petitioners for exempting them from payment of additional sales tax and to recall the notice (annexure 1).

(2.) The 130 petitioners are running Government Fair Price Shops in the district of Bhagalpur. Their case is that they are retailers of Government Fair Price Shops. An agreement to that effect was entered into between the Governor of Bihar and each of the petitioners and, according to the terms and conditions of the agreement, the Government has to arrange for issue of rice, wheat, sugar, etc., at a price fixed, to the petitioners and they have to sell only such rice, wheat, sugar, etc., to the consumers of the area who hold ration cards at the price and the quantity fixed by the Government and strictly in accordance with the directions issued by the Government from time to time. The petitioners are not at liberty to sell commodities obtained from any other source. It is also averred that the petitioners have no right to claim continuance of the allotment of the commodities supplied to them as the officers concerned have the full right to cancel the allotment at their discretion without assigning any reason or without giving any notice to them and they are not entitled to claim any damage or compensation for such cancellation or variation in the allotment. As between them and the Government on the one hand and between them and the consumers on the other, there was or is no mutual assent as a result of negotiations, express or implied and, as such, these transactions are not "sale" within the meaning of the Sale of Goods Act, 1930 and, accordingly, they are not "sale" as defined in the Bihar Sales Tax Act, 1959. According to the petitioners, they cannot decline to carry out the order of the Government and, if they do so, they are liable to be penalised and they have no freedom to fix the price of the commodities dealt in by therrj nor do the consumers have any freedom of choice with respect to the quantity and quality of the commodities supplied to them. The petitioners are entitled to a gross profit of Rs. 1.80 only per quintal. According to the petitioners, since they do not sell "goods" they are not "dealers" as defined in the Bihar Sales Tax Act, 1959 (hereinafter referred to as "the Act") and they are not liable to pay sales tax in respect of the transactions carried on by them. Alternatively, they have also averred that the definition of the word "sale" as given in the Act and that given in the Sale of Goods Act, 1930, are quite contradictory and, as such, the definition of the word "sale" in the Act is ultra vires and unconstitutional. Their case further is that after respondent No. 2 issued the notice (annexure 1) under Sub-section (5) of Section 16 of the Act calling upon the petitioners to produce their books of account, the secretary of the Fair Price Shops Association filed a representation before the Finance Minister of the Government of Bihar with a prayer that necessary instructions be issued to the authority concerned not to levy sales tax on the petitioners for the transactions carried on by them. The representation was rejected and the secretary of the Fair Price Shops Association was informed by letter dated 6th March, 1974 (annexure 2), that the notice issued to the petitioners under the Act was a legal and valid notice.

(3.) A counter-affidavit has been filed on behalf of the respondents refuting the claim of the petitioners. It is stated therein that the petitioners' transactions are "sale" within the meaning of the Indian Sale of Goods Act, 1930 and also under the Sales Tax Act and the petitioners are "dealers" within the meaning of the Act. It is further stated therein that the levy of additional tax on gross turnover was introduced for the first time by the Bihar Sales Tax (Fourth Amendment) Ordinance, 1971 (Bihar Ordinance No. 107 of 1971), which, after successive Ordinances, has been enacted as an Act of the legislature, namely, Bihar Finance Act, 1974. That the retail price of the foodgrains is fixed by the local officers, namely, the District Magistrate and/or the Sub-divisional Magistrate after adding retailer's margin as per instructions of the Government in that regard. Government in the supply depArt ment merely determines the wholesale price, which includes sales tax and additional tax at the prescribed rate and they are also paid at source along with the price of the foodgrains, to which Rs. 1.80 per quintal as retailer's commission is added and then at the aggregate price the foodgrains are sold to the ration card holders. It is also stated therein that the notice (annexure 1) has been issued only for the purpose of levy of additional tax in accordance with the provisions contained in Section 3B of the Act on the gross turnover of the sales of the commodities by the petitioners other than exempted commodities such as sugar and, as the additional tax is legally payable on the gross turnover of the concerned commodites, it was necessary to issue the impugned notices to the petitioners and to ask them to get themselves registered under the Act.