Case: Dhampur Sugar Mills Ltd Vs. Commissioner Of Trade Tax, U.P

may be achieved by scientific and technological advances in future. No one has argued that at present electromagnetic waves are abstractable or are capable of delivery. It would, therefore, appear that an electromagnetic wave (or radio frequency as contended by one of the counsel for the respondents), does not fulfil the parameters applied by the Supreme Court in Tata Consultancy for determining whether they are goods, right to use of which would be a sale for the purpose of Article 366 (29-A)(d). 26. The subject matter involved in the said decision of Bharat Sanchar Nigam Ltd. & Anr. (supra) primarily was held not to be within the purview of definition of goods as the contract between the telecom service provider and the subscriber was merely to receive, transmit and deliver messages of the subscriber through a complex system of fibre optics, satellite and cables. 27. This Court, it may be noticed, in a recent Constitution Bench judgment in M/s. Sunrise Associates vs. Govt. of NCT of Delhi & Ors. (pronounced on 28th April, 2006), has opined that the sale of lottery ticket or a railway ticket may not be a sale of goods. 28. In Tata Consultancy Services vs. State of A.P. [(2005) 1 SCC 308] , a CD containing software was held to be goods within the meaning of the A.P. General Sales Tax Act, 1957. 29. Devi Das Gopal Krishnan & Ors. vs. State of Punjab & Anr. [(1967) 3 SCR 557] and CIT, A.P. vs. Motor & General Stores (P) Ltd. [(1967) 3 SCR 876 : AIR 1968 SC 200 ] were relied upon by Mr. Dave for the proposition that the expression valuable consideration takes colour from the preceding expression cash or deferred payment. The said decision is not an authority for the proposition that cash or deferred payment cannot be by way of adjustment. If the parties intended to adjust their own dues, having regard to different transactions in terms whereof both the parties to the said transaction were required to pay in cash or by way of deferred payment, the same would not militate against the interpretation of the expression valuable consideration, although, the term valuable consideration in the changed context (in view of the Constitution amendment) may be viewed differently. But, having regard to the fact situation obtaining in this case, we may not have to go into the said question. 30. Molasses manufactured in the sugar mills, was the property of the appellant and it answers the description of goods. In view of the terms and conditions of the Deed of Licence, the appellant was the owner thereof. The Company was to use the molasses for the purpose of manufacture of sugar in its factory. Transfer of such molasses by the appellant to the Company, would not be a transfer by way of transfer of stock. It is transfer of the ownership in goods wherefor the Company was to pay the price to the appellant. The transaction, therefore, beyond any doubt, answers the description of sale within the meaning of the provisions of the U.P. Trade Tax Act, 1948. For each supply of molasses the appellant would be entitled to the price thereof. The amount towards the price of the goods could be paid either by way of cash or deferred payment. Instead of cash, the price of molasses was to be adjusted from the amount payable by the appellant to the owner by way of consideration for use of the mill. Such a mutual arrangement is merely one for the purpose of adjusting the accounts. The transactions between the parties are in effect and substance involve passing of monetary consideration. It would, thus, come within the purview of the expression any other valuable consideration, which expression would take colour from deferred payment being a monetary payment, but does not loose its character of some other monetary payment by way of mutual arrangement. The parties are not bartering or exchanging any goods so that the element of monetary consideration is absent. Money is a legal tender. Cash is, however, narrower than money. The words deferred payment and other valuable consideration enlarge the ambit of consideration beyond cash only. Entry 54 of List II of the Seventh Schedule to the Constitution of India provides for sale of goods. Once a sale of goods takes place, the State becomes entitled to impose tax on sale or purchase of goods. For construction of the words sale of goods, now the Court is not necessarily required to fall upon the definition of sale of goods, as contained in the Sale of Goods Act, 1930. It has to be governed by its enlarged definition under Clause (29-A) to Article 366 of the Constitution of India. Once an essential component of sale takes place, Sales tax would, indisputably, be payable. By reason of such an arrangement by the parties, the State is not creating a new taxable event nor imposing a new tax which was unknown in law. 31. In fact, the transaction entered into by the parties even does not provides for any camouflage to evade tax. They are clear and unambiguous. 32. We, therefore, are of the opinion that the High Court cannot be said to have committed any error in passing the impugned judgment. 33. In regard to the submissions of the learned counsel for the parties that as no appeal was preferred from the order dated 30.7.1991, wherein the Company was the appellant, the respondent must be held to have accepted the order, is not acceptable to us, as, admittedly, the appellant itself is liable to pay the tax. The contentions of the appellant that having regard to the transaction entered into by and between the parties and no sale having taken place, they are not liable to pay any tax, will not be correct. Non-filing of the appeal against the said order dated 30.7.1991, would not take away the effect of order of assessment passed as against the appellant by the Assessing Authority.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Molasses manufactured in the sugar mills, was the property of the appellant and it answers the description of goods. In view of the terms and conditions of the Deed of Licence, the appellant was the owner thereof. The Company was to use the molasses for the purpose of manufacture of sugar in its factory. Transfer of such molasses by the appellant to the Company, would not be a transfer by way of transfer of stock. It is transfer of the ownership in goods wherefor the Company was to pay the price to the appellant. The transaction, therefore, beyond any doubt, answers the description of sale within the meaning of the provisions of the U.P. Trade Tax Act, 1948. For each supply of molasses the appellant would be entitled to the price thereof. The amount towards the price of the goods could be paid either by way of cash or deferred payment. Instead of cash, the price of molasses was to be adjusted from the amount payable by the appellant to the owner by way of consideration for use of the mill. Such a mutual arrangement is merely one for the purpose of adjusting the accounts. The transactions between the parties are in effect and substance involve passing of monetary consideration. It would, thus, come within the purview of the expression any other valuable consideration, which expression would take colour from deferred payment being a monetary payment, but does not loose its character of some other monetary payment by way of mutual arrangement. The parties are not bartering or exchanging any goods so that the element of monetary consideration is absent. Money is a legal tender. Cash is, however, narrower than money. The words deferred payment and other valuable consideration enlarge the ambit of consideration beyond cash only. Entry 54 of List II of the Seventh Schedule to the Constitution of India provides for sale of goods. Once a sale of goods takes place, the State becomes entitled to impose tax on sale or purchase of goods. For construction of the words sale of goods, now the Court is not necessarily required to fall upon the definition of sale of goods, as contained in the Sale of Goods Act, 1930. It has to be governed by its enlarged definition under Clause (29-A) to Article 366 of the Constitution of India. Once an essential component of sale takes place, Sales tax would, indisputably, be payable. By reason of such an arrangement by the parties, the State is not creating a new taxable event nor imposing a new tax which was unknown in lawIn fact, the transaction entered into by the parties even does not provides for any camouflage to evade tax. They are clear and unambiguousWe, therefore, are of the opinion that the High Court cannot be said to have committed any error in passing the impugned judgmentIn regard to the submissions of the learned counsel for the parties that as no appeal was preferred from the order dated 30.7.1991, wherein the Company was the appellant, the respondent must be held to have accepted the order, is not acceptable to us, as, admittedly, the appellant itself is liable to pay the tax. The contentions of the appellant that having regard to the transaction entered into by and between the parties and no sale having taken place, they are not liable to pay any tax, will not be correct. Non-filing of the appeal against the said order dated 30.7.1991, would not take away the effect of order of assessment passed as against the appellant by the Assessing Authority.