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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. Ratio |
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 o... |
The appellant is a licensed stockist 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. FAC |
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. FAC |
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. FAC |
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, ... |
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. FAC |
The licence is issued only for the purpose of Mfg. of Mosaic Tiles at 188, Netaji Subhas Road, Calcutta 40. FAC |
Under no circumstances will the validity of the permit be extended beyond the period of 15 days from the date of its issue. FAC |
Cement Total Tonnge Country Cement at Rs. 144.58 Ton Cwt.per M.T. exclusive of section 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 ... |
The appellant was assessed to sales tax by the first respondent, the Commercial Tax Officer,, Sealdah Charge, in respect of these transactions. FAC |
It paid the tax but discovered on perusal of the decision of this Court in New India Sugar Mills Ltd. vs Commissioner of Sales Tax(1) that the transactions were not exigible to sales tax. FAC |
Pleading that the payment was made under a mistake of law, it filed appeals against the orders of assessment passed by respondent 1. FAC |
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... |
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. FAC |
The appellate authority rejected the first contention and upheld the assessments. FAC |
It did not, as it could not, go into the second contention regarding legislative competence. FAC |
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 i... |
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. FAC |
between the appellant and the allottees. RLC |
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. FAC |
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. FAC |
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. FAC |
Counsel appearing in the Andhra Pradesh appeals agree that the decision in the Calcutta case will govern those appeals also. FAC |
(1) [1963] Supp. 2 S.C.R. 459. FAC |
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. Ratio |
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 com merce in, cement in West Bengal." FAC |
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. STA |
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, possessio... |
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 con tranvention, may direct that a property in respect of which the Court is satisfied t... |
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. FAC |
The relevant clauses of that Order contain the following provisions. FAC |
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. FA... |
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. FAC |
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. FAC |
By paragraph 4, no person shall sell cement at a "higher than notified price". FAC |
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 paymen... |
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. FAC |
We are not concerned with the amendments made by the Govern ment 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. Ratio |
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. FAC |
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... |
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. FAC |
The agriculturist has the choice to select his own procuring agent but he cannot sell paddy to a private purchaser. FAC |
The procuring agents in their turn have to supply paddy to the rice millers at controlled prices. FAC |
The millers, after converting paddy into rice, have to declare their stocks to the Civil Supplies Department. FAC |
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. FAC |
Orders for such supply by the millers are passed by the authorities under the A.P. Procurement (Levy) and Restriction on Sale Order, 1967. FAC |
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 ... |
A breach of these provisions is liable to be punished under section 7 of the and the goods are liable to be forfeited under section 6A of that Act. Ratio |
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. FAC |
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. FAC |
These then are the provisions of the respective Orders passed by the Governments of West Bengal and Andhra Pradesh. Ratio |
445 We may now notice the provisions of the Sales Tax Acts. Ratio |
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, char... |
" 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. . STA |
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". STA |
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. STA |
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. STA |
Section 5 of that Act is the charging section. Ratio |
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 transfer... |
But that is over simplification. Ratio |
To counteract what appears on the surface plain enough, learned counsel for the appellants have advanced a two fold contention. ARG |
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 ; or else, the definition of sale in these Sales 'Tax Acts will be beyond the legislative competence of the Provincial and ' State legislatures. ARG |
Secondly, the appellants contend that since under the , 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 b... |
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 since the expression "sale of ... |
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. STA |
" 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. STA |
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." STA |
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 is repelled on behalf of the State Governments with the argument that constitutional provisions which... |
The principle that in interpreting a constituent or organic statute, that construction most beneficial to the 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. Ratio |
Some of the leading cases on this point are the Privy Council decisions in British Coal Corporation vs king(1), Edwards vs A. G. for Canada(2) and James vs Commonwealth of Australia("); the Australian decisions in Morgan vs Deputy Federal Commissioner of Land Tax, N.S.W.(4) and Broken Hill South Ltd. vs Commissioner of... |
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 con... |
(1) (6) (2) ; (7) (3) (8) (4) [1912] 15 C.L.R.661. PRE |
(9) [1959].S.C.R. 379. PRE |
(5) 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 L... |
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. Ratio |
After considering text book definitions contained in Blackstone, Benjamin on Sale, Halsbury 's Laws of England, Chalmer 's , 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 in... |
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 ... |
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 , which repealed Chapter VII of the Indian Contract Act relating to ... |
"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... |
In coming to this conclusion, the Court relied upon the, American decisions in United States vs Wong Kim Ark, South Carolina vs United States(2 ) and Ex Parte Grossman(3); the Privy Council decisions in L 'Union St. Jacques De Montreal vs Be Lisle (4) , Royal Bank of Canada vs Larue,(5) The Labour Relations Board of (1... |
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 ... |
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 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 be... |
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 might be unknown in 19 3 5 when the Government of India Act was passed but which may have come into existe... |
In Attorney General vs 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; upon the Postmaster General under an Act of 1869. Ratio |
The decision depended on the meaning of the (1) (2) (3) [1948] L.R. 75 I.A. 86.(4) ; (5) ; (6) 449 word "telegraph" in the Acts of 1863 and 1869. Ratio |
The company contended that since telephones were unknown at the time when these Acts were passed, the definition of 'telegraph ' could not comprehend 'telephones. Ratio |
That contention was negatived by an English Court. Ratio |
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. PRE |
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. PRE |
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 ... |
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. Ratio |
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 is that in order to constitute a sale, it is necessary that there should be an agreement between the parties. Rat... |
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. Ratio |
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. Ratio |
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 ... |
If they did, the transactions would amount to sales, but not otherwise. Ratio |
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 author... |
That is a limitation on the dealer 's right to supply cement. Ratio |
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. Ratio |
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