http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 24  

PETITIONER: COFFEE BOARD, KARNATAKA, BANGALORE

       Vs.

RESPONDENT: COMMISSIONER OF COMMERCIAL TAXES

DATE OF JUDGMENT11/05/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) PATHAK, R.S. (CJ) NATRAJAN, S. (J)

CITATION:  1988 AIR 1487            1988 SCR  Supl. (1) 348  1988 SCC  (3) 263        JT 1988 (2)   448  1988 SCALE  (1)1055  CITATOR INFO :  D          1990 SC 781  (34)

ACT:      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 section  25(1)-Of-Is compulsory  acquisition  and  not sale or purchase to attract levy of purchase tax.

HEADNOTE:      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  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 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  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 be  exigible to  sales or purchase tax under the relevant 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 24  

growers to  the Board, there would be compulsory acquisition of coffee  by the Coffee Board. The High Court dismissed all the writ  petitions by  a common  judgment. The Coffee Board filed appeals in this Court by 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.      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 Court. ^      HELD: The  question involved  in these  appeals and the writ petitions  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  the Karnataka Sales  Tax Act  1957 as amended from time to time, and 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]      Coffee Board is a ’dealer’ registered as such under the Central 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. [360B,E]      This Court  (Bench of Five Judges) in the case of State of Kerala  v. Bhavani  Tea Produce  Co., [1966] 2 S.C.R. 92, which arose under the Madras Plantations Agricultural Income Tax Act,  held that  when growers  delivered coffee  to  the Board, all  their rights  therein were  extinguished 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  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 view of  the  decision  of  the  High  Court,  and  all  the questions were  answered by  this Court  in the  Bhavani Tea Produce Co.’s  case (supra)  against the appellant. [360F-G; 364B]      All the  four essential  elements of  sale (1)  parties competent of  contract, (2)  mutual consent, though minimal, by growing coffee under the conditions imposed by the Coffee Act, 1942  (The Act),  (3) transfer of property in the goods and (4) payment of price though deferred were present in the transaction in  question. As  regards  the  provision  under section  26(2)  empowering  the  Coffee  Board  to  purchase additional 350 coffee not  delivered for  inclusion in the surplus pool, it is only  a supplementary provision enabling the Coffee Board to have  a second avenue of purchase, the first avenue being the right  to purchase  coffee under  a compulsory  delivery system formulated under section 25(1) of the Act. The scheme of the  Act is  to provide  for a single channel for sale of coffee grown  in the registered estates. The Act directs the entire coffee  produced except  the  quantity  allotted  for internal sale  quota, if any, to be sold to the Coffee Board through the  modality of  compulsory delivery  and imposes a corresponding obligation on the Coffee Board to compulsorily

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 24  

purchase the  coffee delivered to the pool, except (1) where the  coffee  delivered  is  found  to  be  unfit  for  human consumption, and  (2) where the coffee estate is situated in a far  off and remote place or the coffee grown in an estate is so  negligible as  to make  the sale  of  coffee  through compulsory delivery  an arduous  task  and  an  uneconomical provision. [367E-H; 368A-B]      In the  nature of  transactions contemplated  under the Act, mutual  assent either express or implied is not totally absent in  this case  in the  transactions  under  the  Act. Coffee growers  have a volition or option, though minimal or nominal to  enter into  the coffee growing trade. If any one decides to  grow coffee,  he must  transact in  terms of the regulation imposed  for the  benefit of  the coffee  growing industry. Section  25 of the Act provides the Board with the right to reject coffee if it is not upto the standard. Value to be  paid as  contemplated by  the Act is the price of the coffee. There is no time fixed for delivery of coffee either to the  Board or the curer. These indicate consensuality not totally absent in the transaction. [368C-E]      The scheme  contemplated  under  the  Act  was  not  an exercise of  eminent domain  power. The  Act was to regulate the development  of coffee  industry  in  the  country.  The object was  not to acquire coffee grown and vest the same in the Coffee  Board.  The  Board  is  only  an  instrument  to implement the  Act. The High Court had rightly observed that the Board  has been  chosen as  the instrumentality  for the administration of  the Act.  It cannot  be said  in the Act, there is  any compulsory acquisition. In essence, the scheme envisages sale  and not  compulsory acquisition.  The  terms ’sale’  and  ’purchase’  have  been  used  in  some  of  the provisions  and   that  is  indicative  that  no  compulsory acquisition was intended.      The levy of duties of excise and customs under sections 11 and  12 of  the Coffee  Act  are  inconsistent  with  the concept of  compulsory acquisition.  Section  13(4)  of  the Coffee Act clearly fixes the liability for 351 payment of  duty of  excise on  the registered  owner of the estate producing coffee. The Board is required to deduct the amount of duty payable by such owner from the payment to the grower under  section 34 of the Act. The duty payable by the grower is  a first  charge on such pool payment becoming due to the grower from the Board. Section 11 of the Act provides for levy of duty of customs on coffee exported out of India. This duty  is payable to the Customs Authorities at the time of actual  export. The  levy and collection of this duty are not unrelated  to the  delivery of  coffee by the growers to the Board  of the payments made by the Board to the growers. The duty  of excise  as also  the duty of customs are duties levied by Parliament. It is not a levy imposed by the Board. The revenue realised from levy of these duties forms part of the Consolidated  Fund of  India, which  may be utilised for the purpose  of the Coffee Act only if the Parliament by law so provides.  The true principle or basis in Vishnu Agencies (Pvt.) Ltd.  v. Commercial  Tax officer  and  others,  etc., [1978] 2  S.C.R.  433,  applies  to  this  case.  Offer  and acceptance need  not always  be in  an elementary  form, nor does the  law of  contract or  sale of  goods  require  that consent to  a contract must be express. Offer and acceptance can be spelt out from the conduct of the parties which cover not only  their acts  but omissions as well. The limitations imposed by  the Control  order on  the normal  right of  the dealers and  consumers  to  supply  and  obtain  goods,  the obligation  imposed   on  the   parties  and  the  penalties

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 24  

prescribed by the order do not militate against the position that  eventually,   the  parties  must  be  deemed  to  have completed the  transaction under  an agreement  by which one party binds itself to supply the stated quantity of goods to the other  at a price not higher than the notified price and the other  party consents  to accept  the goods on the terms and conditions  mentioned in  the permit  or  the  order  of allotment issued  in its  favour by the concerned authority. [375C-H; 376A-B]      A contract, express or implied, for the transfer of the property in  the goods  for a  price paid  or promised is an essential requirement  for a  ’sale’. In  the absence  of  a contract, express  or implied,  there cannot  be any sale in law; however,  in this  case, as  the scheme  of the Act is, there was  contract contemplated between the growers and the Coffee Board.  In law, there cannot be a sale whether or not compulsory in  the absence of a contract express or implied. [376B-C]      The imposition  of tax  in the manner done by the Sales Tax Authorities upheld by the High Court was correct and the High Court was right. The appeals failed. [378D] 352      Civil Writ  Petition No. 358 of 1986 was dismissed. Re. Writ Petition  No. 36  of 1986,  the Court could not go into the contentions in this petition. The rights and obligations of the  parties inter  se between  the petitioners  and  the Coffee Board  might be  agitated in appropriate proceedings. Writ Petition  37 of 1986 was dismissed without prejudice to the rights  of the  petitioners to  agitate the  question of liability of  the petitioner  vis-a-vis the  Coffee Board in respect of the Sales Tax due and payable on the transactions between the  parties in  appropriate proceedings.  In  Civil Writ Petition  No. 39  of 1986,  the Court  passed no order; this was  without prejudice  to the  right  of  the  parties taking  appropriate   proceedings  if   necessary  for   the determination  of  the  liabilities  inter  se  between  the petitioners and the Coffee Board for the amount of the Sales Tax payable. [378E-G]      Indian Coffee  Board v.  State of Madras, 5 S.T.C. 292; C.E.B. Draper  & Sons  Ltd. v.  Edward Turner  &  Son  Ltd., [1965] 1  Q.B. 424;  State of  Kerala v. Bhavani Tea Produce Co., [1966]  2 S.C.R.  92; Consolidated  Coffee Ltd.  & Anr. etc. v.  Coffee Board,  Bangalore, etc.  etc., [1980]  3 SCR 625; Peanuts  Board v.  The Rockhampton  Harbour  Board,  48 Commonwealth Law  Reports 266;  Vishnu Agencies  (Pvt.) Ltd. etc. v.  Commercial Tax  officer and  others etc.,  [1978] 2 S.C.R. 433;  Indian Steel  and Wire  Products  Ltd.,  Andhra Sugar Ltd.  and Karam  Chand Thapar,  [1968] 1  S.C.R.  479; State of  Madras v.  Gannon Dunkerley  &  Co.  Ltd.,  [1959] S.C.R. 379;  New India  Sugar Mills v. Commissioner of Sales Tax, Bihar,  [ 19631  Suppl. 2  S.C.R.  459;  Charanjit  Lal Choudhury v. The Union of India & Ors., [1950] 1 S.C.R. 869; State of  Karnataka and another etc. v. Ranganatha Reddy and Anr. etc., [1978] 1 S.C.R. 641; Milk Board (New South Wales) v. Metropolitan  Cream Pty. Ltd., 62 C.L.R. 116 and State of Tamil Nadu  v. N.  K.  Kamaleshwara,  119761  1  S.C.R.  38, referred to.

JUDGMENT:      CIVIL  APPELLATE/ORIGINAL  JURISDICTION:  Civil  Appeal Nos. 4522-4529 of 1985 etc. etc      From the  Judgment and  order dated  16.8.1985  of  the Karnataka High Court in W P. Nos t5536-40/1982 and W P. Nos.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 24  

13981, 17071, . 17072. 19118 and 19285/ 1983.      G. Ramaswami.  Additional Solicitor  General, R J Babu, R.F Nariman,  Ranjan Karanjawala,  Mrs. M.  Karanjawala  and Ejaz Maqbool for the Appellant in C.A. Nos 4522-29/1985      Shanti Bhushan,  Kapil Sibal,  Soli J.  Sorabjee,  G.B. Pai, V.A 353 Bobde, K.P.  Kumar, R.  Vasudevan, K.T. Anantharaman, Harish N. Salve, H.K. Dutt, Ms. Mridula Ray, O.C. Mathur, Ms. Meera Mathur and Ms. Lekha Mathur for the Petitioners in W.P. Nos. 36, 37, 39 and 358 of 1986.      T.S.  Krishnamurthi   Iyer,  S.  Padmanabhan,  Soli  J. Sorabjee, R.P. Srivastava, P. Parmeshwaran, R. Mohan, Harish N. Salve,  Ms. M.  Ray and  H.K. Dutt  for the Intervener in C.A. Nos. 4522-29 of 1985.      Dr. Y.S.  Chitale, M.Veerappa,  Ashok Kumar  Sharma and Atul Chitale for the Respondents.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI,  J. These  appeals by certificates are from  the judgment  and  order  of  the  High  Court  of Karnataka dated  16th  of  August,  1985.  By  the  impugned judgment and  order the  writ petitions  filed by the Coffee Board and  others were dismissed. In order to appreciate the questions involved in the decision, it may be noted that the appellant herein-Coffee  Board contended that the compulsory delivery of  coffee under the Coffee Act, 1942 extinguishing all  marketing   rights  of   the  growers  was  ’compulsory acquisition’ and  not sale  or purchase  to attract  levy of purchase tax;  it was  further contended  that the appellant was only  a ’trustee’  or ’agent’ of growers not exigible to purchase tax  and that  all export sales were ’in the course of  export’   immune  to   tax  under  Article  286  of  the Constitution.      It was held by the Division Bench of the Karnataka High Court that  an element  of consensuality  subsists  even  in compulsory sales  governed by  law  and  once  there  is  an element of  consensuality,  however  minimal  that  may  be, whether express  or implied,  then that  would  be  sale  or purchase for  purposes of  Sale of  Goods Act  and the  same would be  exigible to  sales or purchase tax as the case may be under the relevant Sales Tax Law of the country.      The power conferred on the Board under section 25(2) of the Coffee  Act, to  which we  will make reference later, to reject coffee  offered for  delivery or  even the right of a buyer analogous  to section  3;’ of  the Sale  of Goods  Act showed that  there was  an element  of consensuality  in the compulsory sales  regulated by  the Act.  The amount paid by the Board to the grower under the Act was the value or price of coffee  in conformity  with the  detailed accounting done thereto under 354 the Act.  It was  further held  by the  High Court  that the amount paid  to the  grower  was  neither  compensation  nor dividend.  The  payment  of  price  to  the  grower  was  an important element  to determine  the consensuality  test  to find out  whether there  was sale  under section 4(1) of the Sale of  Goods Act. The Act also ensures periodical payments of price  to the  growers. The  Rules provide  for advancing loans to growers. Therefore, according to the Division Bench of the  Karnataka High  Court without  any shadow  of  doubt these elements  indicated that  in the  compulsory  sale  of coffee, there was an element of consensuality. When once the Board was  held to  be a  ’dealer’ it also followed from the same that  there was  sale by  the grower,  purchase by  the Board and  then a  sale by  the Board. The purchases and the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 24  

exports if any made by the Board thereafter on any principle would not  be ’local  sales’ within  the State of Karnataka. Explanation 3(2)(ii)  to section 2(1) of the Karnataka Sales Tax Act  had hardly  any relevance  to hold  that the  later export sales  were ’local  sales’ to  avoid liability  under section 6  of the Karnataka Sales Tax Act. The direct export sales made by the appellant for the period in challenge were not ’in  the course  of export’ and they did not qualify for exemption from purchase tax under section 6 of the Karnataka Sales Tax  Act. The levy of sales tax on coffee, it was held by the  High Court  fell, under  Entry No.  43 of the second schedule of  the Act  and it was governed by section 5(3)(a) of the  Act and  not by  section 5(1)  of the  Act.  It  was further held  that under  section 5 of the Central Sales Tax Act, 1956 purchases and exports made by the Coffee Board are ’for export’  and not ’in the course of export’ and thus did not  qualify   for  exemption   under  Article  286  of  the Constitution of  India. It  was observed  by the  High Court that the  Board did  not purchase  or take  delivery of  any specific coffee or goods of any grower and exported the same under prior  contracts of  sale. The  Board did not purchase any specific  coffee of  any specific grower for purposes of direct exports  at all. The purchases made and exportes made would be  ’for export’  only and  not in  ’in the  course of export’  to   earn  exemption   under  Article  286  of  the Constitution of  India. It was further held that sections 11 and 12  of the  Act which  regulate the  levy and payment of Customs and  Excise  Duties  when  closely  examined  really established according  to the High Court that what was grown by the  growers and  delivered to  the Board  was not at all compulsory acquisition  but was  sale. If  it was compulsory acquisition and  there was  payment  of  compensation,  then these provisions  would not  have found  their places in the Coffee Act  at all,  according to  the High  Court. Levy  of Customs and  Excise Duties  on  compensation  was  something unheard, an  incongruity and  an anachronism in   compulsory acquisition,according to the High Court. 355      On an  analysis of  all the  provisions of  the Act  in general and  sections 17 and 25 in particular it was held by the High  Court 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 Board.      In order  to determine  the questions at issue, that is to say the nature of the transaction one has to in a case of this nature  telescope into  the history and project it into the dimensions  of the  present levy.  In November  1935 the Indian Coffee  Cess Act,  1935 (Act  14 of  1935) came  into operation, for  levying  cess  on  coffee  produced  in  and exported out  of India,  for promoting  the  consumption  in India and elsewhere of coffee produced in India and also for promoting agricultural  and technological  research  in  the interests of the coffee industry in India. The purpose seems to have  been to develop the coffee industry, popularise the same and win a market in the international field. On 14th of September, 1940  Coffee Market Expansion ordinance (No. XIII of 1940)  was promulgated  by the Central Government and the Pool Marketing Scheme for coffee introduced in India for the first time.  An ’internal  sale quota’ was to be allotted to each coffee  estate upto  which the  owner  could  sell  his coffee in  the  Indian  Market.  Coffee  in  excess  of  the internal sale  quota allotted and grown on the estates which were henceforth  to  be  registered,  were  required  to  be compulsorily delivered  to the  surplus pool  of the  Coffee

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 24  

Market Expansion  Board set up under the ordinance. The Pool Marketing Scheme  was inspired by the pool marketing schemes for agricultural  produce under  Australian statutes.  On or about 2nd  March, 1942 the Coffee Market Expansion Act, 1942 (the title  of the  Act was  later changed  to Coffee Act in 1955) (hereinafter referred to as "the Act") was enacted and the ordinance  repealed. The  Act was to remain in operation for the duration of the second world war and a period of one year thereafter.  The Act,  inter alia,  added  a  new  sub- section (6) to section 25 of the Act, specifically providing for extinguishment  of all  the rights  of the owners of the registered coffee estates in the coffee delivered by them to the surplus  pool of  the Coffee Board (hereinafter referred to as ’the Board’) set up under the Act, except the right to receive payments referred to in section 34 of the Act. Under section 34  of the  Act the Coffee Board was required to pay to the  registered  owners  who  had  delivered  coffee  for inclusion in  the surplus pool such payments out of the Pool Fund (comprising  of the  monies realised  from the  sale of coffee pooled with the Board) as the Board may think proper, the amount so paid being dependent upon the quantity and the kind of the coffee delivered to the Board 356      on or about 26th March, 1943 the Act was amended, inter alia, to  enable the Coffee Board with the previous approval of the  Central Government  not to  allow any  internal sale quota to the growers. Since 1943 in each year the Board with the previous  sanction of the Central Government has decided that no  internal sale quota should be allowed. Sections 38A and 38B  were added  making failure to deliver coffee to the Board an offence to be penalised by fine and confiscation of the quantities  not delivered.  Power was  also conferred on the Coffee  Board to  seize coffee  required to  be but  not delivered to  the Board.  Ever  since  1943,  internal  sale quotas have  not been  al1owed and  all the  coffee grown on estates in  the areas  to which Section 25(1) of the Act was applicable was  required  to  be  compulsorily  pooled.  The surplus pool referred to in the Act was now in fact the pool of practically  all coffee  produced in  India,  it  is  not necessary to refer to the actual quantities available in the internal pool  in different  years though  a table  to  that effect was  placed  before  us  by  the  learned  Additional Solicitor General,  Sree G. Ramaswamy. On the 11th of March, 1947 the  Coffee Market Expansion (Amendment) Act IV of 1947 was enacted.  The life  of the  Act was extended without any time limit  and,  inter  alia,  changes  were  made  in  the constitution of  the Board  providing for  representation of labour. On  1st August,  1955 the  Coffee  Market  Expansion (Amendment) Act,  1954 was brought into force. The object of the Coffee  Act was  modified from  ’the continuation of the provisions made under the Coffee Market Expansion ordinance, 1940 for assistance to the coffee industry by regulating the sale of  coffee in India and by other means’ to "Development under the  control of  the union of the coffee industry". It was highlighted  before us  in the  course of the submission that the pool system of marketing is a unique feature of the coffee industry  in India. The principal features, according to the  learned Additional Solicitor General, of this system are: (a)  Compulsory registration  of all lands planted with coffee  (section  14  of  the  Coffee  Act).  (b)  Mandatory delivery of  all coffee  grown  in  the  registered  estates except the  quantities permitted by the Board to be retained for domestic consumption and for seed purposes, (see section 25(1) of  the Coffee  Act). Estates situated in remote areas specified  in   the  notification   issued  by  the  Central

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 24  

Government under  the proviso to section 25(1) of the Coffee Act are exempt from this provision. (c) Seizure by the Board of coffee  wrongly withheld  from the  pool. Prosecution for failure  to   deliver  and   confiscation  of  quantity  not delivered. (d)  Delivery to be effected at such times and at such places  as designated by the Board (section 25(2)); the extinguishment on  delivery of  all rights of the growers in respect of  the coffee  delivered to the Board excepting the right to receive payment under section 34 of 357 the Act.  (section 25(6)). (e) Sale of coffee in the pool by the Board  in the  domestic market  and for  export  through auctions and  other channels  in regulated quantities and at convenient  intervals.   (section  26(1)).  (f)  Payment  to growers in  such amounts and at such times as decided by the Board (section  34). The  payment to be made on the basis of the value  as determined  by the  price  differential  scale (section 24(4)),  and in  proportion to  the value  of  such coffee to  the  total  realisations  in  the  pool  (section 34(2)). (g)  Sale or  contracts to sell coffee by growers in the years in which internal sale quota was not allotted were prohibited by  section 17  of the Act. All contracts for the sale of  coffees at  variance with the provisions of the Act were declared as void by section 47 of the Act.      Learned Additional  Solicitor General  sought  to  urge before us  that the  framers of  the Act  made  a  conscious distinction between  (i) mandatory delivery of coffee to the Coffee Board under section 25(1) and (ii) purchase of coffee by the Coffee Board from the growers exempted from mandatory delivery and  from out of the internal sale quota during the years when such quotas were allotted under section 26(2) and (iii) sale  of coffee  by the  growers in  the Indian Market whenever internal  sale quotas  were allotted under sections 17 and  22. It was highlighted that the Board has no capital of its own and it did not have any Reserve Fund. The estates on which  coffee is  grown are  not owned  by the Board. The Board is required to maintain two separate funds one General Fund and the other Pool Fund. Our attention was drawn to the fact that  the Pool  Fund consists  of amounts realised from the sale  of coffee  marketed by  the Board. The accounts of the Pool  Fund are  required to be maintained separately for each coffee  season. The  coffee season is from July to June of the  following year.  The sales  realisations,  less  the costs of storing, curing and marketing the coffee, are to be utilised for  making payments  to growers  who had delivered coffee in  that season,  in proportion  to the  value of the coffee delivered  by them.  The  value  is  determined  with reference to  the  kind,  quality  and  quantity  of  coffee delivered by  the growers  There are  various other features which have  to be  borne in  mind on  the maintenance of the separate funds.  It may  be highlighted,  however, that  the General Fund  consisted principally  of the  amounts paid to the  Board   by  the   Central  Government   from   out   of appropriations made  by the  Parliament annually.  This fund was to  be utilised for meeting the costs of administration, research, measures  for the  welfare of  plantation  labour, promotion of coffee consumption and developmental assistance to coffee  estates. After  the Coffee  Act was  enacted  the production of  coffee and  the quantities  exported and  the value of the exports have increased greatly. 358      It may  be mentioned  that the production of coffee was less than  15,000 tonnes in 1940. The production in the year 1984-85 was  about 1,93,000  tonnes. Over  50% of the coffee grown in  the country  is grown  in the  State of Karnataka.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 24  

There are  1,12,153 coffee  estates in  the country of which 1,04,958 estates are less than l0 acres in size and 3,62,689 persons were employed on the estates in 1982-83. Over 59,000 tonnes of  coffee of the value of about Rs.209 crores was ex ported in the year 1984-85.      The Madras  High Court  in the  case of  Indian  Coffee Board v.  / State  of Madras,  S S.T.C.  292 held  that  the Coffee Board  was a  ’dealer’ under the Madras General Sales Tax Act,  1939 and  inter  alia,  held  that  there  was  no contract, express  or implied, between the coffee grower and the Board  and that  the object  and scheme  of the Act were analogous  to  the  statutes  in  Australia,  providing  for compulsory acquisition  of pool  marketing  of  agricultural produce. So  far as  the Madras  High Court  held  that  the Indian Coffee  Board was  a dealer  we accept  the same. The observation that  there was  no contract  was  made  in  the context of  agency contract between the Coffee Board and the grower.      In or  about 1957  Karnataka Sales  Tax Act,  1957  was enacted and  the Mysore Sales Tax Act, 1948 repealed. ’Sale’ is defined  in section  2(t) and ’dealer’ in section 2(k) of the said  Act.  Growers  of  agricultural  produce  are  not ’dealers’ by  reason of the Exception to section 2(k) of the said Act.  This position was not disputed before us. Section S of  the Act  provides for  levy of  sales tax.  Coffee  is mentioned at  item 43  in Schedule II to the Karnataka Sales Tax Act.  Sales tax  on coffee is a single point tax payable on the first sale in the State. The basic rate of tax is l0% in Karnataka.  The rate  in Tamil  Nadu, Andhra  Pradesh and Kerala is 6%.      The question  involved in  these appeals  and the  writ petitions is the exigibility of tax on sale if there be any, by the  growers of  the coffee  to the  Board. Basically, it must depend upon what is sale in the general context as also in the context of the relevant provisions of the Act namely, the Karnataka  Sales Tax  Act, 1957, as amended from time to time, (hereinafter called the Karnataka Act) and the Central Central Sales Tax Act, 1956, (hereinafter called the Central Act). We  must, however,  examine these  in the  context  of general law,  namely, the  Sale of  Goods Act,  1930 and the concept of  sale in  general. The  essential object  of  the contract of  sale is  the exchange  of property  for a money price. There must be a transfer of property, or an agreement to transfer  it, from  one party,  the seller, to the other, the buyer, in 359 consideration of a money payment or a promise thereof by the buyer.      Lord Denning,  M.R., in  C.E.B. Draper  & Sons  Ltd. v. Edward Turner  & Son  Ltd., [1965]  1 Q.B. 424, at page 432, observed as follows:           "I know  that often  times a  contract for sale is           spoken of  as a sale. But the word ’sale’ properly           connotes the  transfer of  the absolute or general           property in  a thing  for a  price in  money (see:           Benjamin on  sale, 2nd  ed. (1873)  p. 1 quoted in           Kirkness v.  John Hudson  & Co.,  [1955] A.C. 696,           708, 719.  In this Act of 1926 I think that ’sale’           is used in its proper sense to denote the transfer           of property  in the goods. The sale takes place at           the time  when the property passes from the seller           to the buyer and it takes place at the place where           the goods  are at  that  time.  Lord  Denning  was           speaking for  the English Act of 1926 for the sale           of Goods Act. D

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 24  

    In the Sale of Goods Act, 1930, (hereinafter called the ’Sale of  Goods Act’)  Contract of  sale of goods is defined under  section   4(1)  as  a  contract  whereby  the  seller transfers or agrees to transfer the property in goods to the buyer for  a price. It also stipulates by sub-section (4) of section 4  that an agreement to sell becomes a sale when the time elapses  or the  conditions are  fulfilled  subject  to which the property in the goods is to be transferred.      Benjamin’s Sale  of Goods  (2nd  Edition)  states  that leaving aside  the battle  of forms,  sale is  a transfer of property in  the goods by one, the seller, to the other, the buyer. F      Under the  Karnataka Sales  Tax Act,  sale  is  defined under section 2(t) as:           "Sale" with  all its  grammatical  variations  and           cognate expressions  means every  transfer of  the           property in  goods by one person to another in the           course of  trade  or  business  for  case  or  for           deferred payment  or other valuable consideration,           but does  not include  a mortgage,  hypothecation,           charge or pledge. "      The Central  Act defines  "sale" as  under  in  section      2(g): 360           "Sale" with its grammatical variations and cognate           expressions, means  any transfer  of  property  in           goods by  one person  to another  for case  or for           deferred  payment   or  for   any  other  valuable           consideration, and includes a transfer of goods on           the hire-purchase  or other  system of  payment by           instalments, but  does not  include a  mortgage or           hypothecation of or a charge or pledge on goods."      Coffee Board  is a  ’dealer’ duly  registered  as  such under the Sales Tax Acts of all the States in which it holds auctions/maintains depots/  runs coffee houses. The Board is also registered  as a  ’dealer’ under  the Central Sales Tax Act. The  Board collects  and remits  sales tax  on all  the coffee sold  by it  for domestic consumption to the State in which the  sale takes place. Coffee is sold through auctions held in  the States  of Karnataka,  Tamil  Nadu  and  Andhra Pradesh, and  also through the Board’s own depots located in nine States.  Sale is  also effected by way of allotments to cooperative societies. The Board directly exports coffee and also sells  coffee to  registered exporters through separate export auctions.  It may  be mentioned  that over  fifty per cent of  the coffee is produced in Karnataka and most of the Robusta variety  of coffee  is produced  in Kerala.  All the coffee produced  in these  States cannot  be sold within the State where  the coffee is produced. Coffee meant for export has also  to be  stored at  convenient  places.  The  Board, therefore, transfers coffee from one State to another. Sales tax is  not payable  or paid on the transfer of such coffee. In order  to appreciate the actual controversy and the point at issue  in the instant case, it is vital to appreciate the real nature of the transaction.      In 1966  this Court  in the  case of State of Kerala v. Bhavani Tea  Produce Co.,  [1966] 2 S.C.R. 92, (an unanimous decision of  a Bench  of five  learned judges)  which  arose under the  Madras Plantations  Agricultural Income  Tax Act, 1955, held  that when growers delivered coffee under section 25 of  the Act  to the  Board all  their rights therein were extinguished and the coffee vested exclusively in the Board. This Court  observed that  when growers  delivered coffee to the Board,  though the  grower "does  not actually sell" the coffee to the Board, there was a ’sale’ by operation of law.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 24  

This was  in connection  with section  25 of  the  Act.  The Court, however, did not hold that there was a taxable ’sale’ by the  grower to  the Board  in the  year in  question. The sale, according  to this  Court in  that case  took place in earlier years  in which  the Agricultural Income Tax Act did not operate. All the States in which coffee is grown and all the persons  concerned  with  the  coffee  industry,  it  is asserted on behalf of the Additional Solicitor General,                           NIRANJAN 361 understood this  decision as  laying down  that the ’sale by operation  of   law’  mentioned   therein  only   meant  the ’compulsory acquisition’ of the coffee by the Coffee Board.      We are,  however, bound  by the  clear  ratio  of  this decision. The  Court considered  this question  "was there a sale to  the Coffee Board?" at page 99 of the Paper Book and after discussing  clearly said  the answer  must be  in  the affirmative. It  was rightly  argued, in our opinion, by Dr. Chitale on  behalf of  the  respondents  that  the  question whether there  was sale  or not  or whether the Coffee Board was a  trustee or an agent could not have been determined by this Court,  as it was done in this case unless the question was specifically  raised and  determined. We    cannot  also by-pass  this  decision  by  the  argument  of  the  learned Additional Solicitor  General that section 10 of the Act had not been  considered or  how it was understood by some. This decision in  our opinion  concludes all  the issues  in  the instant appeal.      In 1970  purchase tax  was  introduced.  The  Karnataka Sales Tax  Act was  amended by  Karnataka Act  9 of 1970 and section 6  was substituted.  The new  section 6 provided for the levy  of purchase  tax on every dealer who in the course of his business purchased any taxable goods in circumstances in which  no tax  under section  5 was  leviable and,  inter alia, despatched  these to a place outside the State, at the same rate  at which tax would have been leviable on the sale price of  such goods  under section  5 of the Karnataka Act. The delivery  of coffee  by the coffee growers to the Coffee Board not  being treated  a purchase by the Board, the State did not  demand any  tax from  the Board  in respect of such deliveries. Demands  were raised for the first time in 1983. Assessments for  the years  upto 1975 were completed without any demand for purchase tax being raised.      This Court  on or about 15th of April, 1980 in the case of Consolidated  Coffee Ltd.  and Anr. etc. v. Coffee Board, Bangalore etc.  etc., [1980]  3 S.C.R. 625 held that sale of coffee at  export auctions  were sales  which  preceded  the actual export  and thus  exempt from sales tax under section 5(3) of  the Central  Sales Tax Act. The Court also directed the State  Governments to  refund the  amounts collected  as sales tax  on such  sales and set a time limit for effecting such refunds.  The Karnataka  Government, as  a consequence, became liable  to refund  to the  Coffee  Board  about  Rs.7 crores which  amount in turn was to be refunded by the Board of Directors  to the  exporters. In 1981 the Commissioner of Sales Tax, Karnataka informed the Board by a letter that the mandatory delivery  of coffee  to the  Board by  the  grower would be 362 regarded as  ’sale’ and  that the  Board should pay purchase tax as  the coffee  growers, being  agriculturists  are  not ’dealers’. It  is the  case of the Coffee Board that no such claim had  been made  at any  time in the past in any of the States in India. The Commissioner issued a show-cause notice proposing to re-open the assessment for the year 1974-75. In

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 24  

June 1982  pre-assessment notice was sent by the authorities proposing to  assess the  Board  to  purchase  tax  for  the assessment year  1975-76 and  a sum  of  Rs.3.5  crores  was demanded as  purchase tax  on the  coffee  transferred  from Karnataka to  outside the State either as stock transfers or as exports directly to buyers abroad.      In August  1982 Coffee  Board  along  with  two  coffee growers filed  writ petitions being writ petition Nos. 15536 to 15540  of 1982 in the High Court of Karnataka praying for a declaration  that the  mandatory delivery  of coffee under section 25(i)  of the Act was not sale and that section 2(t) of the Karnataka Sales Tax Act required to be struck down if the same  encompassed compulsory  acquisition also. The show cause  notice   and  the   preassessment  notice  were  also challenged and  prayers were made for quashing the same. The High Court granted interim stay. In the meantime on or about 3rd of  February, 1983  Constitution (46th  Amendment)  Act, 1983 came  into force  and the definition of "Tax on sale or purchase of  goods" was  added by insertion of clause 29A in Article 366.  This definition  is prospective  in operation. Subsequent to 3rd of February, 1983, the Karnataka Sales Tax Act was  amended by  Act 10  of 1983,  Act 23/1983  and  Act 8/1984. The  definition of  ’sale’ in section 2(t), however, was not  amended. That  definition was  amended with  effect from 1st  of August,  1985 by  the Karnataka Act 27 of 1985. After hearing  the State  Government, the  High  Court  made absolute the  stay of  further proceedings  pursuant to  the show cause  notice of  the Commissioner proposing to re-open the assessment  for the year 1974-75. The Court modified the stay order regarding the pre-assessment notice and permitted the completion of assessment reserving liberty to the Coffee Board to  move the  High  Court  after  the  assessment  was completed. On  31st of  May, 1983  assessment order was made for the  year 1975-76. On or about 17th of June, 1983 demand for Rs.3.5  crores as arrears of tax for the assessment year 1975-76 was  issued to  the Coffee Board. On 2nd July, 1983, the High Court stayed the assessment demand for purchase tax for the  assessment year  1975-76. On or about 18th of June, 1983 the  assessment order  was issued for the year 1976-77. The Board  was assessed  on a  taxable turnover  of Rs.92.99 crores and  Rs. 10.18  crores was  assessed as  tax. Of this sum, Rs.8.06  crores is  the demand  on account  of purchase tax. Thereafter notice demanding payment of Rs.8.06 crores a 363 arrears of  tax for  the assessment year 1976-77 was issued. The Coffee Board filed a writ petition in August, 1983 being Writ Petition  No. 13981  of 1983 challenging the assessment and the  demand for the purchase tax for the assessment year 1976-77. Rule  was issued  and the assessment as also demand for purchase  tax was  stayed .  In the  meantime, notice of demand  for  Rs.8.08  crores  as  arrears  of  tax  for  the assessment year  1977-78 was issued. In September, 1983 Writ Petition No. 17071 of 1983 was filed by the Coffee Board for the assessment year 1977-78. Rule was issued. Assessment and demand for purchase tax was stayed. Similarly, Writ Petition No. 17072  of 1983  was filed  by the Coffee Board regarding assessment year  1978-79. Rule  was issued.  Assessment  and demand for  purchase tax  was stayed.  In  the  meantime  in October, 1983,  there was another Writ Petition No. 19285 of 1983 filed  challenging the  demand for the purchase tax for the year 1979-80. Rule was issued. Assessment and demand was stayed.  Writ   Petition  No  .  19118  of  1983  was  filed challenging the demand of purchase tax for the year 1980-81. Rule was  issued. Assessment and demand for purchase tax was stayed.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 24  

    All these writ petitions in January, 1984 were referred to the  Division Bench  for hearing  and disposal. It may be mentioned here  that in  or about May, 1984 the Coffee Board started for  the first  time to collect contingency deposits to cover  purchase tax  liability, if  any, for  the  period 3.2.83 onwards subsequent to the 46th Amendment to a limited extent. This  was by a circular. It is stated that the Board withheld about  Rs.6.8  crores  from  the  pool  payment  to growers for  the season  1982-83 for  meeting  in  part  the liability, if  any, for  the purchase  tax  for  the  period subsequent to  3.2.1983. The Court however, in 1985 directed the appellant-Coffee  Board to remit to the State Government Rs.6.8 crores.  The High  Court also  directed the  Board to remit to the State Government Rs.1.5 crores collected by the Board as  contingency deposits  between  May  and  December, 1984. The  State Government undertook to return these monies with interest,  in the  event of  the writ  petitions  being allowed. By the judgment delivered on 16th August, 1985, the High Court dismissed the writ petitions by a common judgment and various  sums of  money for  the  various  years  became payable as  purchase tax.  The said  judgment is reported in Indian Law  Reports, Karnataka,  Vol. 36 at page 1365. These appeals challenge the said decision.      In view  of the  decision of  the  High  Court  several questions were  canvassed in  these appeals.  The  questions were (1)  Was there transfer of coffee to the Board from the coffee growers or acquisition? (ii) Was 364 there any  element of  sale involved?  (iii) Was  the Coffee Board trustee  or agent  for the  coffee growers for sale to the export  market, and  (iv) if  it is  sale, is  it in the course of  export of  the goods  to  the  territory  outside India? The  first and the basic question that requires to be considered in  these appeals  is whether  the acquisition of coffee by  the Board  is compulsory  acquisition  or  is  it purchase or  sale?  As  mentioned  all  the  questions  were answered by  this Court  in Bhavani  Tea Produce  Co’s  case (supra) against  the appellant. We were, however, invited to compare the  transaction in  question with  transactions  in Peanuts  Board   v.  The   Rockhampton  Harbour   Board,  48 Commonwealth Law  Reports 266).  Was there any mutuality? In this connection  it is  necessary to analyse and compare the decision of  this Court  in Vishnu Agencies (Pvt.) Ltd. etc. v. Commercial  Tax officer  and others etc., [1978] 2 S.C.R. 433 and to what extent the principles enunciated in the said decision affect  the position. In order to address ourselves to the problem posed before this Court, we must bear in mind the  history   and  the  provisions  of  the  Coffee  Market Expansion Act,  1942, under which the Board was constituted, which we have already noted.      The control  of  marketing  of  farm  produce  for  the economic  benefit  of  the  producers  and  to  bring  about collective marketing  of the produce is a recognised feature of Governments  of several  countries, particularly,  United States of  America, Britain and Australia. The object was to prevent unhealthy  competition  between  the  producers,  to secure the  best price  for the produce in the local market, to conserve  for local  consumption as  much produce  as was needed and  to make available the surplus for export outside the States  and also  to foreign markets. The method usually adopted to  achieve the  object is  to establish a marketing board with  power to control the price, to obtain possession of the  produce and  to pool  it with  a view  to collective marketing. The  legislation in  this behalf is compendiously described as  "pooling legislation"  and  is  based  on  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 24  

fundamental idea  that the  collectivist economy is superior to individualistic  economy. There  are therefore, different marketing boards  for different  kinds of  produce, such  as sugar, dairy  produce, wheat,  lime fruit, apples, pears and so on.  The Indian  Coffee Market Expansion Act was modelled somewhat on  the lines which obtained in other countries and was intended  to  control  the  development  of  the  coffee industry and  to regulate the export and sale of coffee. If, however, the  transaction amounts  to sale or purchase under the relevant Act then that is the end of the matter.      All parties  drew our  attention to the decision in the case of  Vishnu Agencies  Pvt. Ltd. (supra). There the Court was concerned 365 with the  Cement Control  order and  the transactions taking place under the provisions of that control order. The Cement Control order  was promulgated  under the West Bengal Cement Control Act, 1948 which prohibited storage for sale and sale by a  seller and  purchase by a consumer of cement except in accordance with  the conditions  specified  in  the  licence issued by  a designated  officer. It  also provided  that no person should  sell  cement  at  a  higher  price  than  the notified price  and no  person to  whom a  written order had been issued  shall refuse  to sell  cement "at  a price  not exceeding the  notified price".  Any  contravention  of  the order became  punishable with  imprisonment or fine or both. Under the  A.P. Procurement  (Levy and  Restriction on Sale) order, 1967, (Civil Appeals Nos. 2488 to 2497 of 1972) every miller carrying  on rice  milling operation  was required 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 can move or otherwise  dispose of  the rice  recovered by  milling at such rice-mill  except in  accordance with the directions of the Collector. Breach of these provisions became punishable. It was  held dismissing  the appeals  that sale of cement in the former  case by  the allottees  to the permitholders and the transactions between the growers and procuring agents as well as  those between  the rice millers on the one hand and the wholesalers  or retailers  on the  other, in  the latter case, were  sales exigible  to sales-tax  in the  respective States. It was observed by Beg, C.J. that the transaction in those cases were sales and were exigible to tax on the ratio of Indian  Steel and  Wire Products Ltd., Andhra Sugar Ltd., and Karam  Chand Thapar, [1968] 1 SCR 479. In cases like New India Sugar  Mills, the  substance of  the concept of a sale itself disappeared  because the transaction was nothing more than the execution of an order. The Chief Justice emphasised that deprivation of property for a compensation called price did not amount to a sale when all that was done was to carry out an  order so  that the  transaction was  substantially a compulsory  acquisition.   On  the   other  hand,  a  merely regulatory law,  even if  it circumscribed  the area of free choice, did  not take  away the  basic character  or core of sale from  the transaction. Such a law which governs a class obliges a  seller to deal only with parties holding licences who may  buy particular  or allotted  quantities of goods at specified prices,  but an  essential element  of choice  was still left  to the  parties  between  whom  agreements  took place.  The   agreement,  despite   considerable  compulsive elements regulating  or restricting  the area of his choice, might still  retain the  basic character of a transaction of sale. In  the former type of cases, the binding character of the transaction  arose from the order directed to particular

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 24  

parties asking them 366 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   which  binds   the  parties  to  perform  their obligations remains  contractual. The  regulatory law merely adds other obligations, such as the one to enter into such a tie between  the parties.  Although the regulatory law might specify  the   terms,  such  as  price,  the  regulation  is subsidiary to  the essential  character of  the  transaction which is  consensual and  contractual. The  parties  to  the contract must  agree upon  the same thing in the same sense. Agreement on  mutuality of consideration, ordinarily arising from an  offer and  acceptance, imports to it enforceability in courts  of law.  Mere regulation  or restriction  of  the field of  choice does  not  take  away  the  contractual  or essentially consensual  binding core  or  character  of  the transaction.  Analysing   the  Act,  it  was  observed  that according to  the definition  of "sale"  in the two Acts the transactions between  the appellants  in that  case and  the allottees or  nominees, as  the case  may be,  were patently sales because  in one case the property in the cement and in the other property in the paddy and rice was transferred for cash consideration  by the  appellants. When  the  essential goods are  in short  supply, various  types  of  orders  are issued under the Essential Commodities Act, 1955 with a view to making  the goods  available to  the consumer  at a  fair price. Such  orders sometimes  provide that a person in need of an  essential commodity like cement, cotton, coal or iron and steel  must apply  to the  prescribed  authority  for  a permit for  obtaining the commodity. Those wanting to engage in the business of supplying the commodity are also required to possess  a dealer’s licence. The permit-holder can obtain the supply of goods, to the extent of the quantity specified in the  permit and  from the  named dealer  only  and  at  a controlled price.  The dealer  who is  asked to  supply  the stated quantity  to  the  particular  permit-holder  has  no option but  to supply  the stated  quantity of  goods at the controlled price.  Then the  decisions in State of Madras v. Gannon Dunkerley & Co. Ltd., [1959] S.C.R. 379 and New India Sugar Mills  v. Commissioner  of Sales  Tax,  Bihar,  [1963] Suppl. 2 S.C.R.459 were discussed and the correctness of the view taken  in the  former case was doubted and the majority opinion in the latter case was overruled.      It was  submitted by  the learned  Additional Solicitor General that these cases, namely, Bhavani Tea Estate (supra) and Vishnu Agencies (supra) would have no application within the set  up of  the Coffee Act because the provisions of the statute expressly  provided that  there could  be no sale or contract of  sale, yet  the High  Court had  for purposes of Sales Tax assumed (notwithstanding the statutory prohibi- 367 tion) that  the transaction  contemplated by  the statute in the present  case, the  mandatory delivery, would be a sale. It  was   submitted  that   where  a  statute  prohibited  a registered owner  from selling or contracting to sell coffee from any registered estate, there could be no implication of any purchase  on the  part of the Coffee Board of the coffee delivered pursuant  to the  mandatory provisions  of section 25(1) of the Act. It was urged that section 17 of the Coffee Act read with sections 25 and 47 enacts what since 1944 is a total prohibition  against the sale of coffee by growers and corresponding purchase  of coffee  from growers.  In view of section 17  read with  section 25,  purchase by  the  Coffee Board of  coffee delivered  under  section  25(1)  was  also

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 24  

impliedly  prohibited.   It  is  in  view  of  this  express prohibition of sale and corresponding implied prohibition of purchase that  the Act  provided the only method of disposal of coffee, viz., by the delivery of all coffee to the Coffee Board with  no rights  attached on  such delivery,  save and except the  statutory right  under section  34. It  was also argued that  the Legislature has made a conscious difference between acquisition  of coffee by compulsory delivery by the growers under  Section 25(1)  of the  Act  and  purchase  of coffee by  the Board  under  Section  26(2)  and,  as  such, compulsory delivery  of coffee  under Section  25(1)  cannot constitute a  sale transaction  as known  to law between the growers and  the Coffee  Board. We  are, however,  unable to accept the  submissions of  the learned Additional Solicitor General. All the four essential elements of sale-(1) parties competent to contract, (2) mutual consent-though minimal, by growing coffee  under the conditions imposed by the Act, (3) transfer of  property in  the goods and (4) payment of price though deferred,-are present in the transaction in question. As regards the provisions under Section 26(2) empowering the Coffee Board to purchase additional coffee not delivered for inclusion in  the surplus  pool, it  is only a supplementary provision enabling  the Coffee Board to have a second avenue of purchase,  the first  avenue being  the right to purchase coffee under the compulsory delivery system formulated under Section 25(1)  of the  Act. The  scheme of  the  Act  is  to provide for a single channel for sale of coffee grown in the registered estates. Hence, the Act directs the entire coffee produced except  the quantity  allotted  for  internal  sale quota, if  any, to  be sold  to the Coffee Board through the modality of  compulsory delivery and imposes a corresponding obligation on  the Coffee Board to compulsorily purchase the coffee delivered to the pool, except:      (1) where the coffee delivered is found to be unfit for      human 368      consumption; and      (2) where  the coffee  estate is  situated in a far off      and remote place or the coffee grown in an estate is so      negligible as  to  make  the  sale  of  coffee  through      compulsory delivery an arduous task and an uneconomical      provision.      Since  all  persons  including  the  Coffee  Board  are prohibited from  purchasing/selling  coffee  in  law,  there could be  no sale  or purchase  to attract the imposition of sales/purchase  tax   it  was   urged.  Even  if  there  was compulsion there  would be  a sale  as was  the position  in Vishnu Agencies  (supra). This  Court therein  approved  the minority opinion  of Hidayatullah,  J. in  New  India  Sugar Mills v. Commissioner of Sales Tax (supra). In the nature of the transactions  contemplated under  the Act  mutual assent either express or implied is not totally absent in this case in the  transactions under  the Act.  Coffee growers  have a volition or  option, though minimal or nominal to enter into the coffee growing trade. Coffee growing was not compulsory. If any  one decides  to grow  coffee  or  continue  to  grow coffee, he  must transact in terms of the regulation imposed for the  benefit of  the coffee growing industry. Section 25 of the  Act provides  the Board  with the  right  to  reject coffee if  it is  not upto the standard. Value to be paid as contemplated by the Act is the price of the Coffee. Fixation of price  is regulation  but is  a matter of dealing between the parties.  There is  no time fixed for delivery of coffee either  to   the  Board   or  the   curer.  These   indicate consensuality  which   is  not   totally   absent   in   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 24  

transaction.      It was  urged that  regard having been to the sovereign nature of  the power  exercised by  the Coffee Board and the scheme of  the Coffee  Act, the  ratio  of  Vishnu  Agencies (supra) will  not apply  to the  acquisition of coffee under section 25(1)  by the  Coffee Act.  It is in this connection appropriate  to   refer  to   the  question   of  compulsory acquisition and  this naturally  leads  to  the  problem  of exercising  eminent   domain  by  the  State.  It  is  trite knowledge that  eminent domain  is an essential attribute of sovereignty of  every state and authorities are universal in support of  the definition of eminent domain as the power of the sovereign  to take  property for  public use without the owner’s consent  upon making  just compensation.  Nichols on Eminent Domain  (1950 Edition)  a classic  authority on  the subject, defines  ’eminent domain’  as  ’the  power  of  the sovereign to  take  property  for  public  use  without  the owner’s consent’;  see para  1.11 page  2 of  Vol.  1  which elaborates the same in these words: 369           "...This definition  expresses the  meaning of the           power in its irreducible terms:           (a) Power to take,           (b) Without the owner’s consent,           (c) For the public use.           All  else  that  may  be  found  in  the  numerous           definitions   which    have   received    judicial           recognition is  merely by  way  of  limitation  or           qualification of  the power.  As a  matter of pure           logic it  might be  argued that  inclusion of  the           term ’for  the public  use’  is  also  by  way  of           limitation. In this connection, however, it should           be pointed out that from the very beginning of the           exercise of  the power  the concept of the ’Public           use’ has  been so inextricably related to a proper           exercise of  the power  that such  element must be           considered as  essential in  any statement  of its           meaning. The  ’public use’ element is set forth in           some definitions  as the  ’general  welfare’,  the           ’welfare of  the public’,  the ’public  good’, the           ’public benefit’ or ’public utility or necessity’.           It must  be admitted, despite the logical accuracy           of the  foregoing definition  and despite the fact           that  the   payment  of  compensation  is  not  an           essential  element   of  the  meaning  of  eminent           domain, that  it is  an essential  element of  the           valid exercise  of such power. Courts have defined           eminent domain  so as  to include  this  universal           limitation as  an  essential  constituent  of  its           meaning. It  is much  too late  in the  historical           development of  this principle  to find fault with           such judicial utterances. The relationship between           the individual’s  right to  compensation  and  the           sovereign’s  power  to  condemn  is  discussed  in           Thayer’s cases  on Constitutional  Law. But  while           this obligation  (to make  compensation)  is  thus           well established  and clear let it be particularly           noticed upon what ground it stands, viz., upon the           natural rights  of the  individual. On  the  other           hand, the  right of the State to take springs from           a  different   source,   viz,   a   necessity   of           government. These  two, therefore,  have  not  the           same origin;  they do not come, for instance, from           any implied  contract between  the state  and  the           individual,  that   the  former   shall  have  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 24  

         property, if  it will make compensation; the right           is no  mere right  of pre-emption,  and it  has no           condition of  compensation annexed  to it,  either           precedent or  subsequent. But, there is a right to           take, and 370           attach to it as an incident, an obligation to make           compensation;  this   latter,  morally   speaking,           follows the other, indeed like a shadow, but it is           yet distinct  from  it,  and  flows  from  another           source."           It is concluded thus:           "Accordingly, it  is now generally considered that           the power  of eminent  domain is  not  a  property           right, or  an exercise by the state of an ultimate           ownership in  the soil,  but that it is based upon           the sovereignty  of the  state. As  the  sovereign           power of  the state  is broad  enough to cover the           enactment of any law affecting persons or property           within its jurisdiction which is not prohibited by           some clause  of the  Constitution  of  the  United           States, and  as the  taking of property within the           jurisdiction of  a state  for the  public use upon           payment of  compensation is  not prohibited by the           constitution of  the United States, it necessarily           follows that it is within the sovereign power of a           state, and it needs no additional justification."      Cooley  in   his   treatise   on   the   Constitutional Limitations Chapter  XV expressed  the same view at page 524 of the book in these words:           "... More accurately, it is the rightful authority           which must  rest in  every sovereignty  to control           and regulate those rights of a public nature which           pertain  to   its  citizens   in  common   and  to           appropriate and  control individual  property  for           the  public   benefit,  as   the  public   safety,           convenience or necessity may demand."      In Charanjit  Lal Chowdhury  v. The  Union of India and others, [1950]  1 S.C.R.  869, Mukherjea,  J. as the learned Chief Justice  then was, while examining the scope and ambit of Article 31 of the Constitution observed as follows:                "It is a right inherent in every sovereign to           take and appropriate private property belonging to           individual citizens  for public  use. This  right,           which is  described as  eminent domain in American           law, is  like the power of taxation, and offspring           of political  necessity, and  it is supposed to be           based upon  an implied  reservation by  Government           that private  property acquired  by  its  citizens           under its pro 371           tection may  be taken  or its  use controlled  for           public benefit  irrespective of  the wishes of the           owner."      This Court  in the  State of Karnataka and another etc. v. Ranganatha  Reddy and  another etc.,  [1978] 1 S.C.R. 641 held that  the power  of acquisition could be exercised both in respect of immovable and movable properties.      While conceding  the power  of acquisition of coffee in exercise of  eminent domain,  the scheme  contemplated under the Act was not an exercise of eminent domain power. The Act was to  regulate the  development of  coffee industry in the country. The object was not to acquire coffee grown and vest the same  in the  Board. The  Board is only an instrument to implement the Act.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 24  

    The High  Court in  its judgment  has rightly  observed that the  Board has  been chosen  as the instrumentality for the administration of the Act. The role of the Board of this type has been noted in three Australian decisions which must be taken  note of.  It is appropriate at this stage to refer to the  decision of  the Australian  High Court,  in Peanuts Board  v.   The  Rockhampton  Harbour  Board,  (supra).  The question posed  before the  High Court  was in  relation  to Section 92  of  the  Constitution  Act  of  Commonwealth  of Australia and  the decision  is instructive,  though not  in point. Rich,  J. Observed  at pages 275 to 277 of the report as follows:                "It  therefore   remains  only   to  consider           whether the  operative  instruments  affecting  to           deal with  peanuts do or do not interfere with the           freedom of  inter-State trade. This should be done           weighing  compulsory   acquisition  as   a  matter           perhaps characterizing  the enactments, but not of           necessity determining  their effect.  The  feature           which at  once challenges  attention is that these           instruments provide a means of marketing. They are           concerned  with  establishing  a  compulsory  pool           through which  growers producing  peanuts for sale           must dispose of their product for distribution and           receive their  reward. The  pith and  substance of           the enactments  is the establishment of collective           sale and distribution of the proceeds of the total           crop and the concomitant abolition of the grower’s           freedom to  dispose of  his product voluntarily in           the course of trade and commerce, whether foreign,           inter-State of  intra-State. Section 15 of the Act           of 1926 provides that "all the commodity" shall be 372 delivered by  the growers  to the  marketing board, and that "all the  commodity" so  delivered shall  be deemed  to have been delivered  to the  board for  sale by  the board,  "who shall account  to  the  growers  thereof  for  the  proceeds thereof after  making all  lawful deductions  therefrom  for expenses and  outgoings  and  deductions  of  all  kinds  in consequence of  such delivery  and sale  or otherwise  under these Acts"  (sec. 15(1),  (2), as  modified by the order in Council). Sub-section  3 of section 15 penalizes the sale or delivery of  any of  the "commodity"  to, or the purchase or the receipt  of any  of the  "commodity"  from,  any  person except the board. These provisions operate even although the Governor  in   Council  does   not  resort   to   compulsory acquisition. It was said by Mr. Mitchell that the provisions authorizing the  borrowing of  money constituted  the  chief purpose of  the compulsory  acquisition. If  this means that the control  of the marketing of peanuts is a subordinate or consequential purpose  of the  instruments, I  cannot agree. The ability  to borrow  upon the  whole crop  may afford  an advantage, if  not an incentive, in the concentration of the "commodity" in the hands of one marketing authority. But the weight attached  to supposed  advantages  arising  from  the policy adopted  in these enactments is not material. What is material is  whether the  scope and object of the enactments as gathered  from their  contents are to deal with trade and commerce  including   inter-State  trade  and  commerce.  In examining this  question one  cannot fail  to  observe  that compulsory acquisition  is resorted  to as a measure towards ensuring  that   the  whole  crop  grown  in  Queensland  is available for collective marketing by the central authority. The case  is not  one in  which a State seeks to acquire the total production of something it requires for itself and its

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 24  

citizens. It  is interposing  in the  course of trade in the "commodity" an  organization established  for the purpose of carrying out  one of  the functions  of trade. In my opinion the enactment  controls directly  the commercial  dealing in Peanuts by  the grower  and aims  at, and  would, apart from section 92  accomplish,  the  complete  destruction  of  his freedom of  commercial disposition  of his  product. Part of this freedom  is guaranteed  by section  92. Accordingly the Primary Producers’  organization and  Marketing Act  1926-30 and the  order in  Council  thereunder  are  ineffectual  to prevent the grower of peanuts from disposing 373           of them  in inter-State trade and commerce and the           appellant Board  had no  title to  the peanuts the           subject matter of this action."      In Milk  Board (New  South Wales) v. Metropolitan Cream Pty. Ltd., (62 C.L.R. 116), Chief Justice Latham at page 131 of the report observed as follows: R           "It is  true that the decision in the Peanut Board           Case (48  C.L.R. 266) was approved in James v. The           Commonwealth, 55  C.L.R. 1, but it is important to           consider carefully the precise words in which this           approval was expressed. They were as follows: "The           producers  of  the  peanuts,  it  was  held,  were           prevented by  the Act from engaging in inter-State           and  other   trade  in   the  commodity.  The  Act           embodied, so  the majority  of the  court held,  a           compulsory marketing  scheme, entirely restrictive           of any  freedom of  action  on  the  part  of  the           producers; it involved a compulsory regulation and           control of  all trade,  domestic, inter-State  and           foreign; on the basis of that view, the principles           laid down by this board were applied by the Court"           (55 C.L.R. 520)."      Justice McTiernan observed at page 158 of the report as follows:           "It is clear that the Milk Act does not profess to           expropriate in  order  to  hinder  or  burden  the           passing of  milk, and the other products which the           word ’milk’  is expressed  to include,  from other           States; and  there is no ground for the contention           that any such burden or hindrance is imposed under           the disguise of expropriation. The Act replaces an           individualist economy  by a  collectivist one  for           the  distribution   of  milk   within   the   area           containing the  most densely populated part of the           State; and  all that  can be  presumed is that the           substitution was  deemed by  the legislature to be           an expedient  one  for  reasons  only  of  health,           hygiene, efficiency  and the  economic benefit  of           farmers in  the milk-producing districts. I agree,           therefore, that the operation of section 26 is not           inconsistent with  section 92 of the Constitution.           "      The aforesaid  observations are  most apposite.  In the light aforesaid  along with the provisions of section 17 and section 25 of the 374 Act, it  cannot be  said in the Act, there is any compulsory acquisition.      We accept  the submission  of  the  learned  Additional Solicitor General that it is not necessary that every member of  the   public  should   benefit  from  property  that  is compulsorily acquired.  But in  essence the scheme envisaged in sale-and not compulsory acquisition.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 24  

    It has  also to  be borne  in mind that the term ’sale’ and ’purchase’  have been used in some of the provisions and that  is  indicative  that  no  compulsory  acquisition  was intended.      Section 34 of the Act reads as follows:           "      34(1) The  Board shall  at such times as it           thinks fit  make to  registered  owners  who  have           delivered coffee for inclusion in the surplus pool           such payments  out of  the Pool  funds as  it  may           think proper.                (2) The  sum of  all payments made under sub-           section (  1) to  any one  registered owner  shall           bear to  the sum  of  the  payments  made  to  all           registered owners the same proportion as the value           of coffee  delivered by him out of the year’s crop           to the  surplus pool  bears to  the value  of  all           coffee delivered  to the  surplus pool out of that           year’s crop."      The High  Court  has  referred  to  the  provisions  of section  34(2)  of  the  Act  and  observed  that  the  said provisions  ensure  periodical  payments  of  price  to  the growers. The  Rules  provide  for  advancing  loans  to  the growers. Without  a shadow of doubt these elements indicate, according to  the High Court, that in the compulsory sale of coffee, there  was an  element of  consensuality. We  are in agreement that  there is  consensuality in the scheme of the section. The High Court has referred to section 25(2) of the Coffee Act  and observed that the power conferred by section 25(2) of  the Coffee  Act must  be read  subject to the very requirement of  that and  all other  provisions of  the Act. When a grower sells coffee that has become totally unfit for human consumption  for one or the other valid reason, such a grower cannot  compel the  Board to  purchase such coffee on the ground  that it  was coffee  and  thus  endanger  public safety and  also pay  its value or price. In the very nature of things,  these things  cannot be  foreseen or  enumerated exhaustively. The  High Court  was of  the view  that  if  a grower  delivered  coffee  to  the  Board,  the  Coffee  Act extinguished his title and absolutely vested the same in the Board, however, preserving 375 his  right  for  payment  of  its  value  or  its  price  in accordance with the provisions of that Act. According to the High Court  the amount paid by the Board to the grower under the Act  is the  value or price of coffee in conformity with the detailed  accounting done  thereto under the Coffee Act. The High  Court was right. The High Court went on to observe that the  amount paid to the grower was neither compensation nor dividend.  The payment  of price  to the  grower  is  an important element to determine the consensuality in the sale and the  sale itself  is under  section 4(1)  of the Sale of Goods Act.  Therefore, the  High Court  was of the view that neither  section   25(2)  read   with  section  17  nor  the provisions for  payment of compensation indicate that coffee becomes the  property of the Coffee Board not by consent but by the operation of law.      The levy of duties of excise and customs under sections 11 and  12 of  the Coffee  Act  are  inconsistent  with  the concept of  compulsory acquisition.  Section  13(4)  of  the Coffee Act  clearly fixes  the liability for payment of duty of excise  on the  registered owner  of the estate producing coffee. The  Board is  required to deduct the amount of duty payable by  such owner  from the payment to the grower under section 34  of the  Act. The duty payable by the grower is a first charge on such Pool payment becoming due to the grower

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 24  

from the  Board. Section  11 of the Act provides for levy of duty of  customs on  coffee exported out of India. This duty is payable  to the Customs authorities at the time of actual export.  The  levy  and  collection  of  this  duty  is  not unrelated to  the delivery  of the  coffee by the growers to the Board  or the  pool payments  made by  the Board  to the growers. The  duty of excise as also the duty of customs are duties levied  by Parliament  in exercise  of its  powers of taxation. It  is not  a levy  imposed by  the Board. It is a fact that the revenue realised from the levy of these duties form part  of the  Consolidated Fund  of India  and  can  be utilised for any purpose. It may be utilised for the purpose of the  Coffee Act  only if Parliament by appropriation made by law  in this  regard so  provides. The  true principle or basis in  Vishnu Agencies  case applies- to this case. Offer and acceptance need not always be in an elementary form, nor does the  law of  contract or  of sale of goods require that consent to  a contract must be express. Offer and acceptance can be spelt out from the conduct of the parties which cover not only  their acts  but omissions as well. The limitations imposed by  the Control  order on  the normal  right of  the dealers and  consumers  to  supply  and  obtain  goods,  the obligations  imposed   on  the  parties  and  the  penalties prescribed by the order do not militate against the position that  eventually,   the  parties  must  be  deemed  to  have completed the transaction under an agreement by 376 which one  party binds  itself to supply the stated quantity of goods  to the  other at  a  price  not  higher  than  the notified price  and the  other party  consents to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority.      A contract  whether  express  or  implied  between  the parties for  the transfer of the property in the goods for a price paid  or promised  is an  essential requirement  for a ’sale’. In  the absence  of a  contract whether  express  or implied, it is true, there cannot be any sale in the eyes of law. However,  as we  see the position and the scheme of the Act, in the instant case, there was contract as contemplated between the growers and the Coffee Board. This Court applied in Vishnu  Agencies’s case (supra) the consensual test laid- down in  the earlier  decision of this Court in the State of Madras v.  Gannon  Dunkerley,  [1959]  S.C.R.  379  in  this regard. In  law there  cannot  be  a  sale  whether  or  not compulsory, in the absence of a contract express or implied. The position of the Coffee Board so far as sale is concerned is explained  by the  Madras High  Court very lucidly in The Indian Coffee  Board, Batlagundu  v.  The  State  of  Madras (supra), where  the High  Court expressed  the view that the Indian Coffee  Board which  derived its  existence from  the Coffee Market  Expansion Act  is a dealer within the meaning of section  2(b) of  the Madras General Sales Tax Act, 1939, and is  therefore, liable  to sales tax on its turnover. The High Court  held  that  the  Board  was  not  a  constituted representative of the producer and it did not hold the goods on behalf  of the  producer. After  the goods enter the pool after delivery,  they become  the absolute  property of  the Board and  the producer, a registered owner, has no right or claim to  the goods  except to  a share in the sale proceeds after the  goods are  sold in accordance with the provisions of the Act.      It was said by the learned Additional Solicitor General that the  cultivation of  coffee in India was over a century old and  numerous plantations  existed  long  prior  to  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 24  

enactment of the Coffee Act. There was no act of volition on the part  of the growers in taking to coffee cultivation and subjecting themselves to the provisions of the Act by taking up such  cultivation.  The  cultivation  of  coffee  can  be carried on  only in  certain  types  of  soil  and  in  high elevations. The land suited for coffee cultivation cannot be used for growing other crops on a similar scale. Coffee is a perennial crop. The growers have no choice in growing coffee one year  and then  changing to  a  different  crop  in  the following year. Coffee plants have a life ranging from 30 to 70 years,  the average  life of  the plant  being 40  years. Coffee estates require 377 constant attention  and expenses  have to  be  incurred  for manuring, cultural  operations, application  of  pesticides, etc. at  regular intervals.  Removal  of  old  and  diseased plants and  replanting them  with superior disease-resistant varieties is  also necessary  and is  done  each  year.  The coffee grower  has thus  no choice at all continuing to be a coffee cultivator,  it was argued. The cultivation of coffee is  not   in  any  way  comparable  to  the  cultivation  of sugarcane, the  cultivation of  which can be discontinued at will.  Such  practical  difficulties,  however,  do  not  in essence make any difference.      Because coffee is grown on the estate, the owner of the land can  be presumed  to have  consented to  surrender  his produce to  the Board it was submitted. But the surrender is thus clearly  an act  of volition. The planting of the seeds of a  coffee plant by a grower can be regarded as his act of volition in  respect of  the surrender  to the  Board of the coffee yielded by the plant.      The coffee growers being agriculturists are not dealers and therefore  are not  liable  to  pay  any  sales  tax  or purchase tax,  it was submitted. The demand for purchase tax is in  effect a  demand on  the growers who were exempt from such levy,  as the monies required for paying the tax if the same is  lawful has  necessarily to  come out  of the monies otherwise payable  to the  growers. The  object of  the pool marketing system  is not  to deprive  the growers  of a fair compensation for  their produce  by making them suffer a tax which they  would not  otherwise be  required to  suffer. An analysis of the different provisions of the Coffee Act makes it clear  that there  was no  sale to attract exigibility to duty, it  was submitted.  We  are  unable  to  accept  these submissions. Section  6 of the Karnataka Sales Tax Act, 1957 meets the  situation created by such circumstances. This was examined by  this Court  in State  of  Tamil  Nadu  v.  N.K. Kamaleshwara, [1976]  1 SCR  38 which examined section 7A of Tamil Nadu  General Sales  Tax Act,  1959-which was  in pari materia with  section 6  of the  Karnataka Sales Tax Act. In that view of the matter section 6 of the Karnataka Act would he attracted      The alternative  submission of  the appellant  was that the Coffee  Board was  a trustee or agent of the growers. We are unable  to accept  this submission  either. There  is no trust created  in the scheme of the Act in the Coffee Board; it is a statutory obligation imposed on the Coffee Board and does not  make it  a trustee  in any  event. It  is also not possible to accept the submission that the Central Sales Tax Act will  not be  applicable to any sale by the Coffee Board because it was an 378 export sale by the Coffee Board. In Consolidated Coffee Ltd. & Another  v. Bangalore  etc., (supra) it has been held that there must  be a  prior  agreement  at  the  time  when  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 24  

transaction of  sale takes  place. No  such prior  agreement existed in this case.      In New  India Sugar Mills Ltd. v. Commissioner of Sales tax Bihar  (supra), Hidayatullah,  J. as  the Chief  Justice then was,  observed that  so long as the parties trade under controls at fixed price and accept these as any other law of the realm  because they must be deemed to have contracted at a fixed  price both sides having or deemed to have agreed to such price.  Consent under  the law  of contract need not be expressed, it can be implied. This is the position under the scheme of  the Coffee  Act. It has to be emphasised like the Vishnu Agencies’s  case a  person for all practical purposes is free to become or not to become a grower of coffee. So it is also covered by the ratio of Vishnu Agencies Pvt. Ltd.      In the  aforesaid view  of the  matter, we  are of  the opinion that  the imposition  of tax in a manner done by the Sales tax  Authorities which  had been  upheld by  the  High Court is correct and the High Court was right.      The  appeals  fail  and  are  dismissed.  There,  will, however, be no order as to costs      Civil Writ Petition No. 358 of 1986 under Article 32 of the Constitution  of India  is dismissed.  Re. Writ Petition No. 36 of 1986, we are of the opinion that we cannot go into in  the   contentions  in  this  petition.  The  rights  and obligations of the parties, inter-se between the petitioners and  the   Coffee  Board  may  be  agitated  in  appropriate proceedings. Re.  Writ Petition  No. 37  of 1986.  This writ petition is dismissed without prejudice to the rights of the petitioner to  agitate the  question  of  liability  of  the petitioner, vis-a-vis,  Coffee Board in respect of the sales tax due  and payable on the transactions between the parties in appropriate  proceedings. Re.  Civil Writ Petition No. 39 of 1986.  There will be no order in this petition. But it is made clear  that this  is without  prejudice to the right of the parties  taking appropriate proceedings if necessary for determination  of   the  liabilities  inter-se  between  the petitioners and the Coffee Board for the amount of sales tax payable.      Parties in these writ petitions will pay and bear their own costs. Interim orders, if any, are all vacated. S.L.      C.M.P. No. 2447 of 1986 is allowed 379