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PETITIONER: VISHNU AGENCIES (PVT.) LTD.  ETC.

       Vs.

RESPONDENT: COMMERCIAL TAX OFFICER & ORS.  ETC.

DATE OF JUDGMENT16/12/1977

BENCH: BEG, M. HAMEEDULLAH (CJ) BENCH: BEG, M. HAMEEDULLAH (CJ) CHANDRACHUD, Y.V. BHAGWATI, P.N. KRISHNAIYER, V.R. UNTWALIA, N.L. FAZALALI, SYED MURTAZA KAILASAM, P.S.

CITATION:  1978 AIR  449            1978 SCR  (2) 433  1978 SCC  (1) 520  CITATOR INFO :  F          1979 SC1158  (3,4,5)  RF         1980 SC 674  (4)  R          1980 SC1124  (30)  F          1985 SC1199  (6)  R          1988 SC1487  (48)  C          1989 SC1371  (15)

ACT: Sales-tax-Statutory sale-If sale for the purposes of  Sales- tax Acts. Cement  sold  to holders of permits issued  under  the  West Bengal Cement Control Act 1948-Sale, if exigible to tax. Transactions  between growers and procuring agents and  rice miller  and whole-sale agents under A. P. Paddy  Procurement (Levy) Order-If exigible to sales-tax.

HEADNOTE: The  Cement Control Order promulgated under the West  Bengal Cement Control Act, 1948 prohibits storage for sale and sale by  a seller and purchase by a consumer of cement except  in accordance with the conditions specified in a licence issued by  a designated officer.  It also provides that  no  person shall sell cement at a higher than the notified price and no person to whom a written order has been issued shall  refuse to  sell  cement  "at a price  not  exceeding  the  notified price".   Any contravention of the order becomes  punishable with imprisonment or fine or both. Under  the A.P. Procurement (Levy and Restriction  on  Sale) Order, 1967, (Civil Appeals Nos. 2488 to 2497 of 1972) every miller  carrying on rice milling operation is  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   becomes

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punishable. It  was contended in this Court on behalf of the  appellants that  the word ,sale" in the Bengal Finance Sales  Tax  Act, 1941, must receive the same meaning as in the Sale of  Goods Act,  1930 since the expression "sale of goods" was, at  the time  when the Government of India Act, 1935 was enacted,  a term      of well recognised legal import in the general law relating to sale goods and    in  the  legislative  practice relating to that topic both in England and in India and  (2) since  under  the  Sale of Goods Act there can  be  no  sale without a contract  of  sale  and since the parties  had  no volition  but were compelled by law to supply the  goods  at prices fixed under the Control Orders by the authorities the transactions were not sales and so were not exigible to tax. Disssing the appeals. HELD  :  Per curiam Sale of cement by the allottees  to  the permit-holders and the transactions between the growers and procuring  agents as well as those between the rice  millers on  the  one band and the wholesalers or  retailers  on  the other,  are  sales exigible to sales-tax in  the  respective States. [465-F-G] Per Beg.  C.J, The  transactions  in the instant cases are  sales  and  are exigible  to  tax  on the ratio of  Indian  Steel  and  Wire Products  Ltd.. Andhra Sugar Ltd. and Karam,  Chand  Thapar. In  cases like New India Sugar Mills, the substance  of  the concept of a side itself disappears because the  transaction is nothing more than the execution of an order.  Deprivation of property for a compensation called price does not  amount to a sale when all that is done is to carry out an order  so that 434 the  transaction is substantially a compulsory  acquisition. On  the  other  hand, a merely regulatory law,  even  if  it circumscribes  the area of free choice, does 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 is still left to  the  parties between  whom agreements take place.  The agreement  despite considerable  compulsive elements regulating or  restricting the area of his choice, may still retain the basic character of  a transaction of sale.  In the former type of case,  the binding  character of the transaction arises from the  order directed  to  particular  parties  asking  them  to  deliver specified  goods  and  not  from  a  general  order  or  law applicable  to  a class.  In the latter type of  cases,  the legal  tie  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, imparts 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. [438B-D, EG, 439A-C, 440B] New  India Sugar Mills v. Commissioner of Sales Tax,  Bihar, AIR 1963 SC 1207; [1963] Supp. 2 SCR 459 explained. Commissioner,  Sales tax, U.P. v. Ram Bilas Ram  Gopal,  AIR

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1970  All 518, Chittar Mal Narain v. Commissioner  of  Sales Tax,  [1971] 1 SCR 671, Indian Steel and Wire Products  Ltd. v.  State of Madras, [1968] 1 SCR 479, Andhra Sugar Ltd.  v. State  of  Andhra  Pradesh [1968] 1 SCR  705  and  State  of Rajasthan  v. Karam Chand Thapar, AIR 1969 SC  343  referred to. [Per Chandrachud, Bhagwati, Krishna Iyer, Untwalia,  Murtaza Fazal Ali and Kailasam, JJ.] According  to the definitions of "Sale" in the two Acts  the transactions  between  the appellants and the  allottees  or nominees are patently sales because in one case the property in  cement and in the other property in the paddy  and  rice was  transferred for cash consideration by  the  appellants. [445D] 1.   When 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,  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. [440 E-G] 2.   In  State  of Madras v. Gannon Dunkerley  &  Co.  Ltd., [1959] SCR 379 after considering a variety of authorities on the  subject,  this Court held that the expression  sale  of goods  in  Entry 48 List 11 Government of  India  Act,  1935 cannot be construed in its popular sense and that it must be interpreted in its legal sense.  Whereas in popular parlance a  sale  is said to take place when the bargain  is  settled between  the parties through property in the goods  may  not pass at that stage, as where the contract relates to  future or  unascertained  goods, the essence of sale in  the  legal sense is the transfer of property in a thing from one person to another for a price.  It was further held that  according to the law both of England and India in order to  constitute a  sale, it is necessary that there should be  an  agreement between the parties for the purpose of transferring title to the goods which pre-supposes capacity to contract, supported by  valuable  consideration  and that as  a  result  of  the transaction property must actually pass 435 in the goods.  "Unless all these elements are present, there can  ’be no sale." The effect of the construction which  the Court  put on the words of Entry 48 in Gannon  Dunkerley  is that  a sale is necessarily a consensual transaction and  if the parties have no volition or option to bargain, there can be no sale.  If this view is assumed to reflect the  correct legal Position, the transactions in these cases will  amount to sales. [447B-C, D-F, 449D-E] 3.   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 covers not only their acts but  omissions as  well.  On occasions, silence can be more  eloquent  than eloquence  itself.   Just  as  correspondence  between   the parties can constitute or disclose an offer and  acceptance, so can their conduct.  This is because law does not  require

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offer  and  acceptance  to conform to  any  set  pattern  or formula. [450D-E] 4.   In the instant case, it is not correct to say that  the transactions  between the dealer and the consumer  were  not consensual.  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 transactions under an agreement by  which one  party  bound itself to supply the  stated  quantity  of goods  to the other at a price not higher than the  notified price  and the other party consented 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.  in  order, to determine whether  there  was  any agreement  or consensuality between the parties regard  must be had to their conduct at or about the time when the  goods changed hands.  In the first place, it is not obligatory  on a  trader to deal in cement nor on the consumer  to  acquire it.  The primary fact is that the decision of the trader  to deal in an essential commodity is volitional.  Such volition carries  with  it the willingness to trade strictly  on  the terms  of the Control Order.  The consumer who is  under  no legal compulsion to acquire or Possess cement, decides as  a matter  of  his volition to obtain it on the  terms  of  the permit or the order of allotment issued in his favour.  That brings  the two parties together, one of whom is willing  to supply the essential commodity and the other to receive  it. When  the  allottee presents his permit to  the  dealer,  he signifies  his willingness to obtain the commodity from  the dealer  on  the  terms stated in the  permit.   His  conduct reflects  his consent.  And when, upon the  presentation  of the  permit the dealer acts upon it, he impliedly agrees  to supply  the commodity to the allottee on the terms by  which he has voluntarily bound himself to trade in the  commodity. His  conduct  too reflects his consent.  Thus,  though  both parties  are  bound to comply with  the  legal  requirements governing the transaction, they agree as between  themselves to  enter  into  the  tranaction  on  statutory  terms,  one agreeing to supply the commodity to the other on those terms and the other agreeing to accept from him on the very terms. [449E-H, 450C, E-H,451A] 5.   Secondly,  though  the  terms of  the  transaction  are mostly predetermined by law, it cannot be said that there is no area at all for bargain.  The conditions provided in  the order  that  cement shall not be sold at a higher  than  the notified price and that no dealer shall refuse to sell it at a price not exceeding the notified price leaving it open  to the individuals to charge and pay a price which is less than the  notified  price or charge a lesser price.   Within  the bounds of reasonableness, it would be open to the parties to fix  the time of delivery.  The consumer has a right to  ask for  weighment of goods which shows that he may  reject  the goods  if found short in weight or are not of the  requisite quality.   The consumer has a right to ask for weighment  of goods which shows that he tions have the freedom to  bargain militates  against  the view that the transactions  are  not consensual. [451-AE] 6.   In New India Sugar Mills Ltd. the question was  whether sugar  supplied  by  the mills on the orders  of  the  Sugar Controller  was exigible to tax.  The majority held  that  a contract of sale between the buyer and the seller, which  is a pre-requisite to a sale, being absent the transaction  was not exigible to sales

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436 tax.   But  the  principle on which the  problem  should  be approached was set out in the dissenting judgment which said that consent may be express or implied and that it could not be said that unless offer and acceptance were present in  an elementary form, there could be no taxable sale.  Taking the view  that on obtaining the necessary permit the  seller  on the  one hand and the buyer on the other agreed to sell  and purchase sugar it was pointed out that when the buyer, after receiving  the permit, telegraphed instructions to  despatch sugar and the seller despatched it, ’a contract emerged  and consent  must be implied on both sides though not  expressed antecendently to the permit".  So long as the parties  trade under controls at fixed price and accept these as any  other law  of the realm, the contract is at the fixed price,  both sides  having  or  deemed to have agreed to  such  a  price. Consent  under the law of contract need not be  express;  it could be implied. [453B-G; 454A-C] 7.In  coming  to its conclusion the majority  in  New  India Sugar  Mills followed the decision of this Court  in  Gannon Dunkerley that in a building contract there was no agreement express or implied to sell goods and secondly that  property in  the  building materials does not pass in  the  materials regarded  as   goods"  but it passes as  part  of  immovable property.   The  majority in-New India Sugar  Mills  was  in error in saying that the ratio govern that case because  the questions  involved in both different.  In New  India  Sugar Mills  the  commodity  with  concerned  was  sugar  and  was delivered as sugar just as in commodity is cement, which was delivered  as  cement Dunkerley tax was demanded  after  the commodity had after property in it had passed.  The question in this case which was question involved in New India  Sugar Mills namely  decidendi of Gannon Dunkerley must cases  were altogether  which  the  Court  was   the  instant  case  the Secondly, in Gannon changed hands, that is, the very whether a  transaction  effected in accordance with  the  obligatory terms  of a statute can amount to a sale, did not  arise  in Gannon  Dunkerley, Gannon Dunkerley is not an authority  for the  proposition that there cannot at all be a  contract  of sale  if the parties to a transaction are obliged to  comply with the terms of a statute. [456C-E] 8.   In  Gannon Dunkerley this Court was influenced  largely by  the observations in the 8th edn. of Benjamin on  "Sale?’ that to constitute a valid sale there must be a  concurrence of  four  elements, one of which is  "mutual  assent".   The majority  judgment  in New India Sugar  Mills  also  derived sustenance  from  the same passage in  Benjamin’s  8th  edn. Gannon Dunkerley involved an altogether different point  and is not an authority for the proposition that there cannot at all  be a contract of sale if the parties to  a  transaction are obliged to comply with the terms of a statute. [464E-F , 465C-D] 9.   With the high ideals of the Preamble and the  directive principles   of  our  Constitution,  there  has  to   be   a fundamental  change  in the judicial  outlook.   Freedom  of contract has largely become an illusion.  The policy of  the Parliament  in  regard  to  the  contracts  including  those involved in sale of goods, has still to reflect  recognition of  the  necessity for a change, which could be  done  by  a suitable  modification of the definition of sale  of  goods. [464C-D] Majority  decision in New India Sugar Mills v.  Commissioner of  Sales Tax, Bihar, AIR 1963 SC 1207; [1963] Supp.  2  SCR 459 overruled. Minority opinion in India Steel & Wire Products v. State  of

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Madras  [1968]  1  SCR 479, Andhra Sugar Ltd.  v.  State  of Andhra  Pradesh,  [1968] 1 SCR 705, Salar Jung  Sugar  Mills Ltd. v. State of Mysore [1972] 2 SCR 228 and Oil and Natural Gas Commission v. State of Bihar [1977] 1 SCR 354 approved. State of Tamil Nadu v. Cement Distributors Pvt.  Ltd. [1973] 2 SCR 1019 partly approved. Chhitter  Mal  Nazrain  Das. v. Commissioner  of  Sales  Tax [1971] 1 SCR 671 explained. State of Madras v. Gannon Dunkerley [1959] SCR 379 explained and distinguished. Kirkness  v. John Hudson and Co. Ltd. [1955] A.C.  696  held inapplicable. Ridge No miness Ltd. v. Inland Revenue Commissioners  [1962] Ch. 376 referred to. Commissioner, Sales Tax U.P. v. Ram Bilas Ram Gopal AIR 1970 Allahabad 318 referred to. 43 7

JUDGMENT: CIVIL  APPELLATE  JURISDICTION:  civil  Appeal  No.  724  of 1976. Appeal  by Special Leave from the, Judgment and Order  dated 13th  Dec.  1974 of the Calcutta High Court in  Appeal  from Original Order No. 240 of 1973.                             AND Civil Appeals.  Nos. 2488-2497 (NT) 1972 (From the  Judgment and  Order dated the 31st March, 1970 of the Andhra  Pradesh High  Court in Writ Petitions Nos. 3005, 3006,  3085,  3086, 3088, 3090, 4232, 4243 and 4244 of 1969. Sachin Chowdhary, B. Sen, S. S. Bose, K. K. Chakraborty,  A. G. Manzes, J. B. Dadachanji and k. J. John for the Appellant in C.A. 724/76. L.   N.  Sinha, D. N. Mukherjee, G. S. Chatterjee and A.  K. Ganguli for respondents 1 to 4 in C.A. 724/76. B. Kanta Rao for the Appellants in C.As 2488-97 of 1972. Soli  J.  Sorabjee, Addl.  Sol.  Genl. (In 2488-97)  72,  P. Parameshwara  Rao A. K. Ganguli and T. V. S.  Narasimhachari for the Respondents in CAs.  Nos. 2488-97/72. A. Subba Rao for the Intervener. The following Judgment were delivered BEG, C.J.--I am in general agreement with my learned brother Chandrachud  who  has  discussed  all  the  authorities   so admirably  and comprehensively.  I, however, would  like  to add a few observations stating the general conclusion, as  I see  it, emerging from an application of general  principles and  accumulation of case law on the subject of what may  be called "statutory" or "compulsory" sales.  Are they sales at all so as to be exigible to sales tax or purchase tax  under the relevant statutory provisions ? The  term ’sale? is defined as follows in Eenjamin  on  Sale (Eighth Edn.) :               "To  constitute a valid sale there must  be  a               concurrences of the following elements, namely               :-               (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 is true that a considerable part of the field over  which what are called ’sales’ take place under either  ’regulatory orders  or  levy  orders passed or  directions  given  under

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statutory  provisions is restricted and controlled by  these orders and directions.  If, what is called a "sale" 438 is,  in  substance, mere obedience to a specific  order,  in which  the so called "price" is only a compensation for  the compulsory  passing of property in goods to which  an  order relates,  at  an amount fixed by the  authority  making  the order,  the  individual  transaction may not  be  a  ,,sale" although  the compensation is determined on  some  generally fixed principle and called "price".  This was, for  example, the  position  in New India Sugar Mills v.  Commissioner  of Sales  Tax,  Bihar(1).   That  was  a  case  of  a  delivery according to an order given by the Govt. which could  amount to  a compulsory levy by an executive order  although  there was  no legislative "levy order" involved in that case.   On the  other  hand,, in Commissioner, Sales Tax, U.P.  v.  Ram Bilas  Ram  Gopal,(2)  the  order  under  consideration  was actually   called   a   levy  order,  but   the   case   was distinguishable  from New India Sugar Mills v.  Commissioner of  Sales Tax, Bihar (supra) on facts.  It was held  in  the case of Ram Bilas (supra) that the core of what is  required for a "sale" was not destroyed by the so called "levy" order which  was legislative.  It is true that passages  from  the judgement of Pathak, J., in the case of Ram Bilas Ram  Gopal (supra)  were cited and specifically disapproved by a  Bench of this Court in Chittar Mal Narain v. Commissioner of Sales Tax(3).  But, perhaps the view of this Court in Chittar  Mal Narain, Das (supra) goes too far in this respect.  It is not really  the  nomenclature  of the order  involved,  but  the substance  of  the  transaction  under  consideration  which matters in such cases. In  the first typo of case mentioned above the substance  of the  concept  of  a sale, as found  under  our  Law,  itself disappears because the transaction is nothing more than  the execution  of  an  order.  Deprivation  of  property  for  a compensation,  which may even be described as "price",  does not amount to, a sale when all that is done is to, carry out an  order  so  that  the  transaction  is  substantially   a compulsory  acquisition.   On  the  other  hand,  a   merely regulatory  law, even if it circumscribes the area  of  free choice,  does not take away the basic character or  core  of sale  from  the transaction.  Such a law,  which  governs  a class, may oblige sellers 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 is still left to the parties between whom  agreements take place.  The agreement, despite considerable  compulsive elements regulating or restricting the area of free  choice, may  still  retain the basic character of a  transaction  of sale.   This  was  the position in  Indian  Steel  and  Wire Products  Ltd. v. State of Madras(4).  Andhra Sugar Ltd.  v. State  of Andhra Pradesh(5) and State of Rajasthan v.  Karam Chand  Thapar(6): There might be borderline cases  in  which it- may be difficult to draw the line. (1)  AIR 1963 SC 1207 : [1963] (Supp) 2 SCR 459. (2)  AIR 1970 All 518. (3)  [1971] 1 S.C.R. 671. (4)  [1968] 1 S.C.R. 479. (5)  [1968] 1 S.C.R. 705. (6)  A.I.R. 1969 S.C. 343. 439 In  the former type of case, the binding character  of  the, transaction  arises  from the order directed  to  particular parties asking them to deliver specified goods and not  from a general order or law applicable to a class.  In the latter

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type  of cases, the legal tie (vinculum juris)  which  binds the  parties to perform their obligations  remains  contrac- tual.   The  regulatory law merely adds  other  obligations, such as the one to enter into such a tie between the parties indicated there.  Although the regulatory law might  specify the  terms,  such as price, or parties,  the  regulation  is subsidiary  to  the essential character of  the  transaction which  is consensual and contractual.  The basis of  a  con- tract  is : "consensus adem".  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, imparts 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. I  may be forgiven for citing a passage from my judgment  in Commissioner of State Tax v. Ram Bilas Ram Gopal,(supra)  to indicate the setting of such transactions               "It   appears  to  me  to  be   necessary   to               distinguish between a restriction in the  area               of  choice  of  parties  and  the  transaction               itself   in  order  to,  determine  the   true               character  of the transaction.  Limitation  of               the field of choice is a necessary concomitant               of  a controlled or mixed economy  which  ours               is.    Absolute   freedom   of   contract   or               unregulated  operation of the laws of-  supply               and  demand, which an apotheosis of the  lais-               sez-faire  doctrine demanded, led really to  a               shrinking  of  the  area  of  freedom  in  the               economic sphere, producing gross  inequalities               in  bargaining  powers and  recurrent  crises.               Therefore,   a  regulated  or  a   socialistic               economy  seeks to regulate the play of  forces               operating  on  the  economic  arena  so   that               economic  freedom of all concerned,  including               employers  and employees, is preserved and  so               that  the interests of consumers are also  not               sacrificed  by any exploitation of  conditions               in which there is scarcity of goods,.  I think               that the regulation or restriction of the area               of  choice,  cannot be held to take  away  the               legal character of the transactions which take               place within the legally restricted field.  It               is  too late in the day, when so much  of  the               nation’s  social and economic  activities  are               guided   and  governed  by   control   orders,               allotment orders, and statutory contracts,  to               contend  that  mere State  regulation  of  the               economic   sphere  of  life  results  in   the               destruction of the nature of the  transactions               which take place within that sphere." (P. 524) In  Roman  Law  the  contract  of  sale  was  classed  as  a "consensual"  contract.   The consent could,  no  doubt,  be express  or  implied.  I find that Hidayatullah J.,  in  his very  learned dissenting judgment in New India  Sugar  Mills Case (supra), where some Roman Law is. referred to,  thought that even in a case of a ’specific order directing  delivery of 440 goods there could be an implied consent so as to  constitute a  safe.  I find it, with great respect, difficult to go  so far  as  that.  What could be implied, upon the facts  of  a particular  case, must still be a consent to a  proposal  if

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the  transaction  is  to be construed  as  a  "sale".   Mere compliance with an order may imply an acceptance of an order but  acceptance of a proposal to purchase or sell are  of  a juristically different genus.  It is, however, not necessary for  us,  in  this case, to accept the  correctness  of  the minority  view of Hidayatullah, J. in New India Sugar  Mills case  (supra).  The transactions before us are sales  on  an application of the ratio decidendi of Indian Steel and  Wire Products  Ltd’s  case  (supra) and other  cases  decided  on similar grounds. The  difficulty  arises  from the fact  that,  although  the ingredients  of a "sale," as defined in Benjamin’s  treatise on  "Sale?’,  may seem to be satisfied even if  delivery  of goods  is  in obedience to "an order to deliver them  for  a consideration,  fixed  or to be fixed if we  stretch  mutual assent to cover assent resulting from orders given, yet,  it is difficult to see how such a transaction would be based on a  contractual tie.  According to Sec. 4(3) of our  Sale  of Goods  Act,  a  sale  results only  from  a  contract  which presupposes  a minimal area of freedom of choice  where  the ordinary mechanism of proposal and acceptance operates. For  the  reasons indicated above, while I  agree  with  the answer  given  by  my learned  brother  Chandrachud  to  the question  before us and also practically with all the  views expressed  by  my learned brother, yet, I hesitate  to  hold that the majority opinion expressed by Shah J., in New India Sugar Mills case (supra), is erroneous.  I think the case is distinguishable.  Ibis, however, makes no difference to the common  conclusion reached by us on the facts of  the  cases before us. CHANDRACHUD,  J. These appeals have been placed for  hearing before  a seven-Judge Bench in order to set at rest, to  the extent   foreseeable,  the  controversy  whether   what   is conveniently, though somewhat loosely, called a  ’compulsory sale? is exigible to sales tax.  When 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,  from  the  named  dealer  only  and  at  a controlled  price.   The dealer who is asked to  supply  the stated quantity of goods at the particular permit holder has no option but to supply the stated quantity  of goods at the controlled price.  The question for our consideration  not easy  to decide, is whether such a transaction amounts to  a sale     in the language of the law. We  will refer to the facts of civil appeal 724 of 1976,  in which  a company called M/s Vishnu Agencies (Pvt.) Ltd.,  is the  appellant.   It carries on business. as  an  agent  and distributor of cement in the 441 State  of West Bengal and is a registered dealer  under  the Bengal   Finance   (Sales  Tax)  Act,  1941,   referred   to hereinafter  as  the Bengal Sales Tax Act.  Cement  being  a controlled  commodity, its distribution is regulated by  the West  Bengal  Cement Control Act, 26 of  1948,  referred  to hereinafter  as  the Cement Control Act, and by  the  Orders made  under section 3 (2) of that Act.  Section (3)  (1)  of the Cement Control Act provides, inter alia, for  regulation

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of  production,  supply  and  distribution  of  cement   for ensuring equitable supply and distribution thereof at a fair price.   By the Cement Control Order, 1948 framed under  the Cement  Control Act, no sale, or purchase of cement  can  be made, except in accordance with the conditions contained  in the written order issued by the Director of Consumer  Goods, West  Bengal  or  the  Regional  Honorary  Adviser  to   the Government of India at Calcutta or by officers authorised by them, at prices not exceeding the notified price. The  appellant  is  a licensed stockist  of  cement  and  is permitted  to stock cement in its godown, to be supplied  to persons in whose favour allotment orders are issued, at  the price  stipulated and in accordance with the  conditions  of permit issued by the authorities concerned.  The authorities designated  under  the Cement Control  Order  issue  permits under which a specified quantity of cement is allotted to  a named  permit-holder, to be delivered by a named  dealer  at the  price mentioned in the permit.  A permit  is  generally valid  for  15  days  and as soon as  the  price  of  cement allotted  in  favour of an allottee is  deposited  with  the dealer,  he is bound to deliver to the former the  specified quantity of cement at the specified price. A  specimen  order issued in favour of  an  allottee,  under which the appellant  had to supply 10 metric tons of  cement at Rs. 144.58 per   M.T., exclusive of sales tax, reads thus               "LICENCE FOR CEMENT               The  quantities of cement detailed  below  are               hereby  allotted  to  M/s.   Marble  &  Cement               products  Co.  Pvt.  Ltd., 2,  Braboume  Road,               Calcutta-1  to  be supplied  by  M/s.   Vishnu               Agencies  Pvt.  Ltd., 3, Chittaranjan  Avenue,               Calcutta-13,  on  conditions  detailed  below.               The   price  of  material  involved  must   be               deposited with the Stockist within 15 days and               the  actual delivery must be taken  within  15               days  from  the date of issue of  the  permit.               The licence is issued only for the purpose  of               Mfg.  of  Mosaic Tiles at 188,  Netaji  Subhas               Road, Calcutta-40.               Under  no circumstances will the  validity  of               the permit be extended beyond the period of 15               days from the date of its issue.               Cement               Total Tonnge               Country Cement at Rs. 144.58 Ton Cwt. per M.T.               exclusive of S. T. 10 M/T (Ten M/T only)" 442 The appellant supplied cement to various allottees from time to  time  in  pursuance of the allotment  orders  issued  by appropriate authorities and in accordance with the terms  of the  licence  obtained  by it for dealing  in  cement.   The appellant was assessed to sales tax by the first respondent, the  Commercial Tax Officer,, Sealdah Charge, in respect  of these  transactions.   It  paid the tax  but  discovered  on perusal  of  the decision of this Court in New  India  Sugar Mills  Ltd.  v.  Commissioner  of  Sales  Tax(1)  that   the transactions were not exigible to sales tax.  Pleading  that the  payment  was  made under a mistake  of  law,  it  filed appeals  against  the orders of assessment  passed  by  res- pondent  1.  It contended in appeals  before  the  Assistant Commissioner  of  Commercial  Taxes that by  virtue  of  the provisions of the Cement Control Act and the Cement  Control Order,  no volition or bargaining power was left to  it  and since  there  was no element of  mutual  consent  aggreement between  it  and the allottees, the  transactions  were  not

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sales  within  the  meaning  of  the  Sales  Tax  Act.   The appellant  further contended that if the  transactions  were treated as sales, the definition of "sale" in the Sales  Tax Act  was  ultra  vires the  legislative  competency  of  the Provincial  Legislature under the Government of  India  Act, 1935  and of the State Legislature under  the  Constitution. The  appellate authority rejected the first  contention  and upheld  the  assessments.  It did not, as it could  not,  go into the second contention regarding legislative competence. The appellant adopted the statutory remedies open to it  but since  the arrears, of tax were mounting up and had  already exceeded  a  sum  of  rupees eight lacs,  it  filed  a  writ petition in the Calcutta High Court praying that the various assessment orders referred to in the petition be quashed and a  writ  of prohibition be issued directing  the  sales  tax authorities  to refrain from making any further  assessments for the purpose of sales tax on the transactions between the appellant and the allottees. A  learned single Judge of the High Court allowed  the  writ petition  and  issued  a writ of  mandamus  restraining  the respondents  from  imposing sales tax on  the  transactions. between  the  appellant and the  allottees.   That  judgment having  been set aside in appeal by a Division Bench of  the High  Court  by its judgment dated December  13,  1974,  the appellant has filed appeal No. 724 of 1976 by special leave. Civil  appeals  No.  2488 to 2497 of 1972  raise  a  similar question  under the Andhra Pradesh Paddy Procurement  (Levy) Orders, under which paddy growers in the State are under  an obligation to sell the paddy to licensed agents appointed by the  State Government at the prices fixed by it.   The  High Court of Andhra Pradesh by its judgment dated March 31, 1970 has taken the, same view as the Calcutta High Court, namely, that the transactions amount to sales and are taxable  under the Sales Tax Act.  Counsel appearing in the Andhra  Pradesh appeals  agree that the decision in the Calcutta  case  will govern those appeals also. (1)  [1963] Supp. 2 S.C.R. 459. 443 Since  the  crux of the appellant’s contention is  that  the measures  adopted to control the supply of cement  leave  no consensual option to the parties to bargain, it is necessary first  to notice the relevant provisions of law  bearing  on the matter.  The West Bengal Cement Control Act, 26 of 1948, was  enacted  in  order. to "confer powers  to  control  the production,  supply and distribution of, and trade and  com- merce  in, cement in West Bengal." Section 3(1) of  the  Act empowers  the Provincial Government to provide, by order  in the   Official  Gazette,  for  regulating  the  supply   and distribution  of  cement  and trade  and  commerce  therein. Section  3(2) provides by clauses (b) to (o) that  an  order made  under  sub-section (1) may provide for  regulating  or controlling  the prices at which cement may be purchased  or sold  and  for prescribing the conditions of  sale  thereof, regulating  by licences, permits or otherwise, the  storage, transport,  movement,  possession,  distribution,  disposal, acquisition,  use of consumption of cement; prohibiting  the withholding  from sale of cement ordinarily kept  for  sale; and for requiring any person holding stock of cement to sell the whole or specified part of the stock at such prices  and to   such  persons  or  classes  of  persons  or   in   such circumstances,  as  may be specified in the order.   If  any person  contravenes  an order made under section  3,  he  is punishable  under  section 6 with imprisonment  for  a  term which  may extend to three years or with fine or with  both, and,  if the order so provides, any Court, trying such  con-

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tranvention,  may  direct  that a  property  in  respect  of which   the Court  is  satisfied  that  the  order    been contravened shall be forfeited to the Government. In  exercise of the powers erred by section 3(1)  read  with clauses  (b)  to (h) of section  (2) of the  Act,  an  Order which  may conveniently be called the Cement  Control  Order was  promulgated  by the Governor on August 18,  1948.   The relevant  clauses  of  that  Order  contain  the   following provisions.   By  paragraph  1, no person  shall  after  the commencement of the order sell or store for sale any  cement unless he holds a licence and except in accordance with the conditions  specified  in  such licence  obtained  from  the Director  of  Consumer Goods, West Bengal,  or  any  officer authorised  by him in writing in this behalf.  By  paragraph 2,  no  person shall dispose of or agree to dispose  of  any cement except in accordance with the conditions contained in a  written  order of the Director of  Consumer  Goods,  West Bengal  or the authorities specified in the  paragraph.   By paragraph 3, no person shall acquire or agree to acquire any cement  from  any  person  except  in  accordance  with  the conditions  contained in a written order of the Director  of Consumer Goods, West Bengal, or the authorities specified in the paragraph.  By paragraph 4, no person shall sell  cement at  a  "higher  than notified price".  By  Paragraph  8,  no person  or  stockist  who has any stock  of  cement  in  his possession and to whom a written order has been issued under paragraph  2 shall refuse to sell the same, "at a price  not exceeding the notified price", ’and the seller shall deliver the cement to the buyer "within a reasonable time after  the payment of price".  By paragraph 8A, every stockist or every person employed by him shall, if so re 3-1146 SCI/77 444 quested  by  the person acquiring cement from  him  under  a written order issued under paragraph 3, weigh the cement  in his   presence  or  in  the  presence  of   his   authorised representative at the time of delivery. We are not concerned with the amendments made by the Govern- ment of West Bengal to the, Cement Control Order on December 30,  1965 by which, inter alia paragraphs 2, 3, 4, 8 and  8A of that Order were deleted.  The,appeal from the decision of the  Calcutta  High  Court is limited  to  the  transactions between the appellant and the allottees from the years  1957 to 1960. As  regards  the batch of appeals from Andhra  Pradesh,  the levy  of  tax was challenged by three sets of  persons,  the procuring  agents, the rice-millers and the  retailers  with the  difference that the procuring agents were  assessed  to purchase tax, while the others to sales tax under the Andhra Pradesh  General  Sales  Tax Act, 1957.  By  virtue  of  the provisions  of the, Andhra Pradesh Paddy Procurement  (Levy) Orders,  the paddy-growers can sell their paddy to  licensed procuring age nts appointed by the State Government only and at  the prices fixed by the Government.   The  agriculturist has  the  choice to select his own procuring  agent  but  he cannot  sell  paddy to a private purchaser.   The  procuring agents  in  their  turn have to supply paddy  to  the  rice- millers at controlled prices.  The millers, after converting paddy  into rice, have to declare their stocks to the  Civil Supplies  Department.  Pursuant to the Orders issued by  the Department,  the  rice-millers-have to  supply  a  requisite quantity  of  rice  to the wholesale or  retail  dealers  at prices  fixed by the Department.  Orders for such supply  by the  millers  are passed by the authorities under  the  A.P. Procurement  (Levy)  and Restriction on  Sale  Order,  1967.

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Under  this  Order, every miller  carrying  on  rice-milling operations is required to sell to the agent or officer  duly authorised  by, the Government the minimum quantities  fixed by  the Government at the notified price; and no  miller  or other person who gets his paddy milled in any price mill can move or otherwise dispose of the, rice recovered by  milling at such rice mill except in accordance with the,  directions of the Collector.  A breach of these provisions is liable to be punished under section 7 of the Essential Commodities Act 1955 and the goods are liable to be forfeited under  section 6A  of  that  Act.  The A.P. sales  tax  authorities  levied purchase tax on the purchase of paddy made by the  procuring agents from the agriculturists and they levied sales tax  on the transactions relating to the sup of rice by the  millers to the wholesale and retail dealers and on the supply made, by  the retailers to their customers.  The case  as  regards the sales tax imposed on the transactions between the retail dealers  and the consumers stood on an altogether  different footing,  but  the  writ petitions filed  by  the  procuring agents and rice-millers raised questions similar to  those involved  in  the writ petition filed in the  Calcutta  High Court. These  then are the provisions of  the  respective  Orders passed by the Governments of West Bengal and Andhra Pradesh. 445 We  may  now notice the provisions of the  Sales  Tax  Acts. Section  2(g)  of the Bengal Finance (Sales Tax) Act,  6  of 1941,  defines a sale" to mean "any transfer of property  in goods  for  cash  or  deferred  payment  or  other  valuable consideration,  including a transfer of ,property  in  goods involved  in  the  execution of a  contract,  but  does  not include  a  mortgage,  hypothecation,  charge  or   pledge." Section  2  (1) provides that the word  "turnover"  used  in relation  to  any period means "the aggregate of  the  sale- prices or parts of sale-prices receivable, or if a dealer so elects,  actually received by the dealer........  By  clause (h) of section 2, "sale-price" is defined to mean the amount payable to a dealer as valuable consideration for "the  sale of  any goods".  By section 4(1), every dealer  whose  gross turnover   during   the  year  immediately   preceding   the commencement  of  the Act exceeded the  taxable  quantum  is liable  to  pay tax under the Act on  all  "sales"  effected after the date notified by the State Government. Section  2(n)  of the Andhra Pradesh General Sales  Tax  Act 1957 defines a "sale" as "every transfer of the property  in goods  by  one person to another in the course of  trade  or commerce, for cash, or for deferred payment or for any other valuable  consideration.   Section  5 of  that  Act  is  the charging section. According to these definitions of ’sale’ in the West  Bengal and  Andhra Pradesh Sales Tax Act, transactions between  the appellants on one hand and the allottees or nominees on  the other are patently ,sales because indisputably, in one  case the  property in cement and in the other, property in  paddy and  rice  was  transferred for cash  consideration  by  the appellants;  and  in  so  far as the  West  Bengal  case  is concerned,  property  in  the  goods did  not  pass  to  the transferees  by  way of mortgage, hypothecation,  charge  or pledge.  But that is over- simplification.   To   counteract what appears on the surface plain enough, learned.     counsel for  the  appellants have advanced a  two  fold  contention. They contend,  in the first place,’ that the word ’sale’  in the  Sales  Tax  Acts  passed by  the  Provincial  or  State legislatures must receive the same meaning as in the Sale of Goods  Act, 1930; or else, the definition of sale  in  these

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Sales ’Tax Acts will be beyond the legislative competence of the  Provincial  and’  State  legislatures.   Secondly,  the appellants  contend that since under the Sale of Goods  Act, there  can be no sale without a contract of sale  and  since the  parties in these matters had no volition of  their  own but were compelled by law to supply and receive the goods at prices  fixed  under the Control Orders  by  the  prescribed authorities,  the  transactions between them are  not  sales properly  so palled and therefore are not exigible to  sales tax. For  examining the validity of the first contention,  it  is necessary  to  turn  to  the  appropriate  entries  in   the legislative   lists  of  the  Constitution  Acts,  for   the contention  is  founded on the premise that the  word  sale’ which occurs in those entries must receive the same  meaning as in the Sale of Goods Act, 1930 since the expression "sale of goods" was, at the time when the Government of India Act was  enacted, a term of well-recognised legal import in  the general law relating to sale 446 of  goods and in the legislative practice relating  to  that topic  both  in  England  and in India. Entry  48  in  the Provincial  List, List II of Schedule VII to the  Government of India Act, 1935 relates to; "Taxes on the sale of goods." Entry  54  of  List  II, of  the  Seventh  Schedule  to  the Constitution reads to say: "Taxes on the sale or purchase of goods  other than newspapers, subject to the  provisions  of entry 92A of the Union List but we may refer to it in  order to  complete the picture.  It refers to: "Taxes on the  sale or purchase of goods other than newspapers, where such  sale or purchase takes place in the course, of inter-State  trade or commerce." The  contention of the appellants that the expression  ’sale of goods’ in entry 48 in the Provincial List of the, Act  of 1935  and in entry 54 in the State List of the  constitution must receive the same meaning as   in the Sale of Goods  Act is  repelled  on behalf of the State  Governments  with  the argument   that  constitutional  provisions   which   confer legislative   powers  must  receive  a  broad  and   liberal construction and    therefore the expression ’sale of goods’ in entry 48 and its successor,     entry  54, should not  be construed in the narrow sense in which that  expression   is used  in the Sale of Goods Act, 1930 but in a  broad  sense. The principle that in interpreting a constituent or  organic statute, that  construction  most beneficial to- the  widest possible amplitude of its     powers  must  be  adopted  has been  examined over the years by various  courts,  including this   Court,  and  is  too  firmly  established  to   merit reconsideration.    Some of the leading cases on this  point are the Privy  Council decisions in British Coal Corporation v. king(1), Edwards v.   A.  G. for Canada(2) and  James  v. Commonwealth of Australia(");      the Australian  decisions in Morgan v. Deputy Federal Commissioner     of  Land   Tax, N.S.W.(4) and Broken Hill South Ltd. v. Commissioner   of Taxation (N.S.W.) (5) ; the Federal Court decisions in In re the  Central Provinces and Berar Act No. XIV of 1938(6)  and United    Provinces v. Atiqa Begum;(7) and the decisions  of this Court in  Navinchandra Mafatlal v. The Commissioner  of Income-tax, Bombay  City(8)  and  The  State  of  Madras  v. Gannon Dunkerley & Co.   (Madras), Ltd. (9) These  decisions have        taken the view that a constitution must  not  be construed in a narrow and pedantic sense, that a  board  and liberal  spirit  should inspire those whose duty  it  is  to interpret  it,  that  a Constitution of a  Government  is  a living and organic  thing  which of all instruments has  the

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greatest claim to be construed     ut res magis valeat  quam pereat,  that  the  legislature  in  selecting  subjects  of taxation  is  entitled to take things as it  finds  them  in remum     natura  and  that it is not proper  that  a  Court should deny to such a    legislature  the right  of  solving taxation problems unfettered by a priori     legal categories   which  often  derive  from  the   exercise   of legislative    power in the same constitutional unit. (1) [1935] A.C. 500.     (6) [1939] F.C.R. 18. (2) [1930] A.C. 124.     (7) [1940] F.C.R. 110. (3) [1936] A.C. 578.     (8) [1955] 1 S.C.R. 529.. (4) [1912] 15 C.L.R.661. (9) [1959].S.C.R. 379. (5)  [1937] 56 C.L.R. 33. 447 On a careful examination of various decisions bearing on the point  this Court speaking through Venkatarama Aiyar  J.  in Gannon Dunkerley (supra) upheld the contention of the  State of  Madras that the words "sale of goods" in Entry 48  which occur in-the Constitution Act and confer legislative  powers on  the State Legislature in respect of a topic relating  to taxation must be interpreted not in  a restricted but  broad sense.   But as observed by the learned Judge in that  case, this conclusion opens up questions as to what that sense is, whether  popular  or  legal, and what  its  connotation  is, either  in the one sense or’ the other.   After  considering text-book  definitions contained in Blackstone, Benjamin  on Sale,  Halsbury’s Laws of England, Chalmer’s Sale  of  Goods Act, Corpus Juris, Williston on Sales and the Concise Oxford Dictionary,  the  Court held that the  expression  ’sale  of goods’ in Entry 48 cannot be construed in its popular  sense and that it must be interpreted in its legal sense.  Whereas in  popular parlance a sale is said to take place  when  the bargain  is settled between the parties though  property  in the goods may not pass at that stage, as where. the contract relates  to  future or unascertained goods, the  essense  of ’sale’ in the legal sense is the transfer of the property in a thing from one person to another for a price. The  Court then proceeded to determine, the  connotation  of the expression ’sale of goods’ in the legal sense and  held, having  regard lo the evolution of the law relating to  sale of  goods,  the scheme of the Indian Contract  Act  and  the provisions  of the Sale of Goods Act, 1930,  which  repealed Chapter  VII of the Indian Contract Act relating to sale  of goods,  that  according to the law both of  England  and  of India,  in order to constitute a sale it is  necessary  that there  should  be an agreement between the parties  for  the purpose  of  transferring  title to the  goods,  which  pre- supposes  capacity. to contract, that the contract  must  be supported by valuable consideration and that as a result  of the  transaction property must actually pass in  the  goods. "Unless  all  these elements are present, there  can  be  no sale," Basing itself on this position, the Court finally  concluded in  Gannon  Dunkerley (supra) that the expression  ’sale  of goods’  was, at the, time when the Government of  India  Act was  enacted, a term of wellrecognised legal import  in  the general law relating to sale of goods and in the legislative practice relating to that topic both in England and in India and  therefore that expression, occurring in entry 48,  must be  interpreted in the sense which it bears in the  Sale  of Goods  Act, 1930.  In coming to this conclusion,  the  Court relied upon the, American decisions in United States v. Wong Kim Ark, South Carolina v.  United States(2 ) and Ex Parte. Grossman(3);  the  Privy Council decisions  in  L’Union  St. Jacques  De Montreal v. Be Lisle (4) , Royal Bank of  Canada

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v. Larue,(5) The Labour Relations Board of (1)  [1898] 169 U.S. 649. (2)  [1905] 199 U.S. 437. (3)  [1925] 267 U.S. 87. (4) [1874] L.R. 6 P.C.31. (5) [1928] A.C. 187. 448 Saskatochewan  v.  John East Iron Works  Ltd.(1);  Croft  v. Dunphy(2), and Wallace Brothers and Co. Ltd. v. Commissioner of Income-tax, Bombay City and Bombay Suburban  District;(3) the  decision  of  the Federal Court in In  re  The  Central Provinces and.  Berar Act No. XIV of 1938; (supra); and  the decisions  of  this Court in The State of Bombay  v.  F.  N. Balsara(4)  and  The Sales Tax Officer, Pilibhit  v.  Messrs Budh Prakash Jai Prakash(5).  In a nutshell, these decisions have   taken  the  view  that  the  Constitution   must   be interpreted  in the light of the common-law, the  principles and history of which were familiarly known to the framers of the  Constitution,  that the language  of  the  Constitution cannot  be understood without reference to the  common  law, that  to  determine the extent of the grants of  power,  the Court  must  place  itself in the position of  the  men  who framed  and’ adopted the Constitution and inquire what  they must  have understood to be the meaning and scope  of  those grants,  that  when a power is conferred to legislate  on  a particular  topic it is important, in determining the  scope of  the power, to have regard to what is ordinarily  treated as  embarced within that topic in-legislative  practice  and particularly in the legislative practice of the State  which has  conferred  that power, that the object of doing  so  is emphatically  not to seek a pattern to which a due  exercise of  the  power must conform, but to  ascertain  the  general conception  involved in the words of the Act,  and  finally, that  Parliament  must  be  presumed  to  have  had   Indian legislative   practice  in  mind  and  unless  the   context otherwise   clearly  requires,  not  to  have  conferred   a legislative power intended to be interpreted in a sense  not understood by those to whom the Act was to apply. The  view  expressed in Gannon Dunkerley (supra)  that  the, words "sale of goods" in entry 48 must be interpreted in the sense  which  they bear in the Sale of Goods Act,  1930  an$ that  the,  meaning  of those words should not  be  left  to fluctuate  with the definition of ’sale in laws relating  to sales of goods which might be in force for the, time  being. may,  with respect, bear further consideration but that  may have.  to await a more suitable occasion.  It will  then  be necessary to examine whether the words "sale of goods" which occur  in entry 48 should not be construed so as  to  extend the  competence  of  the legislature  to  enacting  laws  in respect  of matters which might- be unknown in 19 3  5  when the  Government of India Act was passed but which  may  have come  into  existence  later, as a result of  a  social  and economic   evolution.    In  Attorney  General   v.   Edison Telephone,  Company of London(,,) a question  arose  whether the   Edison   Telephone  Company   London,   infringed   by installation  of  telephones, the, exclusive  privilege,  of transmitting  telegrams  which  was  conferred;  upon-   the Postmaster-General  under  an  Act of  1869.   The  decision depended on the meaning of the (1) [1949]       A.C. 134. (2) [1933]       A.C. 156. (3) [1948]       L.R. 75 I.A. 86. (4) [1951]       S.C.R. 682. (5) [1955]       1 S.C.R. 243. (6) [1880]       L.R. 6 Q.B.D. 244.

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449 word "telegraph" in the Acts of 1863 and 1869.  The  company contended  that  since-telephones were unknown at  the  time when  these Acts were passed, the definition of  ’telegraph’ could  not  comprehend  ’telephones.   That  contention  was negatived  by  an  English Court.   In  the  Regulation  and Control of Radio Communication in Canada, In re(1) a similar question  arose as to whether ’broadcasting" was covered  by the expression "telegraph and other works and  undertakings" in section 92(10) (a) of the Constitution Act of 1867.   The Privy  Council answered the question in the affirmative  and was   apparently  not  impressed  by  the  contention   that broadcasting  was not known as a means of  communication  at the  time  when  the Constitution  Act  was  passed.   These decisions  proceed  on  the  principle  that  if  after  the enactment  of a legislation, new facts and situations  arise which  could  not  have been in  the  contemplation  of  the legislature, statutory provisions can justifiably be applied to  those facts and situations so long as the words  of  the statute  are  in a broad sense capable of  containing  them. This  principle, according to the view expressed  in  Gannon Dunkerley,  (supra) did not apply to the  interpretation  of Entry 48, a view which in our. opinion is capable of further scrutiny.   It is, however, unnecessary in these appeals  to investigate  the  matter any further because,  the  position which  emerges  after putting on the words of Entry  48  the same  meaning which those words’-bear in the Sale  of  Goods Act,  1930  is  that in order to constitute a  sale,  it  is necessary  that  there should be an  agreement  between  the parties.   In  other words, the effect of  the  construction which  the  Court  put on the words of Entry  48  in  Gannon Dunkerley (supra) is that a sale is necessarily a consensual transaction and if the parties have no volition or option to bargain,  there can be no sale.  For the  present  purposes, this  view  may  be assumed to  reflect  the  correct  legal position but even so, the transactions which are the subject matter of these appeals will amount to sales. Applying  the  ratio of Gannon Dunkerley, (supra)  the  true question for decision, therefore, is whether in the  context of  the  Control  Orders issued by the  Government  of  West Bengal for regulating the supply and distribution of cement, the transactions under which the, appellant supplied  cement to  persons  who were issued permits by the  authorities  to obtain the commodity from the appellant, involved an element of volition or consensuality.  If they did, the transactions would amount to sales, but not otherwise.  It is  undeniable that  under  paragraph 2 of the West Bengal Order  of  1948, which  we  have  for convenience designated  as  the  Cement Control Order, no person can dispose of or agree to  dispose of  any  cement  except in accordance  with  the  conditions contained  in  a written order of the Director  of  Consumer Goods or the authorities specified in that paragraph.   That is  a  limitation on the dealer’s right  to  supply  cement. Correspondingly  by  paragraph 3, no person can  acquire  or agree to acquire cement from any person except in accordance with  the  conditions contained in a written  order  of  the Director  of Consumer Goods or the authorities specified  in that  paragraph.   That is a limitation  on  the  consumer’s right  to obtain cement.  Paragraph 4 puts a restriction  on the price which a dealer (1)  [1932] A.C. 304. 45 0 may  charge  for the commodity by providing that  no  person shall sell cement at a price higher than the notified price. Paragraph  8 imposes on the dealer the obligation to  supply

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cement  by providing that no person or stockist who has  any stock  of  cement in his possession and to  whom  a  written order has been issued under paragraph 2 shall refuse to sell the same at a price not exceeding the notified price. person who  contravenes the provisions of the Cement Control  Order is  punishable  under section 6 of the  West  Bengal  Cement Control  Act,  1948 with imprisonment for a term  which  may extend to three years These  limitations  on  the  normal  right  of  dealers  and consumers  to supply and obtain the goods,  the  obligations imposed  on the parties and the penalties prescribed by  the Control  Order do not, in our opinion, militate against  the position that eventually, the parties must be deemed to have completed  the transactions under an agreement by which  one party bound itself to supply the stated quantity of goods to the other at a price not higher than the notified price  and the  other party consented 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. Offer  and  acceptance need not always be in  an  elementary form,  nor  indeed does the Law of Contract or  of  Sale  of Goods  require that consent to a contract must  be  express. It is commonplace that offer and acceptance can be spelt out from the conduct of the parties which covers not only  their acts  but omissions as well.  Indeed, on occasions,  silence can  be  more  eloquent  than  eloquence  itself.   Just  as correspondence   between  the  parties  can  constitute   or disclose  an  offer and acceptance, so  can  their  conduct. This  is because, law does not require offer and  acceptance to conform to any set pattern formula. In  order,  therefore, to determine whether  there  was  any agreement or consensuality between the parties, we must have regard to their conduct at or about the time when the  goods changed hands.  In the first place, it is not obligatory  on a  trader  to deal in cement nor on any one to  acquire  it. The  primary  fact, therefore, is that the decision  of  the trader to deal in an essential commodity is volitional. Such volition  carries with it the willingness to trade  in  the, commodity  strictly  on the terms of  Control  Orders.   The consumer too, who is under no legal compulsion to acquire or possess  cement,  decides as a matter of’  his  volition  to obtain  it  on  the  terms of the permit  or  the  order  of allotment issued in his favour.  That brings the two parties together,  one  of whom is willing to supply  the  essential commodity  and the other to receive it.  When  the  allottee presents  his  permit  to  the  dealer,  he  signifies   his willingness  to obtain the commodity from the dealer on  the terms  stated  in  the permit.   His  conduct  reflects  his consent.  And when, upon the presentation of the permit, the dealer  acts  upon  it, he impliedly agrees  to  supply  the commodity  to  the  allottee on the terms by  which  he  has voluntarily  bound himself to trade in the  commodity.   his conduct too reflects his consent.  Thus, though both parties are  bound to comply with the legal  requirements  governing the  transaction, they agree as between themselves to  enter into the transaction on statutory terms, 451 one  agreeing to supply the commodity to the other on  those terms  and the other agreeing to accept it from him  on  the very  terms.   It is therefore not correct to say  that  the transactions between the appellant and the allottees are not consensual.  They, with their free consent, agreed to  enter into the transactions. We  are  also of the opinion that though the  terms  of  the transaction  are mostly predetermined by law, it  cannot  be

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said  that  there  is no area at all in which  there  is  no scope,  for the parties to bargain.  The West Bengal  Cement Control  Act, 1948 empowers the Government by section  3  to regulate  or  control  the prices at  which  cement  may  be purchased or sold.  The Cement Control Order, 1948  provides by paragraph 4 that no person shall sell cement at a "higher than  notified  price", leaving it open to  the  parties  to charge  and  pay a price which is less  than  the  notified price, the notified price being the maximum price which  may lawfully be charged.  Paragraph 8 of the Order points in the same  direction by providing that no dealer Who has a  stock of  cement in his possession shall refuse to sell  the  same "at  a price not exceeding the notified price",  leaving  it open  to  him to charge a lesser price, which  the  allottee would  be  only too agreeable to pay.  Paragraph  8  further provides that the. dealer shall deliver the cement "within a reasonable  time"  after the payment of  price.   Evidently, within the bounds of reasonableness, it would be open to the parties  to  fix the time of delivery.  Paragraph  8A  which confers  on the allottee the right to ask for  weighment  of goods also shows that he may reject the goods on the  ground that they are short in weight just as indeed, he would  have the  undoubted right to reject them on the ground that  they are not of the requisite quality.  The circumstance that  in these areas, though minimal, the parties to the transactions have the freedom to bargain militates against the view  that the transactions are not consensual. While on this aspect, we may usefully draw attention to  two important  decisions  of this Court, the first of  which  is Indian  Steel  & Wire Products Ltd. v. State  of  Madras(1). The  appellant therein supplies certain steel  products  to various  persons  in  Madras at the instance  of  the  Steel Controller   exercising   powers   under   the   Iron    and Steel’(Control of Production and Distribution) Order,  1941. The  State of Madras assessed the turnover of the  appellant to  sales tax upon which, the appellant contended  that  the deliveries  of steel products were made under compulsion  of law  since it was the controller who determined the  persons to  whom the goods were to be supplied, the price  at  which they  were to be supplied, the manner in which they were  to be  transported  and the mode in which the  payment  of  the price was to be made.  Since every facet of the  transaction was  prescribed by the controller, so it was  argued,  there was  no  agreement  between the parties  and  therefore  the transaction  could not be considered as a  sale.   Rejecting this contention, it was observed by Hegde J., who spoke  for the Constitution Bench, that though the controller fixed the base price of the steel products and determined the (1)  [1968] 1 S.C.R. 479. 452 buyers,  the  parties were stiff ’free to decide  the  other terms  of the bargain, as for example, the time and date  of delivery  and the time and mode of payment and therefore  it could  not be said that there was no agreement  between  the parties to sell and buy the goods.  It was held that  though the  area  within which it was possible for the  parties  to bargain  was  greatly relieved on account of  the  Iron  and Steel  Control  Order, it was not correct  to  contend  that because  law  imposes restrictions on freedom  of  contract, there  could  be  no contract at all.  "So  long  as  mutual assent is not completely excluded in any dealing, in law  it is a contract." The  second  decision is reported in Andhra  Sugar  Ltd.  v. State of Andhra Pradesh(1).  In that case, the occupier of a sugar  factory  had to buy sugarcane  from  cane-growers  in

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conformity  with  the directions. of the  Cane  Commissioner issued  under the Andhra Pradesh (Regulation of  Supply  and Purchase)  Act, 1961.  Under section 21 of that  Act,  sales and  purchase  of sugarcane were exempt from tax  under  the Andhra  Pradesh  General  Sales Tax  Act,  1957,  but  under section  2(1), of the Act of 1961, the State Government  had power  by  notification, to levy a tax "on the  purchase  of cane  required  for  use, consumption or  sale  in  a  sugar factory".   Various sugar factories in the State filed  writ petitions  under Article 32 of the Constitution  challenging the- validity of section 21 mainly on the ground that  since they  were  compelled  by law to buy  cane  from  the  cane- growers, their purchases were      not-      made      under agreements and were not taxable under entry 54,   List 11 of the  Seventh Schedule to the Constitution having regard  to- the decision in Gannon Dunkerley (supra). The writ petitions were-     decided  by  a Constitution Bench  of  this  Court which delivered  its un-      animous    judgment    through Bachawat J. It is necessary in the first     place to  state that though it was argued on behalf of the State  Government in  that  case  that the occupier of the  factory  had  some option    of  not buying the sugarcane from the  grower  and had   some  freedom  of  bargaining  about  the  terms   and conditions of the agreement, that  point was not pursued any further and the writ petitions proceeded on  the basis  that there was no option left for any bargain in the transaction. After  referring to the definition of "contract of  sale  of goods"    in  section 4(1) of the Indian Sale of Goods  Act, 1930,  and  the  relevant provisions  of  the  Contract  Act relating to offer and acceptance,.      the  Court  observed that under section 10 of the Contract Act, an     agreements are  contracts if they are made by the free consent  of  the parties  competent to contract, for a  lawful  consideration and with a     lawful  object,  and  are  not  by  the   Act expressly declared to be void.     Section    13   of    the Contract Act defines "consent" and section 14 says     that consent  is  said  to  be free when  it  is  not  caused  by coercion,      undue influence, fraud, misrepresentation  or mistake  as defined in sections 15 to 22. In the  background of those provisions, the Court     observed  that 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.  But  if  be  made an offer, the  occupier  of  the factory was bound to     accept  it and the consent  of  the occupier  not  being caused by  coercion,  undue  influence, fraud, misrepresentation or mistake was "free (1)  [1968] 1 S.C.R. 705. 453 consent  as defined in section 14 of the Contract Act,  even though  he was obliged by law to enter into  the  agreement. "The compulsion of law is not coercion as defined in section 15 of the Act" and "in the eye of the law, the agreement  is freely made." Since the, parties were competent to contract, the agreement was made for a lawful consideration and with a lawful  object,  the  agreement  was  not  void  under   any provision  of law and it was enforceable at law,  the  Court held  that  the purchases of sugarcane were taxable  by  the State  legislature  under Entry 54, List 11 of  the  Seventh Schedule of the Constitution. Strong  reliance was placed by the factory owners in  Andhra Sugars  (supra) on the majority’ judgment of Kapur and  Shah JJ.  in New India Sugar Mills Ltd. v. Commissioner of  Sales Tax  (supra)  to which we must refer  here.   The  "admitted course of dealing" between the parties in that case was that the Governments of various consuming States used to intimate

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to  the Sugar Controller of India, from time to time,  their requirements of sugar and similarly, the factory owners used to  send  to  the Sugar Controller of  India  statements  of stocks  of  sugar held by them.  On a consideration  of  the requests  received  from  the  State  Governments  and   the statements  of stock received from the factories, the  Sugar Controller used to make allotment of sugar.  The.  allotment order  was addressed by the Sugar Controller to the  factory owner directing him to supply sugar to the State  Government in  question  in accordance with the despatch  instructions received from the competent officer of the State Government. A copy of the allotment order was simultaneously sent to the State Government concerned on receipt of which the competent authority  of  the  State Government  sent  to  the  factory concerned  detailed instructions about the  destinations  to which the sugar was to be despatched as also the  quantities of  sugar  to  be  despatched to  each  place.   The  Madras Government which, under this arrangement, received its quota of sugar from the New India Sugar Mills, also laid down the’ procedure of payment.  The Patna High Court having held that the  supply of sugar by the mills to the Province of  Madras was liable to be taxed under the Bihar Sales Tax Act,  1947, the  mills filed an, appeal to this Court which was  decided by a Bench of three learned Judges.  Kapur and Shah J.  held that  since  the  mills  were compelled  to  carry  out  the directions of the Controller and since they had no  volition in  the  matter of supply of sugar to the State  of  Madras, there  was no offer by them to the State Government  and  no acceptance  by  the  latter.   Shah  J.,  speaking  for  the majority observed that a contract of sale between the seller and  the buyer is a prerequisite to a sale and  since  there was no such contract, the transaction in question which  the Bihar  Sales Tax authorities sought to tax was not  exigible to sales tax. Hidayatullah   J.  who  ’delivered  a   dissenting   opinion observed-after reviewing the position both under the English and  the  Indian Law, that though it was true  that  consent makes  a contract of sale, such consent "may be  express  or implied  and  it cannot be said that unless  the  offer  and acceptance are there in an elementary form, there can be  no taxable  sale."  Taking  the  view  that  on  obtaining  the necessary  permit, the sugar mills on the one hand  and  the Government of 454 Madras  on the other agreed to "sell" and  "purchase"  sugar could  admit of no doubt, the learned Judge said  that  when the   Province  of  Madras  after  receiving   the   permit, telegraphed  instructions  to despatch sugar and  the  mills despatched  it,  "a  contract emerged and  consent  must  be implied  on both sides though not expressed antecedently  to the  permit."  The  Controller brought the  seller  and  the purchaser  together,  gave  them permission  to  supply  and receive sugar leading thereby to an implied contract of sale between the parties.  The learned Judge accepted that  there was  an  element of compulsion in both selling  and  buying, perhaps  more for the supplier than for the  receiver,  but, according to him, "a compelled sale is nevertheless a  sale" and "sales often take place without volition of   party." The learned  Judge summed up the matter pithily thus :  "So-long as  the  parties  trade under controls at  fixed  price  and accept  these  as any other law of the  realm  because  they must,  the contract is at the fixed price both sides  having or  deemed to have agreed to’ such a price.   Consent  under the  law  of  contract need not be express, it  can  be  im- plied..  .  . . The present is just another  example  of  an

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implied   contract  with  an  implied  offer   and   implied acceptance by the parties." Adverting to the construction of the  legislat ive entry 48 of List 11, VII Schedule  to  the Government  of India Act, 1935, the learned  Judge  observed that the entry had to be interpreted in a liberal spirit and not cut down by narrow technical consideration.  "The  entry in  other  words should not be shorn of all its  content  to leave a mere husk of legislative power.  For the purposes of legislation such as on-sales tax it is only necessary to see whether there is a sale, express or implied.....     The entry  has  its meaning and within its meaning  there  is  a plenary power.   If  a sale express or implied is  found  to exist then the tax must follow." We are of the opinion that the true position in law is as is set  out in the dissenting judgment of Hidayatullah J.,  and that,  the  view  expressed by Kapur and  Shah  JJ.  in  the majority  judgment, with deference, cannot be considered  as good  law.   Bachawat J. in Andhra Sugar (supra)  was,  with respect,  right in cautioning that the majority judgment  of Kapur and Shah JJ. in New India Sugar Mills (supra)  "should not  be  treated as an authority for  the  proposition  that there  can  be  no contract of sale under  compulsion  of  a statute." (pages 715-716).  Rather than saying what, in view of the growing uncertainty of the true legal position on the question,  we:  are  constrained to say,  namely,  that  the majority  judgment in New India Sugar Mills (supra)  is  not good law, Bachawat J. preferred to adopt the not  unfamiliar manner  of confining the majority decision to  "the  special facts of that case." The  majority judgment in New India Sugar Mills  (supra)  is based predominantly on the decision of this Court in  Gannon Dunkerley  (supra)  to which we have referred at  length  in another  context.  In fact, Shah J. observes at page 459  of the report after discussing the judgment in Gannon Dunkerley (supra)  that  "the ratio decidendi of  that  decision  must govern this case." The decision in Gannon Dunkerley  (supra) really  turned  on  a  different  point,  the  question  for consideration  therein  being  whether  the  value  of   the materials used in the execution 455 of  building contracts could be included within the  taxable turnover of the company.  It was contended on behalf of  the company that the power of the Madras Legislature to impose a tax on sales under entry 48, List 11 of Schedule VII of  the government  of India Act, 1935 did not extend to unposing  a tax on the value of materials used in construction works, as there was no transaction of sale in respect of those  goods, and  that  the provisions introduced in the  Madras  General Sales  Tax  Act,  1939,  by the  Madras  General  Sales  Fax (Amendment)  Act, 1947, authorising the imposition  of  such tax  were  ultra  vires.  Venkatarama  Aiyar  J.  posed  the question thus : "The sole question for determination in this appeal is whether the provisions of the Madras General Sales Tax Act are ultra vires, in so far as they seek to impose  a tax  on  the  supply  of materials  in  execution  of  works contract   treating   it  as  a  sale  of   goods   by   the contractor.  . . . . . ". The Court accepted  that  building materials  were ’goods’ and limited the inquiry  to  whether there  was "a sale of those materials within the meaning  of that word in entry 48".  Reference was then made to Benjamin on  Sale in which it is said that in order to  constitute  a ’sale,  four elements must concur "(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 (c) a price in money paid or promised." (Vide

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8th Edn., p.. 3).  On the strength of this statement and  on a  consideration of the provisions of the Contract  Act  and the Sale of Goods Act, 1930 it was concluded that "according to  the  law  both  of England and of  India,  in  order  to constitute  a sale it is necessary that there should  be  an agreement   between   the  parties  for   the   purpose   of transferring  title to goods".  The Court then proceeded  to examine the true nature of a building contract and held               "It has been already stated that, both  tinder               the common law and the statute law relating to               sale  of  goods in England and  in  India,  to               constitute A transaction of sale there  should               be an agreement, express or implied, relating               to  goods to be completed by passing of  title               in those goods.  It is of the essence of this-               concept that both the agreement and the  sale,               should  relate  to  the  same  subject-matter.               Where  the goods delivered under the  contract               are   not  the  goods  contracted  for,,   the               purchaser  has got a right to reject them,  or               to accept them and claim damages for breach of               warranty.   Under  the law,  therefore,  there               cannot be an agreement relating to one kind of               property  and a sale as regards  another.   We               are  accordingly of opinion that on  the  true               interpretation   of  the  expression‘sale   of               goods’ there must be an agreement between  the               parties  for  the sale of the  very  goods  in               which   eventually  property  passes.   In   a               building  contract, the agreement between  the               parties   is   that  the   contractor   should               construct   a   building  according   to   the               specifications contained in the agreement, and               in  consideration therefor receive payment  as               provided  therein,  and as will  presently  be               shown there is in such An agreement neither  a               contract  to  sell the materials used  in  the               construction,  nor does property pass  therein               as  movables.  It is therefore  impossible  to               maintain that there               456               is  implicit in a building contract a sale  of               materials  as understood in law." (pages  413-               414)               The final conclusion on the point involved  in               the appeal was expressed thus               "To sum up, the expression ’sale of goods’  in               Entry  48  is  a nomen  juris,  its  essential               ingredients   being  an  agreement   to   sell               movables  for  a price  and  property  passing               therein  pursuant  to that  agreement.   In  a               building contract which is, as in the  present               case, one entire and indivisible--and that  is               its norm, there is no sale of goods, and it is               not  within the competence of  the  Provincial               Legislature under Entry 48 to impose a tax  on               the  supply  of the materials used in  such  a               contract  treating it as a sale." (pages  425-               426) Thus, the, two reasons given by the Court in support of  its conclusion were, firstly, that in a building contract  there was  no agreement, express or implied, to sell  ’goods’  and secondly,  that property in the building materials does  not pass  in the materials regarded a; ’goods’ but it passes  as part  of  immovable  property.  In New  India  Sugar  Mills.

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(supra)  the  commodity with which Court was  concerned  was sugar and was delivered as sugar just as in the instant case the  commodity with which we are concerned is  cement  which was  delivered  as cement.  That meets the first  reason  in Gannon  Dunkerley  (supra).  As regards the  second,  it  is quite  clear that the tax was demanded after  the  commodity had changed hands or putting it in the words of the Sale  of Goods  law,  after property in it had  passed.   With  great respect  therefore,  the majority in New India  Sugar  Mills (supra) was in error in saying that "the ratio decidendi  of that  decision  (Gannon Dunkerley) must govern  this  case’. The question before us which was the very question  involved in New India Sugar Mills (supra) viz., whether a transaction effected  in.  accordance  with the obligatory  terms  of  a statute  can  amount  to a ’sale did  not  arise  in  Gannon Dunkerley.  (supra).  Just as the, majority  Judges  in  New India Sugar Mills (supra)     applied  to  the  case  before them the ratio of Gannon Dunkerley, (supra) the Court in the latter  case  applied  the ratio of  the  House  of  Lords decision  in  Kirkness  v.  John  Hudson  and  Co.   Ltd.(1) observing categorically that "the derision in Kirkness  must be  hold  to  conclude the matter" (P. 412).   We  think  it necessary to lay particular emphasis on this aspect  because it  shows how the question for decision in Gannon  Dunkerley (supra)  was  basically different from the question  in  New India  Sugar  Mills (supra) or in, the  appeals  before  us. In  Kirkness  (supra),  railway  wagons  belonging  to   the respondent   company  were  taken  over  by  the   Transport Commission compulsorily it) exercise of the powers conferred by  section 29 of the Transport Act, 1947, and  compensation was paid therefor.  The question was whether this amount was liable to income-tax on the footing of sale of the wagons by the  company.   The contention on behalf of the  revenue  if was that compulsory acquisition being treated as sale  under the  English law, the taking over of the wagons and  payment of compensation (1)  [1955] A.C. 696. 457 therefor  must  also  be regarded as  sale  for  purpose  of income-tax  and  therefore,  the company  was  liable  to  a balancing  charge  under section 17 of the  Income-tax  Act, 1945.  The case turned on the meaning of the word sale’  for the  purposes of the Excess Profits Tax legislation and  the income-tax  Act, 1945 (8 & 9 Geo. 6, c. 3).  Lord Morton  in his  dissenting speech found it "impossible to say that  the only  construction  which can fairly be given  to  the  word ’sold’ in section- 17(1) (a) of the Income Tax Act, 1945, is to limit it to a transaction in which the element of  mutual assent is present." But the majority of the House came to  A different  conclusion, and held that the element of  bargain was  essential  to  constitute  a  sale’  and  to   describe compulsory taking over of property as a sale was a misuse of that  word.   We  are not concerned in  these  appeals  with ’Compulsory acquisition’ of goods nor indeed, was the  Court concerned with it in Gannon Dunkerley (supra).  The majority in  New India Sugar Mills (supra) was right in  saying  that the decision in Kirkness (supra) and the "observations  made therein  have little relevance in determining the limits  of the,  legislative power of the Provincial legislature  under the  Government of, India Act, 1935, and the  interpretation of statutes enacted in exercise of that power." In fact,  if we may say so with great respect’, the observation in Gannon Dunkerley  (supra)  that the decision  in  Kirkness  (supra) concluded  the  question  before  the  Court.  seems  to  us somewhat wide of the mark.  Since Kirkness (supra)  involved

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an  altogether  different  point,  we  would  have   avoided referring  to  it  put  the  reliance  upon  it  ’in  Gannon Dunkerley  (supra) may lead to a misunderstanding  regarding its  true  ratio  which  needs  to  be  clarified.   Besides Kirkness  (supra) has been referred to in various  decisions and  has  been  considered as an  authority  for  apparently conflicting  propositions,  which too made it  necessary  to understand the decision in a proper perspective. It  is  not  the decision in Kirkness  (supra)  but  another English decision which may with advantage be noticed.   That is  the  decision of the Court of Appeal in  Ridge  Nominees Ltd.  v.  Inland Revenue Commissioners.(1) The  question  in that  case was whether a transfer of shares  executed  under section  209  of  the Companies Act, 1948  on  behalf  of  a stockholder who declined to accept the offer of purchase was required to be stamped as a transfer on sale.  Under section 209,   the  transferee  company  was  entitled  in   certain circumstances  to give a notice to a dissenting  shareholder that  it  desired to acquire his shares.  Upon  such  notice being  given,  the  transferee company  became  entitled  to acquire  the  shares  of the  dissenting  shareholder  at  a particular  price.   If the dissenting shareholder  did  not transfer  the shares, then subsection (3) provided  for  the execution  of a transfer on behalf of the shareholder  by  a person  appointed by the transferee company.  In  the  First Schedule  to  the  Stamp Act, 1891  was  included  the  item "Conveyance  or transfer on sale of any property........  In the light of this entry under which stamp duty was  payable, the  question which the Court had to consider was whether  a transfer    executed    on   behalf    of    a    dissenting shareholderwasa"transferonsale".    Theanswerdepended   upon whether  there  could be a sale even  though  the  essential element (1)  [1962] Ch 376. 45 8 of  mutual  assent was totally absent.  Lord  Evershed  M.R. observed  in his judgnient that what the Companies  Act  had done, by file machinery it had created, was that in truth it brought  into being a transaction which ex facie in all  its essential characteristics and effect was a transfer on sale. Donovan  L.J. in his concurring judgment said that when  the legislature by section 209 of the C Act empowered the trans- feree company to appoint an agent on behalf of a  dissenting shareholder 3  for  thempurpose of executing a  transfer  of his  shares  against a price to be paid  to  the  transferor company and held in trust for the dis-  senting-shareholder, it  was clearly  shring his dissent and putting him  in  the same position as if he had.  For the purpose of  considering whether  the  transaction  amounted to  a  sale,  one  must, according  to the learned Judge, regard the dissent  of  the shareholder  as  overriden by an assent  which  the  statute imposed upon him, fictional        though    it   may    be. Danckwerts L.J., also by a concurring judgment,        said that  a sale may not always require the  consensual  element and       that there may, in truth, be a compulsory sale  of property in which        the owner is compelled to part with Ws property for a price, against        his will. We  will  proceed to refer to the Other  decisions  of  this Court bearing       on the point under discussion. In  State of Rajasthan v. M/s Karam Chand Thapper & Bros. Ltd.(1)  the respondent-assessee which was           registered   as    a dealer under the Rajasthan Sales Tax Act, 1954, entered into a  contract with the Equitable Cod Company under  which it acquired  monopoly rights to supply coal in_Rajasthan as  an agent of  the Coal Company. The respondent supplied coal  to

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the State of   Rajasthan under an agreement with it and that transaction was included in the respondent’s turnover by the Sales  Tax  Officer,  Jaipur. The High  Court  of  Rajasthan allowed the respondents writ petition against          the order  of assessment on the,, ground, inter alia,  that  the supply of           coal  by the respondent to the State  of Rajasthan did not constitute  salt   as  the,   supply   was controlled by a statutory order, namely, the      Colliery Control Order, 1945. In appeal to this Court by the State of Rajasthan,  it  was  held that under  the  Colliery  Control Order, coal         could  be supplied under a contract  and the effect of the Control Order         was     only      to superimpose upon the agreement between the parties the  rate fixed  by the Control Order. The four elements  required  to constitute  a  sale, namely, competency of  parties,  mutual assent  of  the parties, passing of property  in  the  goods supplied to the purchaser, and lastly, payment or promise of payment  of  price were all present to render  the  turnover liable to sales tax" Shah J. who spoke for the Court  relied upon  the  judgments  in Indian  Steel  and  Wire  Products, (supra) and Andhra Sugar (supra) observing that in these two cases  the Court had held that "when goods, supply of  which is controlled by statutory orders, are delivered pursuant to a  contract of & The, the principle  of the case in M/s  New India  Suqar Mills Ltd. case (supra) has  no  application.." The  Court  distinguished the decision in  New  India  Sugar Mills  (supra)  on  the  ground that it  was  founded  on  a different  principle  since the condition  requiring  mutual assent of the parties was lacking in that case. (1)  [1969]. 1 S.C.R. 861. 459 In  Chhitter Mal Narain Das v. Commissioner of Sales  Tax(1) the  appellants 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 High Court held in a reference made to it under the Sales Tax Act that the transaction  amounted to a sale And was exigible to sales tax.  In appeal to  this Court  it was held by a Bench consisting of Shah  and  Hegde JJ. that clause 3 of the U.P. Procurement (Levy) Order, 1959 sets up a machinery for compulsory acquisition by the  State Government  of  stocks of wheat belonging  to  the  licensed dealers, that the Order contains a bald injunction to supply wheat  of the specified quantity day after day, that it  did not  envisage any consensual arrangement and that the  Order did  not even require the State Government to enter into  an informal   contract  with  the  supplier.   Delivering   the judgment of the Bench, Shah J. observed that the 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  in the prescribed manner.  It was observed  that the decision in Indian Steel and Wire Products (supra)  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 Control Order may  be regarded   as   a   sale.    This   decision   is    clearly distinguishable   since   the  provisions   of   the   Wheat Procurement  Order were construed by the Court as  being  in the  nature of compulsory acquisition of  property  obliging the  dealer  to  supply wheat from day  to  day.   Cases  of compulsory  acquisition of property by the State stand on  a different  footing since there is no question in such  cases

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of  offer and acceptance nor of consent, either  express  or implied. We  would, however, like to clarify that  though  compulsory acquisition of property would exclude the element of  mutual assent  which is vital to a sale, the learned  Judges  were, with  respect, not right in holding in Chitter  Mal(1)  that even.  if in respect of the place of delivery and the  place of payment of price, there could be a consensual arrangement the  transaction  will not amount to a sale (p.  677).   The true  position  in law is as stated above, namely,  that  so long  as mutual assent, express or implied, is  not  totally excluded  the  transaction  will  amount  to  a  sale.   The ultimate  decision in Chitter Mal (supra) can  be  justified only  on  the view that clause 3 of  the  Wheat  Procurement Order envisages compulsory acquisition of wheat by the State Government  from  the  licensed dealer.   Viewed  from  this angle,  we cannot endorse the Court’s criticism of the  Full Bench decision of the Allahabad High Court in  Commissioner, Sales  Tax U.P. v. Ram Bilas Ram Gopal(2) which  held  while construing  clause  3 that so long as there was  freedom  to bargain in some areas the transaction could amount to a sale though  effected under compulsion of a statute.  Looking  at the scheme of the U.P. Wheat Procurement Order, particularly clause 3 thereof. this Court in Chitter Mal (supra) seems to have  concluded  that  the transaction  was,  in  truth  and substance, in the nature of (1)  [1971] 1 S.C.R. 671. (2)  AIR 1970 Allahabad 518. 4-- 1146SCI Allhabad 518 460 compulsory  acquisition, with no real freedom to bargain  in any  area. Shall J. expressed the Court’s interpretation  of clause  3 in no uncertain terms by saying that "it  did  not envisage, any consensual arrangement." In  Salar Jung Sugar Mills Ltd. v. State of Mysore,  (supra) which  was decided by a Bench of seven learned  Judges,  the appellants  were  subjected to levy of tax  on  purchase  of sugarcane  after  the inclusion of sugarcane  in  the  Third Schedule to the; Mysore Sales Tax Act, 1957. They challenged the  levy on the ground that on account of the  Central  and State  Control Orders applicable to the transactions,  there was  no  mutual  assent  between them  and  the  growers  of sugarcane in regard to supply of sugarcane by the latter and since there was no purchase and sale of sugarcane, they were not dealers within the meaning of section 2(k) of the Mysore Sales Tax Act.  After referring to the cases which     we have  considered  above, it was held by the Court  that  the decisions      relating to ’compulsory sales? establish that statutory orders regulating.  the supply and distribution of goods do not absolutely impinge on the  freedom of  contact. In spite of the fact that under the relevant      Control Orders  the  parties,  the minimum  price  and  the  minimum quantity of supply were, determined or regulated, the  Court held  that the      Control  Orders left to the parties  the option in regard to a higher  quantity  then was  stipulated in the Orders, It higher price than the      minimum as also the form and manner of payment. A factory could   reject goods  after inspection which indicated not only freedom  in the formation but also in the performance of the contract. A combination  of all these factors, according to Ray- J.  who spoke for a unanimous    Court,   indicated  with   unerring accuracy that the parties entered into       agreement  with mutual assent and with volition for transfer of’ goods     in consideration  of price. The transactions  were  accordingly held as   amounting  to sales within the meaning of  section

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2(t) of the, Mysore      Sales  Tax Act. In coming  to  this conclusion the Court relied on the      statement         in Benjamin on Sale, 8th ed. page 68 that though a contract  of sale  requires  mutual  assent, "The assent need  not  as  a general rule   be express" and that, it may be implied  from the language of or       conduct  of parties and  indeed  it may even be inferred from the silence   on   the   part   of parties  in  certain cases.      As an instance,  the  Court referred  to  the common case of a  person  buying  rationed articles from  a  ration shop. "The parties, the price,  the shop, the supply and the      acceptance    of   goods    in accordance with the provisions of the Ration      Order ,ire all  regulated."  All  the same, said the  Court,  when  the customer  presents  the ration card to the  shopkeeper,  the shopkeeper     delivers the rationed articles, the  customer accepts  the  articles  and  pays  their  price  "there   is indisputably a sale". In State of Tamil Nadu v. Cement Distributors Private Ltd.() the principal question which arose for decision was  whether producers   who  supplied  cement  to  the   State   Trading Corporation or its agents in gunny bass in pursuance of  the directions given by the Government were liable to pay  sales tax on the turnover relating to the price of gunny bags.  In some  of  the  connected appeals  the  question  also  arose whether the (1)  [1973] 2 S.C.R. 1019. 461 selling agents of the, State Trading Corporation were liable to, pay sales  lax in respect of the price of the gunny bags in  which, they sold cement to, the consumers.   As  regards the question whether the transactions between producers  and the  State  Trading Corporation in so far as the  supply  of cement was concerned amounted Lo sales within the meaning of the Madras General Sales Tax Act, 1959, Hegde, J. who  spoke for  the  three  Judge Bench observed  that  there  was  "no dispute"  that those transactions could not amount to  sales in view of the Cement Control Order, 1958.  On the  question whether  the gunny bags, in which the cement  was  supplied, can  be  considered to have been sold it was  observed  that there  was "no dispute’ that if the price of gunny bags  was held  to  have been wholly controlled, then  the  supply  of gunny  bags  also could not be considered  as  sales.   This position was held to have been concluded by the decisions in New  India Sugar Mills Ltd. (supra) and Chittar  Mal  Narain Das  (supra).  The only question which the Court  considered was  whether, in fact, the price of the gunny bags in  which cement  was  supplied to the State Trading  Corporation  was controlled  by  the Cement Control Order of 1958.   On  that question  it was held that since the Central Government  had fixed the actual price of the gunny bags also, the supply of gunny  bags  did not amount to sales.  In the  first  place, the,  decision  proceeds on a concession in so  far  as  the supply  of cement is concerned as is shown by the  statement that  there  was  "no  dispute’ that  "the  same  cannot  be considered  as  sales".   As  regards  the  other   question concerning gunny bags, the Court did not allow the Advocate- General  of Tamil Nadu to contend that since. tinder  clause 6(4)  of  the Cement Control Order  the  Central  Government could  have  fixed the maximum and not the actual  price  of gunny  bags, was scope for bargaining between  the  parties. That question not having been raised in the High Court or in the  appeal  memo  filed  in  this  Court  and  the  Central Government  not having put in its appearance in this  Court, permission  was  declined to raise the  questions  Thus  the decision is not an authority for the, proposition for  which

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the appellant contends.  Besides. the judgment rests  partly on  the decision in New India Sugar Mills (Supra)  which  we have dissented from and partly on Chitter Mal (supra) which, by reason of the ’compulsory acquisition’ inferred  therein, was distinguishable. In  oil  and Natural Gas Commission v. State of  Bihar(1)  a three  Judge Bench speaking through Ray CJ. held,  following the  judgment in Salar Jung Sugar Mills Ltd., (supra)  that the  supplies  of  crude  oil by the  Oil  and  Natural  Gas Commission  to  a  refinery of the  Indian  Oil  Corporation amounted  to  sales,  even though  the  supplies  were  made pursuant  to  the  directions  and  orders  of  the  Central Government and the Commission had no volition in the matter. Law presumes assent of parties, it was observed, when  there is transfer of goods from one party to the other. This  resume  of  cases,  long  as  it  is,  may  yet   bear highlighting the true principle underlying the decisions  of this Court which have (1) [1977] 1 S.C.R. 354. 462 taken  the  view  that a transaction which  is  effected  in compliance  with  the  obligatory terms  of  a  statute  may nevertheless  be  a  safe in the eye  of  law.   The  Indian Contract  Act which was passed in 1872 contained  provisions in  its  seventh  chapter  comprising  sections  76  to  123 relating  to  sale  of  goods which  were  repealed  on  the enactment  of a comprehensive law of sale of goods in  1930. The  Contract Act drew inspiration from the English  law  of contract  which is almost entirely the creation  of  English courts  and  whose growth is marked by  features  which  are peculiar  to  the social and economic  history  of  England. Historically the English law of contract is largely  founded upon  the  action  on the  case for  assumpsit,   where  the essence  of the matter was the undertaking.   The  necessity for  acceptance of the undertaking or the promise   led  the earlier writers on legal theories to lay particular emphasis on the consensual nature of contractual obligations.  It was out  of the importance, which political philosophers of  the eighteenth  century gave to human liberty that the  doctrine was  evolved that every person should be free to pursue  his own  interest  in the way he thinks best and  therefore  law ought to give effect to the will of the parties as expressed in their agreement.  Adam Smith in his famous work on  "The- Wealth  of  Nations" propounded in 1776 the  view  that  the freedom  of  contract  must  as  far  as  possible  be  left unimpaired.   Gradually,  as would  appear  from  Friedman’s statement in Law in a Changing Society (1959), ch. 4 freedom of        contract    the  freedom to  contract  on  whatever terms might seem         most     advantageous    to     the individuals-become a cornerstone of          nineteenth centuary laissez faire economics. Champions of individualist social  philosophy  who protested against legal  and  social restrictions  in order to advance the policies of  expansion and  exploitation  pursued by I industry  and  commerce  won their  battle  and  "freedom  of contract  was  one  of  the trophies of victory" (see Anson’s       Law   of   Contract, 23rd Ed. page 3). The freedom and sanctity of     contract thus became "the necessary instruments of laissez faire, and it  was the function of the courts to foster the one and  to vindicate           the  other. Where a man sowed, there  he should be able to reap".              is     Cheshire    and Fifoot’s Law of Contract, 8th Ed. page 19). it    is significant  that the maxim itself  laissez faire,  laissez passer    which  derived from eightenth century  France  has been commonly       attributed   to  Gournay,  at  first   a

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merchant  and later one of the intendants of commerce and  a friend of Turgot. Turgot attributes the phrase laissez  nous faire to another merchant, Legendre, who          is said to have  used it in impressing upon Colbert the desire  on  the part of the mercantile community for non-interference by the         state . When Colbert asked a meeting of French businessmen what         the state  might do to assist them, Legendre pointedly  replied, "laissez-nous  faire"    The  underlying  assumption-of  the laissez faire       doctrine turns on an optimistic view  of the  nature  of  the universe and on  the  conception  of  a "natural order’ or system of economic        harmonies which will prevail and work out to                  mankind’s           advantag e in the absence of positive regulation. (see International          Encyclo paedia of the Social Sciences, 1968 Ed. edited by David L.         Sills, Vol.  8, page 546 and Encyclopaedia of the  Social  Sciences edited by Edwin R. A. Seligman, Vol.  IX, pages 15-16). 463 Towards  the close of the nineteenth century it came  to  be realised that private enterprises, in order to be  socially just, had to ensure economic equality.               "The   very  freedom  on  contract  with   its               corollary,   the  freedom  to  complete,   was               merging  into the freedom to combine;  and  in               the  last resort competition  and  combination               were, incompatible.  Individualism was  yield-               ing  to monopoly, where strange  things  might               well  be  done in the name  of  liberty.   The               twentieth  century  has seen  its  progressive               erosion on the one hand by opposed theory  and               on  the  other by conflicting  practice.   The               background  of the law, social, political  and               economic, has changed Laissez fare as an ideal               has been supplanted by, ’social security’; and               social  security suggests status. rather  than               contract.   The State may thus compel  persons               to  make contracts, as where, by a  series  of               Road  Traffic  Acts  from  1930  to  1960,   a               motorist  must  insure  against  third   party               risks;  it  may, as by  the  Rent  Restriction               Acts,  prevent  one party to a  contract  from               enforcing  his  right  under  it;  or  it  may               empower a tribunal either to reduce or to  in-               crease  the  rent payable under a  lease.   In               many   instances  a  statute  prescribes   the               contents  of the contract.   The  Moneylenders               Act 1927 dictates the terms of any loan caught               by  its provisions; the Carriage of  Goods  by               Sea  Act 1924, contains six pages of rules  to               be  incorporated  in every contract  for  ’the               carriage  of  goods by sea from  any  port  in               Great Britain or Northern Ireland to any other               port;’  the  Hire-Purchase Act  1965,  inserts               into hire-purchase contracts a number of terms               which the parties are forbidden to  exclude;               successive Landlord and Tenant Acts from  1927               to 1954 contain provisions expressed to  apply               ,notwithstanding   any   agreement   to    the               contrary’.  The erosion of contract by statute               continues briskly; and there are no  immediate               signs  of a reaction." (Cheshire and  Fifoot’s                             Law of Contract, 8th Ed. pages 21-22).               In the words of Anson,

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             "Freedom  of contract is a  reasonable  social               ideal  only  to the extent  that  equality  of               bargaining  power between contracting  parties               can  be assumed, and no injury is done to  the               economic interests of the community at  large.               In the more complicated social and  industrial               conditions  of a collectivist society  it  has               ceased to have much idealistic attraction.  It               is  now realised that economic equality  Often               does  not  exist in any real sense,  and  that               individual  interests  have  to  be  made   to               subserve those of the cornmunity.  Hence there               has  been  a fundamental change  both  in  our               social  outlook  and  in  the  policy  of  the               legislature  towards  contract,  and  the  law               today  interferes at numerous points with  the               freedom  of the parties to make what  contract               they like . ... ... ...               464               "  This intervention is  especially  necessary               today  when  most contracts  entered  into  by               ordinary   people  are  not  the   result   of               individual  negotiation.  It is  not  possible               for  a private person to settle the  terms  of               his agreement with the British Railways  Board               or with the local electricity authority.   The               ’standard form contract is the rule.  He  must               either  accept the terms of this  contract  in               toto,  or go without.  Since, however,  it  is               not  feasible  to  deprive  oneself  of   such               necessary   services,   the   individual    is               compelled  to accept on those terms.  In  view               of  this fact, it is quite clear that  freedom               of  contract  is  now  largely  an  illusion."               (Anson’s Law of Contract, 23rd Ed. pages 3-4). Anson  is perhaps over-optimistic in saying that  there  has been  a  fundamental  change in social outlook  and  in  the legislative policy towards contract.  Anyway, with the  high ideals  of the Preamble and the directive principles of  our Constitution  there has to be such a fundamental change,  in judicial  outlook.   Instances given in Cheshire  and  Anson have  their  parallels  in India  too,  wherein  freedom  of contract has largely become an illusion.  The policy of  our Parliament in regard to contracts, including those  involved in  sale of goods, has still to reflect recognition  of  the necessity  for a change, which could be done by  a  suitable modification of the definition of ’sale of goods. It  all began with the reliance in Gannon Dunkerley  (supra) (pages  396-398) on the statement in the 8th Edition  (1950) of  Benjamin on Sale. that to constitute a valid tale  there must  be  a concurrence of four elements, one  of  which  is "mutual  assent".  That statement is a reproduction of  what the  celebrated author had said in the 2nd and last  edition prepared  by himself in 1873.  The majority judgment in  New India   Sugar  Mills  (supra)  (page  467)   also   derives, sustenance from the same passage in Benjamin’s 8th  edition. But  as  observed  by  Hidayatullah  J.  in  his  dissenting judgment in that case, consent may be express or implied and offer and acceptance need not be in an elementary form (page 510).  It is interesting that the General Editor of the 1974 edition  of ’Benjarnin’s Sale of Goods" says in the  preface that  the  editors decided to produce an entirely  new  work partly  because commercial institutions, modes of  transport and  of payment, forms of contract, types, of goods,  market areas  and marketing methods, and the extent of  legislative

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and  governmental regulation and intervention,  had  changed considerably  since 1868, when the 1st edition of  the  book was published.  The formulations in Benjamin’s 2nd  edition, relating to the conditions of a valid ’sale’ of goods, which are  reproduced in the 8th edition evidently  require  modi- fication  in  the  light of regulatory  measures  of  social control.  Hidayatullah J., in his minority judgment referred to above struck the new path; and Bachawat J. Who spoke  for the  Court  in Andhra Sugars (supra) went a  step  ahead  by declaring  that  "the contract is a contract  of  sales  and purchase  of cane, though the buyer is obliged to  give  his assent  under  compulsion of a statute".  (page  716).   The concept  of freedom of contract, as observed by Hedge J.  in Indian Steel and 4 6 5   Wire  Products,  (supra) has undergone  a  great  deal  of change even      in those countries where it was  considered as  one of the basic economic requirements of  a  democratic life. (page 490).  Thus, in Ridge Nominees Ltd., (supra) the Court of Appeal, while rejecting the argument that there was no  sale because the essential element of mutual assent  was lacking,  held  that  the dissent  of  the  shareholder  was overridden  by an assent which the statute imposed  on  him, fictional  though  it  may be, that a sale  may  not  always require  the  consensual element mentioned  in  Benjamin  on Sale, 8th Edition, page 2, and that there may in truth be  a compulsory  sale  of  property  with  which  the  owner   is compelled to part for a price against his will. (pages  405- 406).   Decisions in case of ’compulsory acquisition,  where such  acquisition  is patent as in Kirkness  (supra)  or  is inferred  as in Chitter Mal (supra) fall in a  separate  and distinct  class.  The observations of Lord Reid in  Kirkness (supra)  that  ’sale’  is  a  women  juris  the  name  of  a particular  consensual contract-have therefore to be  under- stood  in the context in which they were made, namely,  that compulsory  acquisition  cannot amount to  sale.  In  Gannon Dunkerley,  (supra)  Venkatarama  Aiyar  J.  was  influenced largely  by these observations (see pages 411, 412 and  425) and  by the definition of ’sale’ in Benjamin’s 8th  edition’ Gannon  Dunkerley _(supra) involved an altogether  different point and is not an authority for the proposition that there cannot  at all be a contract of sale, if the parties  to  a transaction  are  obliged  to comply with  the  terms  of  a statute.   Since we are putting in a nutshell what  we  have discussed  earlier,  we  would  like  to  reiterate  in  the interest of uniformity and certainty of law that, with great deference  the  majority decision in New India  Sugar  Mills (supra)  is not good law.  The true legal position is as  is stated  in the minority judgment in that case and in  Indian Steel  and  Wire Products, (supra)  Andhra  Sugars,  (supra) Salar  Jung  Sugar  Mills (supra) and Oil  and  Natural  Gas Commission.   (supra).   To  the  extent  to  which   Cement Distributors  Pvt.  Ltd. (supra) is inconsistent with  these judgments, it is also, with respect, not good law. The   conclusion  which  therefore  emerges  is   that   the transactions  between the appellant, M/s.   Vishnu  Agencies (Pvt.) Ltd., and the allottees are sales within the  meaning of section 2(g) of the Bengal Finance (Sales Tax) Act, 1941. For  the same reasons, transactions between the growers  and procuring  agents as also those between the rice-millers  on one  hand and the wholesalers or retailers on the other  are sales  within  the  meaning of section 2(n)  of  the  Andhra Pradesh  General  Sales  Tax Act,  1957.   The  turnover  is accordingly’exigible to sale tax or purchase tax as the case may be.

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The  appeals are accordingly dismissed with costs, with  one hearing fee. P.B.R. Appeals dismissed. 466