21 July 1970
Supreme Court


Case number: Appeal (civil) 2483 of 1969






DATE OF JUDGMENT: 21/07/1970


CITATION:  1970 AIR 2000            1971 SCR  (1) 671  1970 SCC  (3) 809  CITATOR INFO :  RF         1972 SC  87  (32)  F          1973 SC 668  (2)  D          1978 SC 449  (44,45,47,52)  F          1979 SC1158  (3)  F          1985 SC1199  (6)

ACT: U.P. Sales-tax Act 1948 S. 2(h)-Supply of wheat to  Regional Food Controller under U.P. Wheat-Procurement (Levy) Order-if taxable.

HEADNOTE: The,  assesses who were dealers in food-grains  supplied  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  supplied  by the assesses,  rejecting  the  assesses’ contention  that  the  wheat supplied was not  sold  to  the Controller.    In   appeal,   the   Assistant   Commissioner (Judicial)  Sales 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  assesses.   Allowing  the  assesses’ appeal by special leave, this Court. HELD  :  The  supply, pursuant to cf. 3 of  the  U.P.  Wheat Procurement (Levy) Order, 1959 and acceptance thereof,  does not result in a contract of sale. Clause  3  of the order sets up a machinery  for  compulsory acquisition  by  the  State Government of  stocks  of  wheat belonging  to  the licensed dealers.  The Order  contains  a bald  injunction to supply wheat of the  specified  quantity day after day, and enacts that in default of compliance  the dealer  is liable to be punished; it does not  envisage  any consensual arrangement.  To ensure, that the dealer  carries out  his obligation his premises are liable to  be  searched and his property sequestered.The order does not require  the State   Government   to   enter  into   even   an   informal contract.Sale of goods predicates a contract of sale between persons competentto contract for a price paid or promised



:  a transaction. in which an obligation to supply goods  is imposed,  and which does not involve an obligation to  enter into  a  contract, cannot be called a ’sale’,  even  if  the person supplying goods is declared entitled to the value  of goods,  which  is determined or determinable in  the  manner prescribed.   Assuming that between the licensed dealer  and the  Controller,  there may be some arrangement  -about  the place  and manner of delivery of wheat, and the  payment  of "controlled price," the operation of cl. 3 does not on  that account become contractual. [675 H-676 D] Commissioner  of  Sales Tax, U.P. Lucknow v. Ram  Bilas  Ram Gopal,  [1969]  All.  L.J. 424; State of  Madras  v.  Gannon Dunkerlev and Co.,(Madras) Ltd; [1959]S.C.R.  379  M/s.New India  Sugar Mills Ltd. v.Commissioner of Sales Tax,  Bihar, [1963]  Suppl.  2 S.C.R. 459; Indian Steel &  Wire  Products Ltd., v. State of Madras, [1968] 1 S.C.R. 479;Andhra  Sugars Ltd. &Anr.  v. State of Andhra Pradesh & Ors.  [1968]  1 S.C.R. 705; State ofRajasthan  &  Anr. v.  M/s.   Karan Chand Thappar & Bros.  Ltd. [1969] IS.C.R. 861, Kirkness (inspector of Taxes) v. john Hudson & Co. Ltd., [1955]  A.C. 696 referred to. 672

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  2483  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 References Nos. 580 and 581 of 1966. J. P.  Goyal and Sobhagmal Jain, for the appellants (in both the  appeals). C. B. Agarwala and 0. P. Rana, for the respondent (in both the  appeals). The Judgment of the, Court was delivered by Shah,  J.-The  appellants  who are  dealers  in  food-grains supplied 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 (Revisions) Sales Tax. The  Additional  Judge (Revisions) Sales  Tax  referred  the following  questions  to  the High Court  of  Allahabad  for opinion               (1)  Whether  the sales made to  the  Regional               Food   Controller   under   the   U.P.   Wheat               Procurement  (Levy)  Order,  1959,  are  sales               within the meaning of "sale" under s. 2(h)  of               the U.P. Sales Tax Act ?               (2) Whether in the circumstances of the  case,               the  assesses are liable to pay sales  tax  on               the sales made to the Regional Food Controller               under   the  provisions  of  the  U.P.   Wheat               Procurement (Levy) Order, 1959 ?" The  questions  raised  were defective in  form.   The  word "sales" when it first occurs in Question No. (1 ) should  be "supplies".  The expression "sales made" in Question No. (2)



should be "on the price for wheat supplied".  We modify  the questions accordingly. The  High  Court  of  Allahabad,  following  their   earlier judgment in Commissioner of Sales Tax,, U.P. Lucknow v. ) an Bilas 673 Ram Gopal(1) answered the two questions in the  affirmative. The  appellants  have appealed to this  Court  with  special leave. The  expression  "sale" is defined in s. 2(h)  of  the  U.P. Sales  Tax Act, 1948 as meaning any transfer of property  in goods   for  cash,  deferred  payment  or   other   valuable consideration, but not including a mortgage,  hypothecation, charge  or pledge.  Power of the Provincial  Legislature  by virtue  of Entry 48 List 11 of the Government of India  Act, 1935,  was  restricted.  The, Legislature was  competent  to legislate  for levy of tax only on transactions  which  were "sales" within the meaning of the Indian Sale of Goods  Act, 1930 : State of Madras v. Gannon Dunkerley and Co.  (Madras) Ltd.(’) M/s.  New India Sugar Mills Ltd. v. Commissioner  of Sales Tax, Bihar(’).  It was observed in M/s. New India Sugar Mills’ case(’) :               "In popular parlance ’sale’ means transfer  of               property   from  one  person  to  another   in               consideration  of  price paid or  promised  or               other valuable consideration.  But that is not               the  meaning  of ’sale’ in the Sale  of  Goods               Act, 1930.  Section 4 of the Sale of Goods Act               provides  by  its  first  sub-section  that  a               contract of sale of goods is a contract  where               the seller agrees to transfer the property  in               goods  to the buyer for a price.   "Price"  by               cl. (10) of s. 2 means the money consideration               for  sale  of  goods,  ,and  "where  under   a               contract  of  sale property in  the  goods  is               transferred from the seller to the buyer,  the               contract  is  called  a sale,  but  where  the               transfer  of the ’property in the goods is  to               take place at a future time or subject to some               condition  thereafter  to  be  fulfilled,  the               contract is called an agreement to sell" [sub-               section  (3) s. 4]. It is manifest that  under               the Sale of Goods Act a transaction is  called               sale   only  where  for  money   consideration               property  in  goods  is  transferred  under  a               contract  of sale.  Section 4 of the  Sale  of               Goods Act was borrowed almost verbatim from s.               I  of  the English Sale of Goods Act 56  &  57               Vict.  c. 71.  As observed by Benjamin in  the               8th Edn. of his work on ’Sale’, "to constitute               a  valid sale there must be a  concurrence  of               the   following  elements  viz.  (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 was also observed that the expression "sale of goods"  in the  Constitution  must be understood in the same  sense  in which it is (1) (1969) All L.J. 424.           (2) [1959] S.C.R. 379. (3) [1963] Suppl. 2 S.C.R. 459. 13Sup.  C 1/70-14 674 used  in the Sale of Goods Act, 1930.  The U.P.  Legislature



could  therefore  legislate  for  levy  of  sales-tax  on  a transaction  which amounted to a sale within the meaning  of the  Sale  of  Goods  Act,  1930,  and  not  on  any   other transaction which was deemed by fiction to be a sale. It  is  necessary then to determine whether  the  stocks  of wheat  supplied  by the appellants in  compliance  with  the provisions of the U.P. Wheat Procurement (Levy) Order,  1959 to  the Regional Food Controller were sold to  that  Officer within  the meaning of the definition of the word ’sale’  in s.  2(h)  of  the U.P. Sales Tax Act,  1948.   The  relevant provisions of the U.P. Wheat Procurement (Levy) Order, 1959, may first be read.  The preamble to the Order states : "Whereas  the State Government is of the opinion that it  is necessary  and  expedient  so  to  do  for  maintaining  the supplies   of   wheat  and  for   securing   its   equitable distribution and availability at fair prices Now,  THEREFORE,  in  exercise of the  powers  conferred  by clauses  (e),  (f), (h), (i) and (j) of sub-section  (2)  of section  3  of the Essential Commodities Act,  1955  (10  of 1955),   the  Governor  of the State  of  Uttar  Pradesh  is pleased to make the following order Clause 3 provides               "(1)  Every Licensed dealer shall sell to  the               State Government at the controlled prices               (a)  Fifty  (50%) per cent if wheat  held  in.               stock  by  him  at the  commencement  of  this               Order; and               (b) Fifty (50%) per cent of wheat procured  or               purchased by him every day beginning with  the               date  of commencement of this Order and  until               such  time as the State  Government  otherwise               directs.               (2) The wheat required to be sold to the State               Government  under  sub-clause  (1)  shall   be               delivered  by  the  licensed  dealer  to   the               Controller  or to such other person as may  be               authorised by the Controller to take  delivery               on his behalf." Clause  4  confers  powers of entry,  search,  seizure  upon Enforcement Officers : insofar as it is material it provides "(1)  Any Enforcement Officer may, with a view  to  securing compliance  with  this Order or to satisfying  himself  that this order has been complied with 675               (i)  enter  with  such assistance  as  may  be               necessary any premises where he has reason  to               believe  that wheat is procured, purchased  or               stocked-,               (ii)ask   of   any  person   all   necessary               questions;               (iii) examine any books or documents;               (iv)  search any premises, vehicles,  ’vessels               and  aircraft  and seize wheat in  respect  of               which  he  has  reasons  to  believe  that   a               contravention of the order has been, is being,               or  is  about to be committed  and  thereafter               take  or authorise the taking of all  measures               necessary  for  securing  the  production   of               stocks so seized in a court and for their sale               custody, pending such production. By cl. 3 of the Order every licensed, dealer is directed  to "sell"  to  the State Government 50% of the  wheat  held  in stock by him on the date of the commencement of the Order at the  "controlled prices".  Again out of the stock  of  wheat procured  or purchased by him every day beginning  with  the



date  of commencement of the Order he is directed to  "sell" 50% of that stock.  The Order enjoins the licensed dealer to deliver  the  quantities specified in subcl. (1)  of  cl.  3 either  to the Controller or to such other person as may  be authorised by the Controller to take delivery on his behalf. To   ensure  that  the  licensed  dealer  carries  out   his obligation  the Enforcement Officers may enter any  premises where  they have reason to believe that wheat  is  procured, purchased  or  stocked, and may  make  necessary  enquiries, examine  any  books or documents and  search  any  premises, vehicles, vessels and aircraft and seize wheat in respect of which  they have reason to believe that a  contravention  of the Order has been, is being, or is about to be, committed. Obligation to deliver wheat of the quantity specified arises out  of  the  statute.  The Order takes no  account  of  the volition  of  the  licensed  dealers  and  until  the  State Government  directs  otherwise,  of the  Controller  or  the authorised  officer.  The Order imposes an  obligation  upon the licensed dealer who is defined in cl. 2(d) as meaning  a person  holding a valid licence under the U.P.  Food  grains Dealers Licensing Order, 1959, to deliver the quantities  of wheat  specified  in  the Order.  The  State  Government  is directed  by the Order to pay for the wheat supplied at  the controlled  rate.  The source of the obligations to  deliver the specified quantities of wheat and to pay for them is not in  any  contract,  but  in the  statutory  order.   In  our judgment cl. 3 sets up a machinery for compul- 676 sory, acquisition by the State Government of stocks of wheat belonging  to the licensed dealers. The Order, it  is  true, makes  no  provision in respect of the place and  manner  of supply  of  wheat and payment of the controlled  price.   It contains a bald injunction to supply wheat of the  specified quantity  day  after  day, and enacts  that  in  default  of compliance the dealer is liable to -be punished; it does not envisage  any consensual arrangement.  It does  not  require the  State  Government to enter into even an  informal  con- tract.   A  sale  predicates a contract  of  sale  of  goods between  persons competent to contract for a price  paid  or promised  : a transaction in which an obligation  to  supply goods  is imposed, and which does not involve an  obligation to enter into a contract, cannot be called a ’sale’, even if the person supplying goods is declared entitled to the value of goods, which is determined or determinable in the  manner prescribed.   Assuming that between the licensed dealer  and the  Controller,  there may be some arrangements  about  the place and manner of delivery of wheat, and the payment of  " controlled  price", the operation of cl. 3 does not on  that account become contractual. The High Court relied upon the following observations in Ram Bilas Ram Gopal’s case(’)               "Analysing  clause 3 of the Levy Order  it  is               clear  that  a licensed dealer is  obliged  to               sell  to the State Government fifty, per  cent               of  the  wheat  held in stock by  him  at  the               commencement  of  the  Order,  and  thereafter               fifty per cent of the wheat daily procured  or               purchased  by him beginning with the  date  of               commencement  of the Order until such time  as               the  State Government otherwise directs.   The               price at which the wheat is sold is the  maxi-               mum  price fixed in the Wheat (Uttar  Pradesh)               Price  Control Order, 1959 as notified by  the               Government  of India.  Delivery of  the  wheat               has to be given by the dealer to the  Regional



             Food Controller or a person authorised by  him               in that behalf.  The dealer has no option  but               to  sell the specified percentage of wheat  to               the  State Government.  The  State  Government               has  also no option but to purchase fifty  per               cent of the wheat held in stock by the  dealer               at  the  commencement of the Levy  Order.   As               regards the wheat procured or purchased  daily               by  the dealer thereafter, it is open  to  the               State   Government  to  say  that   from   any               particular  date it will not purchase  any  or               all  of  the specified  percentage  of  wheat.               Therefore,  as  regards that  wheat  the  Levy               Order  leaves it open to one of  the  parties,               namely the State Government to decide when  it               will  stop purchasing wheat from  the  dealer.               That in substance is clause 3 of (1961) All.  L.J. 424 677               the  Levy Order and it embodies the total  sum               of  obligations imposed on the dealer and  the               State  Government.  All other details  of  the               transaction are left open to negotiation.   It               leaves it open to the parties to negotiate  in               respect of the time and the mode of payment of               the  price, the time and mode of  delivery  of               wheat, and other conditions of the contract." Clause 3 of the Order compels the licensed dealer to deliver to  the Controller or his authorised agent every day 50%  of the  wheat procured or purchased by him.  There is no  scope for  negotiations there.  Assuming that the  Controller  may designate the place of delivery and the place of payment  of price  at  the  controlled rate,  and  the  licensed  dealer acquiesces  therein,  or even when in respect of  those  two matters  there  is  some  consensual  arrangement,  in   our judgment, supply of wheat pursuant to cl. 3 of the Order and acceptance thereof do not result in a contract of sale.  The High Court observed that               ".......whatever compulsive or coercive  force               is  used  to bring about a  transaction  under               clause 3 of the Levy Order, it must be  traced               to  legislation.  It cannot be  attributed  to               the  State  Government  as  a  party  to   the               transaction.  This, then, is clear.  There  is               nothing in the Levy Order which can be accused               of  vitiating the free consent of the  parties               as  defined  under  Sec.  14  of  the   Indian               Contract Act, when entering into the  contract               of sale." But  these observations assume a contract of sale which  the Order  does  not contemplate.  If there be a  contract,  the restrictions imposed by statute may not vitiate the consent. But the contract cannot be assumed. We  may  refer to certain decisions of this Court  on  which reliance  was placed at the Bar.  In M/s.  New  India  Sugar Mills’  case(’) under the Sugar and Sugar  Products  Control Order, 1946, a scheme was devised for equitable distribution of  sugar.   The  consuming States intimated  to  the  Sugar Controller  of  India their requirements of  sugar  and  the factory  owners sent statements of stocks of sugar  held  by them.  The Controller made allotments to various States  and addressed  orders  to the factory owners directing  them  to supply  sugar to the States in question in  accordance  with the despatch instructions from the State Governments.  Under the  allotment orders, M/s.  New India Sugar Mills Ltd.,  in



Bihar  despatched  stocks of sugar to the State  of  Madras. The  State  of Bihar treated the transaction as a  sale  and levied tax thereon under the (1) [1963] Supp. 2 S.C.R. 459. 678 Bihar Sales Tax Act, 1947.  The tax payer contended that the supplies  of  sugar;  pursuant  to  the  directions  of  the Controller,  did  not result in sales, and that no  tax  was exigible  on  such transactions.  A majority  of  the  Court observed that despatches of sugar pursuant to the directions of  the  Controller  were  not made  in  pursuance  of  -any contract  of sale.  There was no offer by the tax  payer  to the  State of Madras, and no acceptance by the  latter;  the tax payer was under the Control Order compelled to carry out the  directions of the Controller and it had no volition  in the matter.  Intimation by the State of its requirements  of sugar  to the controller or communication of  the  allotment order  to the assessee did not amount to an offer.  Nor  did the mere compliance with despatch instructions issued by the Controller, which the assessee had not the option to  refuse to  comply  with,  amount to acceptance of an  offer  Or  to making of an offer.  A contract of sale of goods  postulates a   voluntary  arrangement  regarding  goods   between   the contracting  parties.  It was held that in the  case  before the Court there was no such voluntary arrangement. In  two later decisions of this Court the true character  of transactions  in  which supplies of  commodities  were  made pursuant to Control Orders was examined.  In Indian Steel  & Wire  Products  Ltd.  v. State of  Madras(’)  the  tax-payer supplied  certain steel products to various persons  in  the State  of  Madras pursuant to the directions  given  by  the Steel Controller exercising powers under the Iron and  Steel (Control  of Production and Distribution) Order, 1941.   The authorities of the State of Madras assessed the turnover  of the tax-payer resulting from those transactions to sales tax under  the  Madras  General Sales Tax  Act.   The  tax-payer contended that the transactions of supply did not result  in sales  and  were on that account not exposed  to  sales-tax, because  steel  products  were  supplied  pursuant  to   the directions  of the Iron and Steel Controller made under  cl. 10B  of the Order there being no mutual assent  between  the parties  to  the  transaction.  This  Court  held  that  the supplies  were made pursuant to the directions issued  under cl. 5 of the Order and not pursuant to the directions issued under cl. 10B of the Order.  It was observed that the Orders were in respect of goods not yet manufactured, whereas under cl.  10B directions could be given only in respect of  goods already  in  stock,  and since cl. 5  did  not  require  the Controller   to  regulate  or  control  every  facet  of   a transaction  between a producer and the person to  whom  the taxpayer  supplied iron and steel products the  transactions were consensual.  Clause 5 of the Order read as follows               "No producer or stock-holder shall dispose  of               or  agree to dispose of or export or agree  to               export  from British India any iron or  steel,               except in accordance with (1) [1968] 1 S.C.R. 479. 679               the conditions contained or incorporated in  a               general  or  special  written  order  of   the               Controller." Clause 10B provided               "The  Controller  may,  by  a  written   order               require  any person holding stock of iron  and               steel,  acquired  by  him  otherwise  than  in



             accordance with the provisions of clause 4  to               sell  the  whole or any part of the  stock  to               such  person or class of persons and  on  such               terms  and conditions as may be  specified  in               the Order." Comparing  the terms of cl. 5 with the terms of cl. 10,  the Court observed that liberty of contract in large measure was reserved to the producer or stockholder and to the purchaser in  the matter of disposal of iron & steel.  The  obligation imposed  by  cl. 5 was, it was said, not to  dispose  of  or agree to dispose of or export or agree to export any iron or steel except in accordance with the conditions contained  or incorporated  in the order of the Controller and that  since there  was  liberty  of contract  between  the  parties  but subject  to restrictions, the transaction could be  regarded as a sale.  It was observed at p. 489 :               "But  under  clause  5  he  can  authorise   a               producer  or a stockholder to dispose  of  any               iron or steel whether the same is in stock  or               not   in   accordance  with   the   conditions                             contained  or  incorporated  in  a  sp ecial  or               general  written order issued by him.  In  the               instant  case,  as can be  gathered  from  the               correspondence already referred to, the  order               issued  by  the Controller could  be  complied               with  only  after manufacturing  the  required               material.   Hence,  the order  issued  by  the               Controller  could not have been  issued  under               clause 10B."               The Court then observed :               "........  the area within which there can  be               bargaining between a prospective buyer and  PA               intending seller of steel products, is greatly               reduced.  Both of them have to conform to  the               requirements  of the order and to comply  with               the  terms  and conditions  contained  in  the               order of the Controller.  Therefore they could               negotiate  only  in  respect  of  matters  not               controlled  by the order or prescribed by  the               Controller."               The Court also observed :               "It would be incorrect to contend that because               law  imposes some restrictions on  freedom  to               contract,  there  is no contract at  all.   So               long  as  mutual  assent  is  not   completely               excluded in -any dealing, in law it is a  con-               tract.   On  the facts of this  case  for  the               reasons already 680               mentioned,  it is not possible to  accept  the               contention  of  the learned  counsel  for  the               appellant that nothing was left to be  decided               by mutual assent." The  Court in that case distinguished the case in M/s.   New India  Sugar  Mills’ case(’) and  expressly  reserved  their opinion  on the question whether supplies of goods  pursuant to  the directions issued under cl. 10B of the Order may  be regarded  as  sales.  The decision in Indian  Steel  &  Wire Products Ltd.’s case(’) does not justify the view that  even if  the liberty of contract in relation to the  fundamentals of  the transaction is completely excluded a transaction  of supply  of goods pursuant to directions issued under a  Con- trol Order may be regarded as a sale. In  Andhra Sugars Ltd. & Anr. v. State of Andhra  Pradesh  &



Ors.(3) again, in the view of the Court liberty of  contract between  parties  to  transactions  relating  to  supply  of sugarcane  was  not  ruled out.  Under  the  Andhra  Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961, the occupier of a sugar factory had to buy sugarcane from  cane- growers  in  conformity  with the  directions  of  the  Cane Commissioner.   Under s. 21 of the Act the State  Government had power to tax purchases of sugarcane for use, consumption or  -sale  in  a sugar factory.   Certain  owners  of  sugar factories contended that "s. 21 was invalid." They contended that  they were compelled by law to buy cane from the  cane- growers,  and  since purchases made by them were  not  under agreements, the price paid for sugarcane could not be  taxed under a statute enacted in exercise of the power in Entry 54 List  II of the Seventh Schedule to the Constitution.   This Court  held that under Act 45 of 1961 and the  rules  framed thereunder, the cane-grower in the factory zone was free  to make or not to make an offer of sale of cane to the occupier of  the  factory;  if the cane-grower  made  an  offer,  the occupier  of  the factory was bound to accept  it,  and  the agreement  resulting therefrom was recorded in  writing  and was signed by the parties.,, The consent of the occupier  of the  factory  was  free as defined in s. 14  of  the  Indian Contract  Act.   The compulsion of law is it  was  said  not coercion  as  defined in s. 15 of the Act.   The  agreements were  enforceable by law and were regarded as  contracts  of sale as defined in s. 4 of the Indian Sale of Goods Act. In a later decision of this Court, State of Rajasthan & Anr. v. M/s.  Karam Chand ‘happar & Bros.  Ltd., (4) the assessee who had acquired monopoly rights to supply coal in Rajasthan and  sold  coal to the State of Rajasthan.   The  Sales  Tax Officer sought to (1)   [1963] Supp. 2 S.C.R. 459. (3)  [1968] 1 S.C.R. 705, (2)   [1968] 1 S.C.R. 479. (4)  [1969] 1 S.C.R. 861, 681 tax the turnover from supplies of coal made to the State  of Rajasthan.   It  was held by this Court  that  the  colliery Control  Order super-imposed upon the agreement between  the -parties  the rate fixed by the Control Order and by  reason of  such super-imposition of the rate fixed by  the  Control Order  the  mutual assent of the parties and  the  voluntary character  of  the  transactions  were  not  affected.   The decision  of  this Court’ in M/s.  New  India  Sugar  Mills’ case(’)  was distinguished on the ground that there  was  in the case then in hand mutual assent between the parties,  to the transaction of supply of coal. The decision of the House of Lords in Kirkness (Inspector of Taxes) v. John Hudson & Co. Ltd.(’) is instructive.  In that case  liability to pay income-tax on the difference  between the compensation received for requisition of certain  wagons by  the Minister of Transport was in issue.  A  majority  of the  House held that there was no sale of the wagons and  no income-tax was payable.  Viscount Simonds observed               "....the taxpayers’ wagons were not sold,  and               it would be a grave misuse of language to  say               that they were sold.  To say of a man who  has               had  his property taken from him  against  his               will  and  been awarded  compensation  in  the               settlement  of which he has had no  voice,  to               say  of  such  a  man that  he  has  sold  his               property  appears to me to be as far from  the               truth as to say of a man who has been deprived               of  his property without compensation that  he



             has given it away.  Alike in the ordinary  use               of  language and in its legal concept, a  sale               connotes the mutual assent of two parties.  So               far  as  the  ordinary  use  of  language   is               concerned,  it  is difficult  to  avoid  being               dogmatic  but,  for my part, I can  only  echo               what  Singleton, L.J., said in  his  admirably               clear judgment-(1954)1 All E.R. at page 32):               "What  would any one accustomed to the use  of               the  words ’sale’ or ’sold’ answer ? It  seems               to  me that every one must say  ’the  taxpayer               did not sell’." " On  the date of the commencement of the U.P. Wheat  Procure- ment  (Levy) Order, upon the licensed dealer was  imposed  a liability to deliver half the quantity of wheat on hand, and he  had  also to supply to the State Government 50%  of  the quantity  of  wheat procured or purchased by him  every  day beginning with the date of commencement of the Order.  If he failed  to  carry  out the obligation he was  liable  to  be penalized.  To ensure that he carried out his obligation his premises were liable to be searched and (1) [1963] Supp. 2 S.C.R. 459. (2) (1955) A.C. 696. 682 his property sequestered.  The order ignored the volition of the dealer. We  are unable to hold that there was any  contract  between the assessee and the State pursuant to which the goods  were sold within the meaning of the U.P. Sales Tax Act. The appeals are allowed.  The order passed by the High Court is  set aside.  The answer to the two questions as  reframed by  us  will  be in the negative.  The  appellants  will  be entitled to their costs in this Court and in the High Court. One hearing fee. Y.P.                            Appeals allowed. 683