VISHNU AGENCIES (PVT.) LTD. ETC. versus COMMERCIAL TAX OFFICER & ORS. ETC.

Citation: [1978] 2 S.C.R. 433 · Decided: 16-12-1977 · Supreme Court of India · Bench: M. HAMEEDULLAH BEG · Disposal: Dismissed
Cited by 7 judgment(s) · cites 6 · see the full citation network in Lexace
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Judgment (excerpt)

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' 
' 
VISHNU AGENCIES (PVT.) LTD. ETC. 
v. 
COMMERCIAL TAX OFFICER & OR'S. ETC. 
December 16, 1977 
433 
[M. H. BEG, C.J., Y. V. CHANDRACHUD, P. N. 
BHAGWATI, V. R. 
KRISHNA IYER, N. L. UNTWALIA, S. MURTAZA FAZAL ALI AND 
P. S. KAILASAM, JJ] 
Sales-tax-Statutory sale-If sale for the purposes of Sales-tax 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 Procuren1ent (Levy) Order-If exigible co. 
sales-tax. 
A 
B 
c 
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 hy 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 
D 
order has been issued shall refuse to sell cement "at a price not exceeding the 
notified price". 
;\ny 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 ~o-:.. 2<i88 to 2497 of 1972) every miller carrying on rice milling 
operation is requin:d 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 
E 
can move or oth..::r1o~·i-;e dispose of the rice recovered by milling at such rice mill 
except in accord:1nce \Vith the directions of the Collector. Breach of these 
provi-,ions becomes punishable. 
It \Vas 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 
n1eaning a5 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 \Vell recogni-:ed legal import in the general law r..::lating to sale of goods and 
F 
in the legislative practi.::e 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 ~ood..:; at p!"lce.<; fixed under the Control Orders by the authorities the 
tran~actions were not sales and so were not exigible to tax. 
Dismis<;ing the appeals. 
HELD : Per cHria11i Sale of cement hy the allottees to the 
permit-holders 
G 
and the transaction~ between the grower.., and procuring agents as well as those 
• 
be1ween the rice l;[li\lers on the one hand and the wholesalers or retailers on the 
other, are sales ex:h:ible to sales-tax in the re<;pective States. 
[465-F-G] 
l'er Beg. C.J., 
The transaction<; in the instant cases are sale<; and are exigible to tax on the 
ratio of Indian Steel and Wire Products Ltd., Andhra Suf(ar Ltd. and Karam' 
H 
Chand Thapar. 
In cases like f'.lew India Suqar Mills, the substance of the con-
cept of a sale 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 ·wlten all that is done is to carry out an order so that 
B 
c 
D 
E 
G 
H 
• 
434 
SUPREME COURT REPORTS 
[1978] 2 S.C.R. 
the transaction is substantially a compulsory acquisition.- b:D.--£he other hand, 
a merely regulatory· law, even if it circumscribes the are'l uf free choice, does 
not take away the basic character or core of sale from the transaction. Such a 
Jaw \\'hich governs a class obliges a seller to deal only with parties holding 
licences '\\''ho 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 ele· 
ments regulating or restricting tHe area of bis choice,' Diay 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 w·hich binds the 
parties, to J
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