Vishnu Agencies (Pvt.) Ltd. Vs. Commercial Tax Officer & Ors [1977] INSC 240 (16 December 1977)
BEG, M. HAMEEDULLAH (CJ) BEG, M. HAMEEDULLAH (CJ) CHANDRACHUD, Y.V.
BHAGWATI, P.N.
KRISHNAIYER, V.R.
UNTWALIA, N.L.
FAZALALI, SYED MURTAZA KAILASAM, P.S.
CITATION: 1978 AIR 449 1978 SCR (2) 433 1978 SCC (1) 520
CITATOR INFO:
F 1979 SC1158 (3,4,5) RF 1980 SC 674 (4) R 1980 SC1124 (30) F 1985 SC1199 (6) R 1988 SC1487 (48) C 1989 SC1371 (15)
ACT:
Sales-tax-Statutory sale-If sale for the purposes of Salestax Acts.
Cement sold to holders of permits issued under the West Bengal Cement Control Act 1948-Sale, if exigible to tax.
Transactions between growers and procuring agents and rice miller and whole-sale agents under A. P. Paddy Procurement (Levy) Order-If exigible to sales-tax.
HEADNOTE:
The Cement Control Order promulgated under the West Bengal Cement Control Act, 1948 prohibits storage for sale and sale by a seller and purchase by a consumer of cement except in accordance with the conditions specified in a licence issued by a designated officer. It also provides that no person shall sell cement at a higher than the notified price and no person to whom a written order has been issued shall refuse to sell cement "at a price not exceeding the notified price". Any contravention of the order becomes punishable with imprisonment or fine or both.
Under the A.P. Procurement (Levy and Restriction on Sale) Order, 1967, (Civil Appeals Nos. 2488 to 2497 of 1972) every miller carrying on rice milling operation is required to sell to the agent or an officer duly authorised by the Government minimum quantities of rice fixed by the Government at the notified price, and no miller or other person who gets his paddy milled in any rice-mill can move or otherwise dispose of the rice recovered by milling at such rice mill except in accordance with the directions of the Collector. Breach of these provisions becomes punishable.
It was contended in this Court on behalf of the appellants that the word ,sale" in the Bengal Finance Sales Tax Act, 1941, must receive the same meaning as in the Sale of Goods Act, 1930 since the expression "sale of goods" was, at the time when the Government of India Act, 1935 was enacted, a term of well recognised legal import in the general law relating to sale goods and in the legislative practice relating to that topic both in England and in India and (2) since under the Sale of Goods Act there can be no sale without a contract of sale and since the parties had no volition but were compelled by law to supply the goods at prices fixed under the Control Orders by the authorities the transactions were not sales and so were not exigible to tax.
Disssing the appeals.
HELD : Per curiam Sale of cement by the allottees to the permit-holders and the transactions between the growers and procuring agents as well as those between the rice millers on the one band and the wholesalers or retailers on the other, are sales exigible to sales-tax in the respective States. [465-F-G] Per Beg. C.J, The transactions in the instant cases are sales and are exigible to tax on the ratio of Indian Steel and Wire Products Ltd.. Andhra Sugar Ltd. and Karam, Chand Thapar.
In cases like New India Sugar Mills, the substance of the concept of a side itself disappears because the transaction is nothing more than the execution of an order. Deprivation of property for a compensation called price does not amount to a sale when all that is done is to carry out an order so that 434 the transaction is substantially a compulsory acquisition.
On the other hand, a merely regulatory law, even if it circumscribes the area of free choice, does not take away the basic character or core of sale from the transaction.
Such a law which governs a class obliges a seller to deal only with parties holding licences who may buy particular or allotted quantities of goods at specified prices, but an essential element of choice is still left to the parties between whom agreements take place. The agreement despite considerable compulsive elements regulating or restricting the area of his choice, may still retain the basic character of a transaction of sale. In the former type of case, the binding character of the transaction arises from the order directed to particular parties asking them to deliver specified goods and not from a general order or law applicable to a class. In the latter type of cases, the legal tie which binds the parties, to perform their obligations remains contractual. The regulatory law merely adds other obligations, such as the one to enter into such a tie between the parties. Although the regulatory law might specify the terms, such as price, the regulation is subsidiary to the essential character of the transaction which is consensual and contractual. The parties to the contract must agree upon the same thing in the same sense.
Agreement on mutuality of consideration, ordinarily arising from an offer and acceptance, imparts to it enforceability in courts of law. Mere regulation or restriction of the field of choice does not take away the contractual or essentially consensual binding core or character of the transaction. [438B-D, EG, 439A-C, 440B] New India Sugar Mills v. Commissioner of Sales Tax, Bihar, AIR 1963 SC 1207; [1963] Supp. 2 SCR 459 explained.
Commissioner, Sales tax, U.P. v. Ram Bilas Ram Gopal, AIR 1970 All 518, Chittar Mal Narain v. Commissioner of Sales Tax, [1971] 1 SCR 671, Indian Steel and Wire Products Ltd.
v. State of Madras, [1968] 1 SCR 479, Andhra Sugar Ltd. v.
State of Andhra Pradesh [1968] 1 SCR 705 and State of Rajasthan v. Karam Chand Thapar, AIR 1969 SC 343 referred to.
[Per Chandrachud, Bhagwati, Krishna Iyer, Untwalia, Murtaza Fazal Ali and Kailasam, JJ.] According to the definitions of "Sale" in the two Acts the transactions between the appellants and the allottees or nominees are patently sales because in one case the property in cement and in the other property in the paddy and rice was transferred for cash consideration by the appellants.
[445D]
1. When essential goods are in short supply, various types of Orders are issued under the Essential Commodities Act, 1955 with a view to making the goods available to the consumer at a fair price. Such Orders sometimes provide that a person in need of an essential commodity like cement, cotton, coal or iron and steel must apply to the prescribed authority for a permit for obtaining the commodity. Those wanting to engage in the business of supplying the commodity are also required to possess a dealer's licence. The permit-holder can obtain the supply of goods, to the extent of the quantity specified in the permit, from the named dealer only and at a controlled price. The dealer who is asked to supply the stated quantity to the particular permit holder has no option but to supply the stated quantity of goods at the controlled price. [440 E-G]
2. In State of Madras v. Gannon Dunkerley & Co. Ltd., [1959] SCR 379 after considering a variety of authorities on the subject, this Court held that the expression sale of goods in Entry 48 List 11 Government of India Act, 1935 cannot be construed in its popular sense and that it must be interpreted in its legal sense. Whereas in popular parlance a sale is said to take place when the bargain is settled between the parties through property in the goods may not pass at that stage, as where the contract relates to future or unascertained goods, the essence of sale in the legal sense is the transfer of property in a thing from one person to another for a price. It was further held that according to the law both of England and India in order to constitute a sale, it is necessary that there should be an agreement between the parties for the purpose of transferring title to the goods which pre-supposes capacity to contract, supported by valuable consideration and that as a result of the transaction property must actually pass 435 in the goods. "Unless all these elements are present, there can 'be no sale." The effect of the construction which the Court put on the words of Entry 48 in Gannon Drunkenly is that a sale is necessarily a consensual transaction and if the parties have no volition or option to bargain, there can be no sale. If this view is assumed to reflect the correct legal Position, the transactions in these cases will amount to sales. [447B-C, D-F, 449D-E]
3. Offer and acceptance need not always be in an elementary form, nor does the law of contract or of sale of goods require that consent to a contract must be express.
Offer and acceptance can be spelt out from the conduct of the parties which covers not only their acts but omissions as well. On occasions, silence can be more eloquent than eloquence itself. Just as correspondence between the parties can constitute or disclose an offer and acceptance, so can their conduct. This is because law does not require offer and acceptance to conform to any set pattern or formula. [450D-E]
4. In the instant case, it is not correct to say that the transactions between the dealer and the consumer were not consensual. The limitations imposed by the Control Order on the normal right of the dealers and consumers to supply and obtain goods, the obligations imposed on the parties and the penalties prescribed by the order do not militate against the position that eventually, the parties must be deemed to have completed the transactions under an agreement by which one party bound itself to supply the stated quantity of goods to the other at a price not higher than the notified price and the other party consented to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority. in order, to determine whether there was any agreement or consensuality between the parties regard must be had to their conduct at or about the time when the goods changed hands. In the first place, it is not obligatory on a trader to deal in cement nor on the consumer to acquire it. The primary fact is that the decision of the trader to deal in an essential commodity is volitional. Such volition carries with it the willingness to trade strictly on the terms of the Control Order. The consumer who is under no legal compulsion to acquire or Possess cement, decides as a matter of his volition to obtain it on the terms of the permit or the order of allotment issued in his favour. That brings the two parties together, one of whom is willing to supply the essential commodity and the other to receive it.
When the allottee presents his permit to the dealer, he signifies his willingness to obtain the commodity from the dealer on the terms stated in the permit. His conduct reflects his consent. And when, upon the presentation of the permit the dealer acts upon it, he impliedly agrees to supply the commodity to the allottee on the terms by which he has voluntarily bound himself to trade in the commodity.
His conduct too reflects his consent. Thus, though both parties are bound to comply with the legal requirements governing the transaction, they agree as between themselves to enter into the tranaction on statutory terms, one agreeing to supply the commodity to the other on those terms and the other agreeing to accept from him on the very terms.
[449E-H, 450C, E-H,451A]
5. Secondly, though the terms of the transaction are mostly predetermined by law, it cannot be said that there is no area at all for bargain. The conditions provided in the order that cement shall not be sold at a higher than the notified price and that no dealer shall refuse to sell it at a price not exceeding the notified price leaving it open to the individuals to charge and pay a price which is less than the notified price or charge a lesser price. Within the bounds of reasonableness, it would be open to the parties to fix the time of delivery. The consumer has a right to ask for weighment of goods which shows that he may reject the goods if found short in weight or are not of the requisite quality. The consumer has a right to ask for weigh ment of goods which shows that he tions have the freedom to bargain militates against the view that the transactions are not consensual. [451-AE]
6. In New India Sugar Mills Ltd. the question was whether sugar supplied by the mills on the orders of the Sugar Controller was exigible to tax. The majority held that a contract of sale between the buyer and the seller, which is a pre-requisite to a sale, being absent the transaction was not exigible to sales 436 tax. But the principle on which the problem should be approached was set out in the dissenting judgment which said that consent may be express or implied and that it could not be said that unless offer and acceptance were present in an elementary form, there could be no taxable sale. Taking the view that on obtaining the necessary permit the seller on the one hand and the buyer on the other agreed to sell and purchase sugar it was pointed out that when the buyer, after receiving the permit, telegraphed instructions to dispatch sugar and the seller dispatched it, 'a contract emerged and consent must be implied on both sides though not expressed antecendently to the permit". So long as the parties trade under controls at fixed price and accept these as any other law of the realm, the contract is at the fixed price, both sides having or deemed to have agreed to such a price.
Consent under the law of contract need not be express; it could be implied. [453B-G; 454A-C] 7.In coming to its conclusion the majority in New India Sugar Mills followed the decision of this Court in Gannon Dunkerley that in a building contract there was no agreement express or implied to sell goods and secondly that property in the building materials does not pass in the materials regarded as goods" but it passes as part of immovable property. The majority in-New India Sugar Mills was in error in saying that the ratio govern that case because the questions involved in both different. In New India Sugar Mills the commodity with concerned was sugar and was delivered as sugar just as in commodity is cement, which was delivered as cement Dunkerley tax was demanded after the commodity had after property in it had passed. The question in this case which was question involved in New India Sugar Mills namely decidendi of Gannon Dunkerley must cases were altogether which the Court was the instant case the Secondly, in Gannon changed hands, that is, the very whether a transaction effected in accordance with the obligatory terms of a statute can amount to a sale, did not arise in Gannon Dunkerley, Gannon Dunkerley is not an authority for the proposition that there cannot at all be a contract of sale if the parties to a transaction are obliged to comply with the terms of a statute. [456C-E]
8. In Gannon Dunkerley this Court was influenced largely by the observations in the 8th edn. of Benjamin on "Sale?' that to constitute a valid sale there must be a concurrence of four elements, one of which is "mutual assent". The majority judgment in New India Sugar Mills also derived sustenance from the same passage in Benjamin's 8th edn.
Gannon Dunkerley involved an altogether different point and is not an authority for the proposition that there cannot at all be a contract of sale if the parties to a transaction are obliged to comply with the terms of a statute. [464E-F , 465C-D]
9. With the high ideals of the Preamble and the directive principles of our Constitution, there has to be a fundamental change in the judicial outlook. Freedom of contract has largely become an illusion. The policy of the Parliament in regard to the contracts including those involved in sale of goods, has still to reflect recognition of the necessity for a change, which could be done by a suitable modification of the definition of sale of goods.
[464C-D] Majority decision in New India Sugar Mills v. Commissioner of Sales Tax, Bihar, AIR 1963 SC 1207; [1963] Supp. 2 SCR 459 overruled.
Minority opinion in India Steel & Wire Products v. State of Madras [1968] 1 SCR 479, Andhra Sugar Ltd. v. State of Andhra Pradesh, [1968] 1 SCR 705, Salar Jung Sugar Mills Ltd. v. State of Mysore [1972] 2 SCR 228 and Oil and Natural Gas Commission v. State of Bihar [1977] 1 SCR 354 approved.
State of Tamil Nadu v. Cement Distributors Pvt. Ltd. [1973] 2 SCR 1019 partly approved.
Chhitter Mal Nazrain Das. v. Commissioner of Sales Tax [1971] 1 SCR 671 explained.
State of Madras v. Gannon Dunkerley [1959] SCR 379 explained and distinguished.
Kirkness v. John Hudson and Co. Ltd. [1955] A.C. 696 held inapplicable.
Ridge No miness Ltd. v. Inland Revenue Commissioners [1962] Ch. 376 referred to.
Commissioner, Sales Tax U.P. v. Ram Bilas Ram Gopal AIR 1970 Allahabad 318 referred to.
43 7
CIVIL APPELLATE JURISDICTION: civil Appeal No. 724 of 1976.
Appeal by Special Leave from the, Judgment and Order dated 13th Dec. 1974 of the Calcutta High Court in Appeal from Original Order No. 240 of 1973.
AND Civil Appeals. Nos. 2488-2497 (NT) 1972 (From the Judgment and Order dated the 31st March, 1970 of the Andhra Pradesh High Court in Writ Petitions Nos. 3005, 3006, 3085, 3086, 3088, 3090, 4232, 4243 and 4244 of 1969.
Sachin Chowdhary, B. Sen, S. S. Bose, K. K. Chakraborty, A.
G. Manzes, J. B. Dadachanji and k. J. John for the Appellant in C.A. 724/76.
L. N. Sinha, D. N. Mukherjee, G. S. Chatterjee and A. K.
Ganguli for respondents 1 to 4 in C.A. 724/76.
B. Kanta Rao for the Appellants in C.As 2488-97 of 1972.
Soli J. Sorabjee, Addl. Sol. Genl. (In 2488-97) 72, P.
Parameshwara Rao A. K. Ganguli and T. V. S. Narasimhachari for the Respondents in CAs. Nos. 2488-97/72.
A. Subba Rao for the Intervener.
The following Judgment were delivered BEG, C.J.--I am in general agreement with my learned brother Chandrachud who has discussed all the authorities so admirably and comprehensively. I, however, would like to add a few observations stating the general conclusion, as I see it, emerging from an application of general principles and accumulation of case law on the subject of what may be called "statutory" or "compulsory" sales. Are they sales at all so as to be exigible to sales tax or purchase tax under the relevant statutory provisions ? The term 'sale? is defined as follows in Eenjamin on Sale (Eighth Edn.) :
"To constitute a valid sale there must be a concurrences of the following elements, namely :(1) parties competent to contract;
(2) mutual assent;
(3) a thing, the absolute or general property in which is transferred from the seller to the buyer; and (4) a price in money paid or promised." It is true that a considerable part of the field over which what are called 'sales' take place under either 'regulatory orders or levy orders passed or directions given under statutory provisions is restricted and controlled by these orders and directions. If, what is called a "sale" 438 is, in substance, mere obedience to a specific order, in which the so called "price" is only a compensation for the compulsory passing of property in goods to which an order relates, at an amount fixed by the authority making the order, the individual transaction may not be a ,,sale" although the compensation is determined on some generally fixed principle and called "price". This was, for example, the position in New India Sugar Mills v. Commissioner of Sales Tax, Bihar(1). That was a case of a delivery according to an order given by the Govt. which could amount to a compulsory levy by an executive order although there was no legislative "levy order" involved in that case. On the other hand,, in Commissioner, Sales Tax, U.P. v. Ram Bilas Ram Gopal,(2) the order under consideration was actually called a levy order, but the case was distinguishable from New India Sugar Mills v. Commissioner of Sales Tax, Bihar (supra) on facts. It was held in the case of Ram Bilas (supra) that the core of what is required for a "sale" was not destroyed by the so called "levy" order which was legislative. It is true that passages from the judgement of Pathak, J., in the case of Ram Bilas Ram Gopal (supra) were cited and specifically disapproved by a Bench of this Court in Chittar Mal Narain v. Commissioner of Sales Tax(3). But, perhaps the view of this Court in Chittar Mal Narain, Das (supra) goes too far in this respect. It is not really the nomenclature of the order involved, but the substance of the transaction under consideration which matters in such cases.
In the first typo of case mentioned above the substance of the concept of a sale, as found under our Law, itself disappears because the transaction is nothing more than the execution of an order. Deprivation of property for a compensation, which may even be described as "price", does not amount to, a sale when all that is done is to, carry out an order so that the transaction is substantially a compulsory acquisition. On the other hand, a merely regulatory law, even if it circumscribes the area of free choice, does not take away the basic character or core of sale from the transaction. Such a law, which governs a class, may oblige sellers to deal only with parties holding licences who may buy particular or allotted quantities of goods at specified prices, but an essential element of choice is still left to the parties between whom agreements take place. The agreement, despite considerable compulsive elements regulating or restricting the area of free choice, may still retain the basic character of a transaction of sale. This was the position in Indian Steel and Wire Products Ltd. v. State of Madras(4). Andhra Sugar Ltd. v. State of Andhra Pradesh(5) and State of Rajasthan v. Karam Chand Thapar(6): There might be borderline cases in which itmay be difficult to draw the line.
(1) AIR 1963 SC 1207 : [1963] (Supp) 2 SCR 459.
(2) AIR 1970 All 518.
(3) [1971] 1 S.C.R. 671.
(4) [1968] 1 S.C.R. 479.
(5) [1968] 1 S.C.R. 705.
(6) A.I.R. 1969 S.C. 343.
439 In the former type of case, the binding character of the, transaction arises from the order directed to particular parties asking them to deliver specified goods and not from a general order or law applicable to a class. In the latter type of cases, the legal tie (vinculum juris) which binds the parties to perform their obligations remains contractual. The regulatory law merely adds other obligations, such as the one to enter into such a tie between the parties indicated there. Although the regulatory law might specify the terms, such as price, or parties, the regulation is subsidiary to the essential character of the transaction which is consensual and contractual. The basis of a contract is : "consensus adem". The parties to the contract must agree upon the same thing in the 'same sense.
Agreement on mutuality of consideration, ordinarily arising from an offer and acceptance, imparts to it enforceability in Courts of law. Mere regulation or restriction of the field of choice does not take away the contractual or essentially consensual binding core or character of the transaction.
I may be forgiven for citing a passage from my judgment in Commissioner of State Tax v. Ram Bilas Ram Gopal,(supra) to indicate the setting of such transactions "It appears to me to be necessary to distinguish between a restriction in the area of choice of parties and the transaction itself in order to, determine the true character of the transaction. Limitation of the field of choice is a necessary concomitant of a controlled or mixed economy which ours is. Absolute freedom of contract or unregulated operation of the laws of supply and demand, which an apotheosis of the laissez-faire doctrine demanded, led really to a shrinking of the area of freedom in the economic sphere, producing gross inequalities in bargaining powers and recurrent crises.
Therefore, a regulated or a socialistic economy seeks to regulate the play of forces operating on the economic arena so that economic freedom of all concerned, including employers and employees, is preserved and so that the interests of consumers are also not sacrificed by any exploitation of conditions in which there is scarcity of goods,. I think that the regulation or restriction of the area of choice, cannot be held to take away the legal character of the transactions which take place within the legally restricted field. It is too late in the day, when so much of the nation's social and economic activities are guided and governed by control orders, allotment orders, and statutory contracts, to contend that mere State regulation of the economic sphere of life results in the destruction of the nature of the transactions which take place within that sphere." (P. 524) In Roman Law the contract of sale was classed as a "consensual" contract. The consent could, no doubt, be express or implied. I find that Hidayatullah J., in his very learned dissenting judgment in New India Sugar Mills Case (supra), where some Roman Law is. referred to, thought that even in a case of a 'specific order directing delivery of 440 goods there could be an implied consent so as to constitute a safe. I find it, with great respect, difficult to go so far as that. What could be implied, upon the facts of a particular case, must still be a consent to a proposal if the transaction is to be construed as a "sale". Mere compliance with an order may imply an acceptance of an order but acceptance of a proposal to purchase or sell are of a juristically different genus. It is, however, not necessary for us, in this case, to accept the correctness of the minority view of Hidayatullah, J. in New India Sugar Mills case (supra). The transactions before us are sales on an application of the ratio decidendi of Indian Steel and Wire Products Ltd's case (supra) and other cases decided on similar grounds.
The difficulty arises from the fact that, although the ingredients of a "sale," as defined in Benjamin's treatise on "Sale?', may seem to be satisfied even if delivery of goods is in obedience to "an order to deliver them for a consideration, fixed or to be fixed if we stretch mutual assent to cover assent resulting from orders given, yet, it is difficult to see how such a transaction would be based on a contractual tie. According to Sec. 4(3) of our Sale of Goods Act, a sale results only from a contract which presupposes a minimal area of freedom of choice where the ordinary mechanism of proposal and acceptance operates.
For the reasons indicated above, while I agree with the answer given by my learned brother Chandrachud to the question before us and also practically with all the views expressed by my learned brother, yet, I hesitate to hold that the majority opinion expressed by Shah J., in New India Sugar Mills case (supra), is erroneous. I think the case is distinguishable. Ibis, however, makes no difference to the common conclusion reached by us on the facts of the cases before us.
CHANDRACHUD, J. These appeals have been placed for hearing before a seven-Judge Bench in order to set at rest, to the extent foreseeable, the controversy whether what is conveniently, though somewhat loosely, called a 'compulsory sale? is exigible to sales tax. When essential goods are in short supply, various types of Orders are issued under the Essential Commodities Act, 1955 with a view to making the goods available to the consumer at a fair price. Such Orders sometimes provide that a person in need of an essential commodity like cement, cotton, coal or iron and steel must apply to the prescribed authority for a permit for obtaining the commodity. Those wanting to engage in the-business of supplying the commodity are also required to possess a dealer's licence. The permit holder can obtain the supply of goods, to the extent of the quantity specified in the permit, from the named dealer only and at a controlled price. The dealer who is asked to supply the stated quantity of goods at the particular permit holder has no option but to supply the stated quantity of goods at the controlled price. The question for our consideration not easy to decide, is whether such a transaction amounts to a sale in the language of the law.
We will refer to the facts of civil appeal 724 of 1976, in which a company called M/s Vishnu Agencies (Pvt.) Ltd., is the appellant. It carries on business. as an agent and distributor of cement in the 441 State of West Bengal and is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, referred to hereinafter as the Bengal Sales Tax Act. Cement being a controlled commodity, its distribution is regulated by the West Bengal Cement Control Act, 26 of 1948, referred to hereinafter as the Cement Control Act, and by the Orders made under section 3 (2) of that Act. Section (3) (1) of the Cement Control Act provides, inter alia, for regulation of production, supply and distribution of cement for ensuring equitable supply and distribution thereof at a fair price. By the Cement Control Order, 1948 framed under the Cement Control Act, no sale, or purchase of cement can be made, except in accordance with the conditions contained in the written order issued by the Director of Consumer Goods, West Bengal or the Regional Honorary Adviser to the Government of India at Calcutta or by officers authorised by them, at prices not exceeding the notified price.
The appellant is a licensed stockiest of cement and is permitted to stock cement in its godown, to be supplied to persons in whose favour allotment orders are issued, at the price stipulated and in accordance with the conditions of permit issued by the authorities concerned. The authorities designated under the Cement Control Order issue permits under which a specified quantity of cement is allotted to a named permit-holder, to be delivered by a named dealer at the price mentioned in the permit. A permit is generally valid for 15 days and as soon as the price of cement allotted in favour of an allottee is deposited with the dealer, he is bound to deliver to the former the specified quantity of cement at the specified price.
A specimen order issued in favour of an allottee, under which the appellant had to supply 10 metric tons of cement at Rs. 144.58 per M.T., exclusive of sales tax, reads thus "LICENCE FOR CEMENT The quantities of cement detailed below are hereby allotted to M/s. Marble & Cement products Co. Pvt. Ltd., 2, Braboume Road, Calcutta-1 to be supplied by M/s. Vishnu Agencies Pvt. Ltd., 3, Chittaranjan Avenue, Calcutta-13, on conditions detailed below.
The price of material involved must be deposited with the Stockist within 15 days and the actual delivery must be taken within 15 days from the date of issue of the permit.
The licence is issued only for the purpose of Mfg. of Mosaic Tiles at 188, Netaji Subhas Road, Calcutta-40.
Under no circumstances will the validity of the permit be extended beyond the period of 15 days from the date of its issue.
Cement Total Tonnge Country Cement at Rs. 144.58 Ton Cwt. per M.T. exclusive of S. T. 10 M/T (Ten M/T only)" 442 The appellant supplied cement to various allottees from time to time in pursuance of the allotment orders issued by appropriate authorities and in accordance with the terms of the licence obtained by it for dealing in cement. The appellant was assessed to sales tax by the first respondent, the Commercial Tax Officer,, Sealdah Charge, in respect of these transactions. It paid the tax but discovered on perusal of the decision of this Court in New India Sugar Mills Ltd. v. Commissioner of Sales Tax(1) that the transactions were not exigible to sales tax. Pleading that the payment was made under a mistake of law, it filed appeals against the orders of assessment passed by respondent 1. It contended in appeals before the Assistant Commissioner of Commercial Taxes that by virtue of the provisions of the Cement Control Act and the Cement Control Order, no volition or bargaining power was left to it and since there was no element of mutual consent aggreement between it and the allottees, the transactions were not sales within the meaning of the Sales Tax Act. The appellant further contended that if the transactions were treated as sales, the definition of "sale" in the Sales Tax Act was ultra vires the legislative competency of the Provincial Legislature under the Government of India Act, 1935 and of the State Legislature under the Constitution.
The appellate authority rejected the first contention and upheld the assessments. It did not, as it could not, go into the second contention regarding legislative competence.
The appellant adopted the statutory remedies open to it but since the arrears, of tax were mounting up and had already exceeded a sum of rupees eight lacs, it filed a writ petition in the Calcutta High Court praying that the various assessment orders referred to in the petition be quashed and a writ of prohibition be issued directing the sales tax authorities to refrain from making any further assessments for the purpose of sales tax on the transactions between the appellant and the allottees.
A learned single Judge of the High Court allowed the writ petition and issued a writ of mandamus restraining the respondents from imposing sales tax on the transactions.
between the appellant and the allottees. That judgment having been set aside in appeal by a Division Bench of the High Court by its judgment dated December 13, 1974, the appellant has filed appeal No. 724 of 1976 by special leave.
Civil appeals No. 2488 to 2497 of 1972 raise a similar question under the Andhra Pradesh Paddy Procurement (Levy) Orders, under which paddy growers in the State are under an obligation to sell the paddy to licensed agents appointed by the State Government at the prices fixed by it. The High Court of Andhra Pradesh by its judgment dated March 31, 1970 has taken the, same view as the Calcutta High Court, namely, that the transactions amount to sales and are taxable under the Sales Tax Act. Counsel appearing in the Andhra Pradesh appeals agree that the decision in the Calcutta case will govern those appeals also.
(1) [1963] Supp. 2 S.C.R. 459.
443 Since the crux of the appellant's contention is that the measures adopted to control the supply of cement leave no consensual option to the parties to bargain, it is necessary first to notice the relevant provisions of law bearing on the matter. The West Bengal Cement Control Act, 26 of 1948, was enacted in order. to "confer powers to control the production, supply and distribution of, and trade and commerce in, cement in West Bengal." Section 3(1) of the Act empowers the Provincial Government to provide, by order in the Official Gazette, for regulating the supply and distribution of cement and trade and commerce therein.
Section 3(2) provides by clauses (b) to (o) that an order made under sub-section (1) may provide for regulating or controlling the prices at which cement may be purchased or sold and for prescribing the conditions of sale thereof, regulating by licences, permits or otherwise, the storage, transport, movement, possession, distribution, disposal, acquisition, use of consumption of cement; prohibiting the withholding from sale of cement ordinarily kept for sale;
and for requiring any person holding stock of cement to sell the whole or specified part of the stock at such prices and to such persons or classes of persons or in such circumstances, as may be specified in the order. If any person contravenes an order made under section 3, he is punishable under section 6 with imprisonment for a term which may extend to three years or with fine or with both, and, if the order so provides, any Court, trying such contranvention, may direct that a property in respect of which the Court is satisfied that the order been contravened shall be forfeited to the Government.
In exercise of the powers erred by section 3(1) read with clauses (b) to (h) of section (2) of the Act, an Order which may conveniently be called the Cement Control Order was promulgated by the Governor on August 18, 1948. The relevant clauses of that Order contain the following provisions. By paragraph 1, no person shall after the commencement of the order sell or store for sale any cement unless he holds a licence and except in accordance with the conditions specified in such licence obtained from the Director of Consumer Goods, West Bengal, or any officer authorised by him in writing in this behalf. By paragraph 2, no person shall dispose of or agree to dispose of any cement except in accordance with the conditions contained in a written order of the Director of Consumer Goods, West Bengal or the authorities specified in the paragraph. By paragraph 3, no person shall acquire or agree to acquire any cement from any person except in accordance with the conditions contained in a written order of the Director of Consumer Goods, West Bengal, or the authorities specified in the paragraph. By paragraph 4, no person shall sell cement at a "higher than notified price". By Paragraph 8, no person or stockist who has any stock of cement in his possession and to whom a written order has been issued under paragraph 2 shall refuse to sell the same, "at a price not exceeding the notified price", 'and the seller shall deliver the cement to the buyer "within a reasonable time after the payment of price". By paragraph 8A, every stockist or every person employed by him shall, if so re 3-1146 SCI/77 444 quested by the person acquiring cement from him under a written order issued under paragraph 3, weigh the cement in his presence or in the presence of his authorised representative at the time of delivery.
We are not concerned with the amendments made by the Government of West Bengal to the, Cement Control Order on December 30, 1965 by which, inter alia paragraphs 2, 3, 4, 8 and 8A of that Order were deleted. The,appeal from the decision of the Calcutta High Court is limited to the transactions between the appellant and the allottees from the years 1957 to 1960.
As regards the batch of appeals from Andhra Pradesh, the levy of tax was challenged by three sets of persons, the procuring agents, the rice-millers and the retailers with the difference that the procuring agents were assessed to purchase tax, while the others to sales tax under the Andhra Pradesh General Sales Tax Act, 1957. By virtue of the provisions of the, Andhra Pradesh Paddy Procurement (Levy) Orders, the paddy-growers can sell their paddy to licensed procuring age nts appointed by the State Government only and at the prices fixed by the Government. The agriculturist has the choice to select his own procuring agent but he cannot sell paddy to a private purchaser. The procuring agents in their turn have to supply paddy to the ricemillers at controlled prices. The millers, after converting paddy into rice, have to declare their stocks to the Civil Supplies Department. Pursuant to the Orders issued by the Department, the rice-millers-have to supply a requisite quantity of rice to the wholesale or retail dealers at prices fixed by the Department. Orders for such supply by the millers are passed by the authorities under the A.P.
Procurement (Levy) and Restriction on Sale Order, 1967.
Under this Order, every miller carrying on rice-milling operations is required to sell to the agent or officer duly authorised by, the Government the minimum quantities fixed by the Government at the notified price; and no miller or other person who gets his paddy milled in any price mill can move or otherwise dispose of the, rice recovered by milling at such rice mill except in accordance with the, directions of the Collector. A breach of these provisions is liable to be punished under section 7 of the Essential Commodities Act 1955 and the goods are liable to be forfeited under section 6A of that Act. The A.P. sales tax authorities levied purchase tax on the purchase of paddy made by the procuring agents from the agriculturists and they levied sales tax on the transactions relating to the sup of rice by the millers to the wholesale and retail dealers and on the supply made, by the retailers to their customers. The case as regards the sales tax imposed on the transactions between the retail dealers and the consumers stood on an altogether different footing, but the writ petitions filed by the procuring agents and rice-millers raised questions similar to those involved in the writ petition filed in the Calcutta High Court.
These then are the provisions of the respective Orders passed by the Governments of West Bengal and Andhra Pradesh.
445 We may now notice the provisions of the Sales Tax Acts.
Section 2(g) of the Bengal Finance (Sales Tax) Act, 6 of 1941, defines a sale" to mean "any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of ,property in goods involved in the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge." Section 2 (1) provides that the word "turnover" used in relation to any period means "the aggregate of the sale prices or parts of sale-prices receivable, or if a dealer so elects, actually received by the dealer........ By clause (h) of section 2, "sale-price" is defined to mean the amount payable to a dealer as valuable consideration for "the sale of any goods". By section 4(1), every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded the taxable quantum is liable to pay tax under the Act on all "sales" effected after the date notified by the State Government.
Section 2(n) of the Andhra Pradesh General Sales Tax Act 1957 defines a "sale" as "every transfer of the property in goods by one person to another in the course of trade or commerce, for cash, or for deferred payment or for any other valuable consideration. Section 5 of that Act is the charging section.
According to these definitions of 'sale' in the West Bengal and Andhra Pradesh Sales Tax Act, transactions between the appellants on one hand and the allottees or nominees on the other are patently ,sales because indisputably, in one case the property in cement and in the other, property in paddy and rice was transferred for cash consideration by the appellants; and in so far as the West Bengal case is concerned, property in the goods did not pass to the transferees by way of mortgage, hypothecation, charge or pledge. But that is oversimplification. To counteract what appears on the surface plain enough, learned. counsel for the appellants have advanced a twofold contention.
They contend, in the first place,' that the word 'sale' in the Sales Tax Acts passed by the Provincial or State legislatures must receive the same meaning as in the Sale of Goods Act, 1930; or else, the definition of sale in these Sales 'Tax Acts will be beyond the legislative competence of the Provincial and' State legislatures. Secondly, the appellants contend that since under the Sale of Goods Act, there can be no sale without a contract of sale and since the parties in these matters had no volition of their own but were compelled by law to supply and receive the goods at prices fixed under the Control Orders by the prescribed authorities, the transactions between them are not sales properly so palled and therefore are not exigible to sales tax.
For examining the validity of the first contention, it is necessary to turn to the appropriate entries in the legislative lists of the Constitution Acts, for the contention is founded on the premise that the word sale' which occurs in those entries must receive the same meaning as in the Sale of Goods Act, 1930 since the expression "sale of goods" was, at the time when the Government of India Act was enacted, a term of well-recognised legal import in the general law relating to sale 446 of goods and in the legislative practice relating to that topic both in England and in India. Entry 48 in the Provincial List, List II of Schedule VII to the Government of India Act, 1935 relates to; "Taxes on the sale of goods." Entry 54 of List II, of the Seventh Schedule to the Constitution reads to say: "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of the Union List but we may refer to it in order to complete the picture. It refers to: "Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course, of inter-State trade or commerce." The contention of the appellants that the expression 'sale of goods' in entry 48 in the Provincial List of the, Act of 1935 and in entry 54 in the State List of the constitution must receive the same meaning as in the Sale of Goods Act is repelled on behalf of the State Governments with the argument that constitutional provisions which confer legislative powers must receive a broad and liberal construction and therefore the expression 'sale of goods' in entry 48 and its successor, entry 54, should not be construed in the narrow sense in which that expression is used in the Sale of Goods Act, 1930 but in a broad sense.
The principle that in interpreting a constituent or organic statute, that construction most beneficial tothe widest possible amplitude of its powers must be adopted has been examined over the years by various courts, including this Court, and is too firmly established to merit reconsideration. Some of the leading cases on this point are the Privy Council decisions in British Coal Corporation v. king(1), Edwards v. A. G. for Canada(2) and James v.
Commonwealth of Australia("); the Australian decisions in Morgan v. Deputy Federal Commissioner of Land Tax, N.S.W.(4) and Broken Hill South Ltd. v. Commissioner of Taxation (N.S.W.) (5) ; the Federal Court decisions in In re the Central Provinces and Berar Act No. XIV of 1938(6) and United Provinces v. Atiqa Begum;(7) and the decisions of this Court in Navinchandra Mafatlal v. The Commissioner of Income-tax, Bombay City(8) and The State of Madras v. Gannon Dunkerley & Co. (Madras), Ltd. (9) These decisions have taken the view that a constitution must not be construed in a narrow and pedantic sense, that a board and liberal spirit should inspire those whose duty it is to interpret it, that a Constitution of a Government is a living and organic thing which of all instruments has the greatest claim to be construed ut res magis valeat quam pereat, that the legislature in selecting subjects of taxation is entitled to take things as it finds them in remum natura and that it is not proper that a Court should deny to such a legislature the right of solving taxation problems unfettered by a priori legal categories which often derive from the exercise of legislative power in the same constitutional unit.
(1) [1935] A.C. 500. (6) [1939] F.C.R. 18.
(2) [1930] A.C. 124. (7) [1940] F.C.R. 110.
(3) [1936] A.C. 578. (8) [1955] 1 S.C.R. 529..
(4) [1912] 15 C.L.R.661. (9) [1959].S.C.R. 379.
(5) [1937] 56 C.L.R. 33.
447 On a careful examination of various decisions bearing on the point this Court speaking through Venkatarama Aiyar J. in Gannon Dunkerley (supra) upheld the contention of the State of Madras that the words "sale of goods" in Entry 48 which occur in-the Constitution Act and confer legislative powers on the State Legislature in respect of a topic relating to taxation must be interpreted not in a restricted but broad sense. But as observed by the learned Judge in that case, this conclusion opens up questions as to what that sense is, whether popular or legal, and what its connotation is, either in the one sense or' the other. After considering text-book definitions contained in Blackstone, Benjamin on Sale, Halsbury's Laws of England, Chalmer's Sale of Goods Act, Corpus Juris, Williston on Sales and the Concise Oxford Dictionary, the Court held that the expression 'sale of goods' in Entry 48 cannot be construed in its popular sense and that it must be interpreted in its legal sense. Whereas in popular parlance a sale is said to take place when the bargain is settled between the parties though property in the goods may not pass at that stage, as where. the contract relates to future or unascertained goods, the essense of 'sale' in the legal sense is the transfer of the property in a thing from one person to another for a price.
The Court then proceeded to determine, the connotation of the expression 'sale of goods' in the legal sense and held, having regard lo the evolution of the law relating to sale of goods, the scheme of the Indian Contract Act and the provisions of the Sale of Goods Act, 1930, which repealed Chapter VII of the Indian Contract Act relating to sale of goods, that according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to the goods, which presupposes capacity. to contract, that the contract must be supported by valuable consideration and that as a result of the transaction property must actually pass in the goods.
"Unless all these elements are present, there can be no sale," Basing itself on this position, the Court finally concluded in Gannon Dunkerley (supra) that the expression 'sale of goods' was, at the, time when the Government of India Act was enacted, a term of wellrecognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic both in England and in India and therefore that expression, occurring in entry 48, must be interpreted in the sense which it bears in the Sale of Goods Act, 1930. In coming to this conclusion, the Court relied upon the, American decisions in United States v. Wong Kim Ark, South Carolina v. United States(2 ) and Ex Parte.
Grossman(3); the Privy Council decisions in L'Union St.
Jacques De Montreal v. Be Lisle (4) , Royal Bank of Canada v. Larue,(5) The Labour Relations Board of (1) [1898] 169 U.S. 649.
(2) [1905] 199 U.S. 437.
(3) [1925] 267 U.S. 87.
(4) [1874] L.R. 6 P.C.31.
(5) [1928] A.C. 187.
448 Saskatochewan v. John East Iron Works Ltd.(1); Croft v. Dunphy(2), and Wallace Brothers and Co. Ltd. v. Commissioner of Income-tax, Bombay City and Bombay Suburban District;(3) the decision of the Federal Court in re The Central Provinces and. Berar Act No. XIV of 1938; (supra); and the decisions of this Court in The State of Bombay v. F. N. Balsara(4) and The Sales Tax Officer, Pilibhit v. Messrs Budh Prakash Jai Prakash(5). In a nutshell, these decisions have taken the view that the Constitution must be interpreted in the light of the common-law, the principles and history of which were familiarly known to the framers of the Constitution, that the language of the Constitution cannot be understood without reference to the common law, that to determine the extent of the grants of power, the Court must place itself in the position of the men who framed and' adopted the Constitution and inquire what they must have understood to be the meaning and scope of those grants, that when a power is conferred to legislate on a particular topic it is important, in determining the scope of the power, to have regard to what is ordinarily treated as embarced within that topic in-legislative practice and particularly in the legislative practice of the State which has conferred that power, that the object of doing so is emphatically not to seek a pattern to which a due exercise of the power must conform, but to ascertain the general conception involved in the words of the Act, and finally, that Parliament must be presumed to have had Indian legislative practice in mind and unless the context otherwise clearly requires, not to have conferred a legislative power intended to be interpreted in a sense not understood by those to whom the Act was to apply.
The view expressed in Gannon Dunkerley (supra) that the, words "sale of goods" in entry 48 must be interpreted in the sense which they bear in the Sale of Goods Act, 1930 an$ that the, meaning of those words should not be left to fluctuate with the definition of 'sale in laws relating to sales of goods which might be in force for the, time being.
may, with respect, bear further consideration but that may have. to await a more suitable occasion. It will then be necessary to examine whether the words "sale of goods" which occur in entry 48 should not be construed so as to extend the competence of the legislature to enacting laws in respect of matters which mightbe unknown in 19 3 5 when the Government of India Act was passed but which may have come into existence later, as a result of a social and economic evolution. In Attorney General v. Edison Telephone, Company of London(,,) a question arose whether the Edison Telephone Company London, infringed by installation of telephones, the, exclusive privilege, of transmitting telegrams which was conferred; uponthe Postmaster-General under an Act of 1869. The decision depended on the meaning of the (1) [1949] A.C. 134.
(2) [1933] A.C. 156.
(3) [1948] L.R. 75 I.A. 86.
(4) [1951] S.C.R. 682.
(5) [1955] 1 S.C.R. 243.
(6) [1880] L.R. 6 Q.B.D. 244.
449 word "telegraph" in the Acts of 1863 and 1869. The company contended that since-telephones were unknown at the time when these Acts were passed, the definition of 'telegraph' could not comprehend 'telephones. That contention was negatived by an English Court. In the Regulation and Control of Radio Communication in Canada, In re(1) a similar question arose as to whether 'broadcasting" was covered by the expression "telegraph and other works and undertakings" in section 92(10) (a) of the Constitution Act of 1867. The Privy Council answered the question in the affirmative and was apparently not impressed by the contention that broadcasting was not known as a means of communication at the time when the Constitution Act was passed. These decisions proceed on the principle that if after the enactment of a legislation, new facts and situations arise which could not have been in the contemplation of the legislature, statutory provisions can justifiably be applied to those facts and situations so long as the words of the statute are in a broad sense capable of containing them.
This principle, according to the view expressed in Gannon Dunkerley, (supra) did not apply to the interpretation of Entry 48, a view which in our. opinion is capable of further scrutiny. It is, however, unnecessary in these appeals to investigate the matter any further because, the position which emerges after putting on the words of Entry 48 the same meaning which those words'-bear in the Sale of Goods Act, 1930 is that in order to constitute a sale, it is necessary that there should be an agreement between the parties. In other words, the effect of the construction which the Court put on the words of Entry 48 in Gannon Dunkerley (supra) is that a sale is necessarily a consensual transaction and if the parties have no volition or option to bargain, there can be no sale. For the present purposes, this view may be assumed to reflect the correct legal position but even so, the transactions which are the subject matter of these appeals will amount to sales.
Applying the ratio of Gannon Dunkerley, (supra) the true question for decision, therefore, is whether in the context of the Control Orders issued by the Government of West Bengal for regulating the supply and distribution of cement, the transactions under which the, appellant supplied cement to persons who were issued permits by the authorities to obtain the commodity from the appellant, involved an element of volition or consensuality. If they did, the transactions would amount to sales, but not otherwise. It is undeniable that under paragraph 2 of the West Bengal Order of 1948, which we have for convenience designated as the Cement Control Order, no person can dispose of or agree to dispose of any cement except in accordance with the conditions contained in a written order of the Director of Consumer Goods or the authorities specified in that paragraph. That is a limitation on the dealer's right to supply cement.
Correspondingly by paragraph 3, no person can acquire or agree to acquire cement from any person except in accordance with the conditions contained in a written order of the Director of Consumer Goods or the authorities specified in that paragraph. That is a limitation on the consumer's right to obtain cement. Paragraph 4 puts a restriction on the price which a dealer (1) [1932] A.C. 304.
45 0 may charge for the commodity by providing that no person shall sell cement at a price higher than the notified price.
Paragraph 8 imposes on the dealer the obligation to supply cement by providing that no person or stockist who has any stock of cement in his possession and to whom a written order has been issued under paragraph 2 shall refuse to sell the same at a price not exceeding the notified price. person who contravenes the provisions of the Cement Control Order is punishable under section 6 of the West Bengal Cement Control Act, 1948 with imprisonment for a term which may extend to three years These limitations on the normal right of dealers and consumers to supply and obtain the goods, the obligations imposed on the parties and the penalties prescribed by the Control Order do not, in our opinion, militate against the position that eventually, the parties must be deemed to have completed the transactions under an agreement by which one party bound itself to supply the stated quantity of goods to the other at a price not higher than the notified price and the other party consented to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority.
Offer and acceptance need not always be in an elementary form, nor indeed does the Law of Contract or of Sale of Goods require that consent to a contract must be express.
It is commonplace that offer and acceptance can be spelt out from the conduct of the parties which covers not only their acts but omissions as well. Indeed, on occasions, silence can be more eloquent than eloquence itself. Just as correspondence between the parties can constitute or disclose an offer and acceptance, so can their conduct.
This is because, law does not require offer and acceptance to conform to any set pattern formula.
In order, therefore, to determine whether there was any agreement or consensuality between the parties, we must have regard to their conduct at or about the time when the goods changed hands. In the first place, it is not obligatory on a trader to deal in cement nor on any one to acquire it.
The primary fact, therefore, is that the decision of the trader to deal in an essential commodity is volitional. Such volition carries with it the willingness to trade in the, commodity strictly on the terms of Control Orders. The consumer too, who is under no legal compulsion to acquire or possess cement, decides as a matter of' his volition to obtain it on the terms of the permit or the order of allotment issued in his favour. That brings the two parties together, one of whom is willing to supply the essential commodity and the other to receive it. When the allottee presents his permit to the dealer, he signifies his willingness to obtain the commodity from the dealer on the terms stated in the permit. His conduct reflects his consent. And when, upon the presentation of the permit, the dealer acts upon it, he impliedly agrees to supply the commodity to the allottee on the terms by which he has voluntarily bound himself to trade in the commodity. his conduct too reflects his consent. Thus, though both parties are bound to comply with the legal requirements governing the transaction, they agree as between themselves to enter into the transaction on statutory terms, 451 one agreeing to supply the commodity to the other on those terms and the other agreeing to accept it from him on the very terms. It is therefore not correct to say that the transactions between the appellant and the allottees are not consensual. They, with their free consent, agreed to enter into the transactions.
We are also of the opinion that though the terms of the transaction are mostly predetermined by law, it cannot be said that there is no area at all in which there is no scope, for the parties to bargain. The West Bengal Cement Control Act, 1948 empowers the Government by section 3 to regulate or control the prices at which cement may be purchased or sold. The Cement Control Order, 1948 provides by paragraph 4 that no person shall sell cement at a "higher than notified price", leaving it open to the parties to charge and pay a price which is less than the notified price, the notified price being the maximum price which may lawfully be charged. Paragraph 8 of the Order points in the same direction by providing that no dealer Who has a stock of cement in his possession shall refuse to sell the same "at a price not exceeding the notified price", leaving it open to him to charge a lesser price, which the allottee would be only too agreeable to pay. Paragraph 8 further provides that the. dealer shall deliver the cement "within a reasonable time" after the payment of price. Evidently, within the bounds of reasonableness, it would be open to the parties to fix the time of delivery. Paragraph 8A which confers on the allottee the right to ask for weighment of goods also shows that he may reject the goods on the ground that they are short in weight just as indeed, he would have the undoubted right to reject them on the ground that they are not of the requisite quality. The circumstance that in these areas, though minimal, the parties to the transactions have the freedom to bargain militates against the view that the transactions are not consensual.
While on this aspect, we may usefully draw attention to two important decisions of this Court, the first of which is Indian Steel & Wire Products Ltd. v. State of Madras(1).
The appellant therein supplies certain steel products to various persons in Madras at the instance of the Steel Controller exercising powers under the Iron and Steel'(Control of Production and Distribution) Order, 1941.
The State of Madras assessed the turnover of the appellant to sales tax upon
