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VISHNU AGENCIES (P) LTD. V. COMMERCIAL TAX OFFICER (1978) 1 SCC 520 : AIR 1978 SC 449

VISHNU AGENCIES (P) LTD. V. COMMERCIAL TAX OFFICER

 (1978) 1 SCC 520 : AIR 1978 SC 449

 

FACTS

  • The appellant, M/s Vishnu Agencies (Pvt.) Ltd., was a licensed stockist of cement in West Bengal, operating under the West Bengal Cement Control Act, 1948.
  • The appellant supplied cement to allottees based on permits issued by authorities, complying with the conditions set forth in the Cement Control Order, 1948.
  • Various orders under the Essential Commodities Act, 1955, were issued to regulate the supply and distribution of essential commodities like cement, cotton, coal, etc.
  • These orders required individuals needing such commodities to obtain permits, and those supplying them to hold dealer's licenses.
  • The appellant contended that these transactions did not constitute sales under the Sales Tax Act due to the absence of mutual consent and contractual agreement.

ISSUE

  • The primary issue was whether transactions between the appellant and allottees constituted sales for the purpose of sales tax liability.

JUDGMENT

  • The court dismissed the appeals, holding that the transactions between the appellant and allottees constituted sales within the meaning of the Sales Tax Acts.
  • The court also concluded that transactions between growers and procuring agents, as well as between rice-millers and wholesalers or retailers, were also subject to sales tax or purchase tax.

LEGAL ANALYSIS

  • The court analysed the provisions of the West Bengal Cement Control Act, 1948, and the Cement Control Order, 1948, which regulated the supply and distribution of cement.
  • It emphasised that although the transactions were conducted under statutory regulations, they still involved consensual agreements between the parties.
  • The court highlighted that both parties voluntarily engaged in the transactions, although under the statutory framework.
  • It observed that while the terms of the transactions were largely predetermined by law, there was still room for negotiation and agreement between the parties.
  • The court rejected the contention that transactions could not be considered sales due to the absence of mutual consent, emphasising that consent could be implied from the parties' conduct.
  • Additionally, the court rejected the argument that the definition of "sale" in the Sales Tax Acts must align with the Sale of Goods Act, 1930, holding that the legislative intent was to define "sale" broadly for taxation purposes.
  • The court distinguished previous decisions that had relied on a stricter interpretation of the term "sale" and reaffirmed the principle that transactions conducted under statutory regulations could still constitute sales for taxation purposes.

COMMENTARIES RATIO

  • In Vishnu Agencies v Commercial Tax Officer , a question arose whether cement supplied under the orders of the cement control act of west bengal was a sale, and the court held that it was no less a contract because it lacked violation, or was made under compulsion. So long as mutual assent was not totally absent, it was a contract