Case: Chhitter Mal Narain Das Vs. Commissioner Of Sales Tax

1. The appellants who are dealers in food grains supplied to the Regional Food Controller diverse quantities of wheat in compliance with the provisions of the U. P. Wheat Procurement (Levy) Order, 1959. The Sales Tax Officer levied tax under the U. P. Sales Tax Act on the aggregate of the price of wheat by the appellants rejecting the contention raised by the appellants that the wheat supplied was not sold by them to the Controller. In appeal the Assistant Commissioner (Judicial) Sales Tax held that the turnover resulting from supplies of wheel was not taxable since there was no "sale" within the meaning of the U. P. Sales Tax Act, 1948. The order was confirmed by the Additional Judge (Revisions) Sales Tax.      2. The Additional Judge (Revisions) Sales Tax referred the following questions to the High Court of Allahabad for opinion:"(1) Whether the sales made to the Regional Food Controller under the U. P. Wheat Procurement (Levy) Order, 1959, are sales within the meaning of "sale" under S. 2 (h) of the U. P. Sales Tax Act?      (2) Whether in the circumstances of the case, the assessee are liable to pay sales tax on the sales made to the Regional Food Controller under the provisions of the U. P. Wheat Procurement (Levy) Order, 1959?"3. The questions raised were defective in form. The word "sales" when it first occurs in Question No. (1) should be "supplies". The expression "sales made" in Question No. (2) should be "on the price for wheat supplied". We modify the questions accordingly.      4. The High Court of Allahabad, following their earlier judgment in Commr. of Sales Tax, U. P. Lucknow v. Ram Bilas Ram Gopal, 1969 All LJ 424 = (AIR 1970 All 518  ) answered the two questions in the affirmative. The appellants have appealed to this Court with special leave.

Court's reasoning:
14. On the date of the commencement of the U. P. Wheat Procurement (Levy) Order, upon the licensed dealer was imposed a liability to delivery half the quantity of wheat on hand, and he had also to supply to the State Government 50 p.c. of the quantity of wheat procured or purchased by him every day beginning with the date of commencement of the Order. If he failed to carry out the obligation he was liable to be penalized. To ensure that he carried out his obligation his premises were liable to be searched and his property sequestered. The order ignored the volition of the dealer15. We are unable to hold that there was any contract between the assessee and the State pursuant to which the goods were sold within the meaning of the U. P. Sales Tax Act.