LexCOFFEE BOARD, KARNATAKA, BANGALORE versus COMMISSIONER OF COMMERCIAL TAXES
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A B COFFEE BOARD, KARNATAKA, BANGALORE v. COMMISSIONER OF COMMERCIAL TAXES MAY 11, 1988 [R.S. PATHAK, CJ, SABYASACHI MUKHARJI AND S. NATARAJAN, JJ.) Karnataka Sales Tax Act, 1957-Challenging purchase tax on coffee levied under provisions of-Coffee Act 1942-Whether compulsory delivery of coffee to Coffee Board from growers under C section 25( 1)-0f-Is compulsory acquisition and not sale or purchase to attract levy of purchase tax. The appellant Coffee Board filed writ petitions in the High Court praying for a declaration that the mandatory delivery of the Coffee under section 25(i) of the Coffee Act, 1942, was not sale and that section D 2(t) of the Karnataka Sales Tax Act, 1957 required to be struck down if the same encompassed compulsory acquisition also, and challenging the show-cause notice, proposing to re-open the tax assessment and the pre-assessment notice proposing to assess the Board to purchase tax on the Coffee transferred from Karnataka to outside the State. The Coffee Board has also filed in the High Court writ petitions, challenging the E assessments and the demands for the purchase tax. The appellant Coffee Board had contended that the compulsory delivery of Coffee under the Coffee Act, 1942 extinguishing all the marketing rights of the growers was 'compulsory acquisition' and not sale or purchase to attract levy of purchase-tax and that the appellant was only a 'trustee' or agent of the growers not exigible to purchase tax and that all the F export sales were in the course of export immune to tax under Article 286 of the Constitution. It was held by the High Court that an element of consensuality subsisted even in compulsory sales governed by law and once there was an element of consensuality even though minimal, that would be sale or purchase for purposes of Sale of Goods Act and the same would he exigible to sales or purchase tax under the relevant G Sales Tax law of the country. On an analysis of all the provisions of the Coffee Act in general and sections 17 and 25 in particular, the High Court held that on the true principles of compulsory acquisition or eminent domain, it was difficult to hold that on compulsory delivery by growers to the Board, there would be compulsory acquisition of coffee by the Coffee Board. The High Court dismissed all the writ petitions by H a common judgment. The Coffee Board fil~d appeals in this Court by 348 COFFEE BOARD v. COMMR. OF COMMERCIAL TAXES 349 certificate against the decision of the High Court. The writ petitions filed in this Court were for the determination of the rights, obligations and liability between the petitioners and the Coffee Board in respect of the sales tax due and payable on the transactions between the parties. A \ Dismissing the appeals and the Writ Petitions Nos. 358 and 37 of 1986 and disposing of the Writ Petitions Nos. 36 and 39 of 1986, the B Court, HELD: The question involved in these appeals and "the writ peti• lions was the exigibility of tax on sale, if any, by the growers of the coffee to the Coffee Board. Basically, it must depend upon what is ·sale in the general context as also in the context of the relevant provisions of lhe Karnataka Sales Tax Act 1957 as amended from time to time, and C the Central Sales Tax Act, 1956. These, however, must be examined in the context of general law, namely, the Sale of Goods Act," 1930 and the concept of sale in general: [358F-G I Coffee Board is a 'dealer' registered as such under the Central D Sales Tax Act and the Sales Tax Acts of all the States in which it holds auctions/maintains depots runs coffee houses. It collects and remits sales tax on all the coffee sold by it to the State in which the sale takes . place. It transfers coffee from one State to another. [3608, El This Court (Bench of Five Judges) in the case of State of Kera/av. E Bhavani Tea Produce Co., 11966] 2 S.C.R. 92, which arose under the Madras Plantations Agricultural Income Tax Act, held that when gro- wers delivered coffee to the Board, all their rights therein were exting- uished and the Coffee vested in the Board. The Court, however did not hold that there was a taxable 'sale' by the grower to the Board in the year in question. The Court in this case was bound by the clear ratio of F that decision and it could not by-pass the same. That decision concludes all the issues in this case. Several questions were canvassed in these appeals in vie
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