CHHITTER MAL NARAIN DAS versus COMMISSIONER OF SALES TAX

Citation: [1971] 1 S.C.R. 671 · Decided: 21-07-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
CHHITTER MAL NARAIN DAS 
v. 
COMMISSIONER OF SALES TAX 
July 21, 1970 
(J.C. SHAH AND K. S. HEGDE, JJ.] 
671 
U.P. Sales-tax Act 1948 S. 2(/1)-Supply of whrnt tu Regional Food 
Controller uncler U.P. Wheat Procurenient (Levy) Order-If lt1.1:ablc. 
The, asscssees who were dealers in food-grains supplied to the Regional 
Food Controller diverse quantities of wheat in compliance with the pro-
visions of the U.P. Wheat Procurement (Levy) Order. 1959. The Sales-tax 
Otliccr levied tax under the U.P. Sales-tax Act on the aggregate ol the 
price of wheat supplied by the assessees, rejec.ting the assessccs' conten-
tion that the wheat supplied was not sold to the Controller. 
In appeal, 
the Assistant Commissioner (Judicial) Saleo Tax held the supply was not 
taxable since there was no "sale" within the U.P. 
Sales-tax Act. 
This 
order was confirmed by the Additional Judge (Revision) Sales-Tax. 
On 
reference, the High Court answered the question against the asscssces. 
Allowing the assessees' appeal by special leave, this Court. 
HELD : The supply, pursuant to cl. 3 of the U.P. Wheat Procurement 
(Levy) Order, 1959 and acceptance: thereof, does not result in a contract 
of sale. 
Clnusc 3 of the order sets up a machinery lo compulsory acquisition 
by the Stutc Government of stocks of wheat belonging to the Jiccn.>cd 
dealer" The Order contains a bald injunction to supply wheat of 
the 
specified quantity day after day, and enacts that in default of complincc 
thl! dealer is liable to be punished; it does not envisage any consensual ;.ir-
rangcment. 
To ensure that the dealer carries out his obligation his pre-
mises are liable to be searched and his property sequestered. 
The order 
docs not require the State Government to enter into even an 
informal 
contract. . Sale of goods predicates a contract of sale bctwcon . persons 
competent to contract for a price paid or promised : a tr•nsaction in which 
un obligation to supply goods is imposed, and which does not involve an 
obligation to ente1r into ·a cor1tract. cannot be called a 'snle', even if the 
person supplying goods is declared entitled to the value of MOOd,, which 
is determined or determinable in the manner prescribed. Assuming that 
between the licensed dealer and the1 Controller. there may be some ar-
rangement about the place and manner of delivery of wh«•t. 
and the 
payment of "controlled price," the operation of cl. 3 
does not on that 
account become contractual. [675 H-676 DJ 
Con1111issfo11er of Sak~s Tax, U.P. Lucknow v. Rain Bi/a\· Rain Gop<il, 
[1969] All. L.J. 424; State of Madras v. Gannon Dunkerley and Co,, 
(Madras) Ltd; [195~] S.C.R. 379 M/.,.New India Su;iar Mi/fr Ltd. v. 
Commissioner of Sale.1· Tax, Bihar, [1963] Suppl. 2 S.C.R. 459; 
l11dia11 
Steel & Wire Products Ltd., v. State of Madras, [1968] I 
S.C.R. 479; 
And/Ira Sugars Ltd. & Anr. v. State of Andh•ra Prade.1'1 & Ors. [19681 
J S.C.R. 705; State of Raiasthan & A nr. v. M Is. Karan Chand Thappar 
& Bros. Ltd., [1969] 1 S.C.R. 861. Kirkness (Inspector of Taxes) v. John 
flud.<on & Co. Ltd., [1955] A.C. 696 reiferred to. 
672 
SUPREME COURT REPORTS 
[1971] 1 s.c.R. 
CIVIL APPELLATE JURISDICTION: 
Civil Appeals Nos. 2483 
A 
and 2484 of 1969. 
Appeals by special leave from the judgment and order dated 
April 11, 1969 of the Allahabad High Court in Sales Tax Refer-
ences Nos. 580 and 581 of 1966. 
J. P. Goyal and Sobhagmal Jain, for the appeUants (in both 
the appeals). 
C. B. Agarwala and 0. P. Rana, .for the respondent (in both 
the appeals). 
B 
The Judgment of the Court was delivered by 
c 
Shah, .J.-The appellants who are dealers in food-grains sup-
plied to the Regional Food Controller diverse quantities of wheat 
in compliance with the provisions of the U.P. Wheat Procurement 
(Levy) Order, 1959. The Sales Tax Officer levied tax under the 
U.P. Sales Tax Act on the aggregate of the price of wheat by the 
appellants, rejecting the contention raised by the appellants that 
the wheat supplied was not sold by them to the Controller. In 
appeal the Assistant Commissioner (Judicial) Sales Tax.held that 
the turnover resulting from supplies of wheat was not taxable since 
there was no "sale" within the meaning of the U.P. Sales Tax Act, 
1948. The order was confirmed by the .Additional Judge (Revi-
sions) Sales Tax. 
The Additional Judge (Revisions) Sales Tax referred the 
following questions to the High Court of Allahabad for opinion : 
(I) Whether the sales made t

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