# ' ' VISHNU AGENCIES (PVT.) LTD. ETC v. COMMERCIAL TAX OFFICER & OR'S. ETC - **Citation:** [1978] 2 S.C.R. 433 - **Court:** Supreme Court of India - **Decided:** 1977-12-16 - **Case number:** Civil Appeal No. 724 of 1976 - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/vishnu-agencies-pvt-ltd-etc-v-commercial-tax-officer-or-s-etc-7394 - **Pages:** 33 ## Headnote - ' ' VISHNU AGENCIES (PVT.) LTD. ETC. v. COMMERCIAL TAX OFFICER & OR'S. ETC. December 16, 1977 433 [M. H. BEG, C.J., Y. V. CHANDRACHUD, P. N. BHAGWATI, V. R. KRISHNA IYER, N. L. UNTWALIA, S. MURTAZA FAZAL ALI AND P. S. KAILASAM, JJ] 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 Procuren1ent (Levy) Order-If exigible co. sales-tax. A B c 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 hy 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 D order has been issued shall refuse to sell cement "at a price not exceeding the notified price". ;\ny 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 ~o-:.. 2_ • l . - ' I l • • VISHNU AGENCIES V. C. T. 0. 435 rn the goods. ''Vnless all thes.e elements are present, there can be no sale." A The effect uf the construction which the Court put on the words of Entry 48 1n 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, 4490-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 B parties which covers not only their acts but omissions as "\\ell. 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 or formula. [450D-E] 4. In the instant case, it is not correct to say that the transactions bet\veen the dealer and the consumer \Vere not consensual. The limitations imposed by C 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 deen1ed 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 D 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 t\\-'O parties together, one of whom is willing to supply the essential commodity and the other lo E receive it. When the allottee presents his permit to the dealer, he signifies his willingnes':; to obtain the commodity from the dealer on the terms stated in the permit. Ja:is conduct reflects his consent. And when, upon the presentation of the permit the dealer acts upon it, be impliedly agrees to supply the commodity to the alle>ttee on the terms by ,,_,,hich 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 transac· tion, they agree as between themselves to enter into the tranaction on statutory F 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 noti·· fied price leaving it open to the individuals to charge and pay a price which is G 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 weie;hment of p:ocxls 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. f451-AE1 6. In New India Sugar Mills Ltd. the question v.ras whether sugar supplied H by the mills on the orders of the Sugar Controller was exigible to tax .. Th.e majority held that a contract of sale between the buyer and the seller, which ts a pre-requisite to .a sale, being absent the transaction was not exigible to sales A B c D E F G H SUPREME COURT REPORTS [1978) 2 S.C.R. ta.i. But the prin~iple on which the -Proble~-shOuld. b~ ·a~proached was set out in the dissenting judgment which said· that ~onsent may :~e express or i_mplied and that it.could not be said that unless offer and acceptance were present in an elementary form, there c.ould be no taxable sale. Taking the· view that on obtaming the necessary permit the seller on the one band and the buyer on the other agreed to sell and ~urchase 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 partie'l 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 ~xpress;. it could l>e implied. __ [453B-G; 454A-C] _ 7. In coming to its Conclusion thet 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 gocxls and secondly that property in the building materials does not pass in the- materials regarded as .. gocxls"'_ but it passes as part of immovable Property. The majority in New India Sugar Mills was in error in saying that the ratio decidendi of Gannon Dunkerley must , govern that case because the questions involved in both cases were altogether different. 'In New India Sugar Mills the commodity with which the Court was concerned was sugar and was delivered as sugar just as in the instant case thecommodity is cement, which was delivered as cement. Secondly, in t.iannon· Dunkerley tax was demanded after the commodity hacl chang"'ed hands, that is,. . after property in it bad passed. The question in this case which was the very question involved _in New India Sugar lvlills namely 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 t11ere must be a concurrence of four elements, one of. which is .. mutual assent''. The . majority judgment in New India Sugar !.fills also derived sustenance from the same passa~e in Benjamin's 8th edn. Gannon Dunkerley _involved an altogether different pomt and is not an authority for· the proposiuon 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" bas largely become an illusion. The policy of the l'arliament in regard to the contracts ·including those involved in sale of goods, Jlas still to reflect i;ecognition of the necessity for a change, which could be don~ by a suitable modification of the definition of -sale of goods. [464C-D] 1fajority decision in New India Sugar Mills v. Commissioner of Sale.J Tax,. Bilzar, AIR 1963 SC 1207; [1963] Supp. 2 SC)l 459 overruled. - - ~Iinority opinion in India Steel &. Wire Products v. Stat"e of Madras [19681 1 SCR 479, A.11dhra Sugar Ltd. v. State of Andhra Pradesh, (1968] 1 SCR 705, Safar Jung Su~ar 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 Distribuiors P"·t. Ltd. (1973] 2 SCR 1019 partly approved. Chhitter ltfal Narain Das. v. Commissioner of Sales Tax (1971] 1 SCR 671 a-plained. _ . " · · _ State of Madras v. Gannon Dunkerley· [1959] SCR 379 -explained and . distinguished. . . . , Kirkn~ss v. John Hudson and Co. Ltd. (1955] A.C. 696 held inapplicable. Ridge "fi.'ominess Ltd. v. Inland Revenue Commissioners [1962] 01. 376 referred to. Commissioner, Sale.J'Tax U.P. v. Ram Bilas Ram Gopal AIR 1970 Allahabad 318 referred to. • • . --).. , VISHNU AGENCIES V. c: T. O. (Beg, C. J.) 43 7 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 l to 4 in C.A. 724/76. B. Kanta Rao for the Appellants in C.As 2488-97 of 1972. A B c Soli J. Sorabjee, Addi. Sol. Genl. (In 2488-97) 72, P. Parameshwara Rao A. K. Ganguli··and T. V. S. Narasimhachari for the ResponD dents in CAs. Nos. 2488-97 /72. A. Subba Rao for the Intervener. The following Judgment were delivered BEG, C.L·-1 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 genera]. principles and accumulation of case law on the subfect 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 concurrence' of the following elements, namely :- (1) parties competent to contract; (2) mutual assent; (3) a lhing, 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 statutory provisions is restricted and controlled by these orders and directions. If, what is called a "sale" E G H A B c D E F H 438 SUPREME COURT REPORTS [1978] 2 S.C.R. is, in substance, mere obedience to a specific order, in which the socalled "price" is only a compensation for the compulsory passing of property in goods to which an order relates, at an amonnt 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, BiharC). 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 Bi/as Ram Gopal,(') 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 Bi/as 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 type of case mentioned above the substance of the concept of a sale, as found under our Law, itself disappears because the transaction is no\hing 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 rtansaction. Such a law, whi.ch 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('). Andhra Sugar Ltd. v. State of Andhra Pradesh(') 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 •59. (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.LR. 1969 S.C,. 343. .I .. VISHNU AGENCIES V. c. T. 0. (Beg, C. J.) 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 type of cases, the legal tie (vinculum juris) which bim~oi the parties to perfonn their obligations remains contractual. The regulatory Jaw merely adds other obligations, such as the one to enter into such a tie between the parties indicated there. Although the regulatory Jaw 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 contract is : "consensus adem". The parties to the contract mu9t 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 Conrts 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 Bi/as 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 Jaws of supply and demand;which an apotheosis of the laissez-faire doctrine demanded, led really to a shrinking of the area of freedom in the economic sphere, producing gross inequalities in bargaining powers and recnrrent 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 sacr-ificed 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 spl1ere." _(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 HidayatuUah 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 A c D E F G H A B c D E F G H 440 SUPREME COURT REPORTS [1978] 2 S.C.R. goods there could. be au implied consent so as to constitute a sale. I find i', 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 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 gerius. 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' s 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 deci?ed on similar grounds. The difficulty arises frol!l the fact that, a1!hough 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 bold that the majority opinion expressed by Shah J., in New India Sugar Mills case (supra), is erroneous. I think the case is distinguishable. This, however, makes no difference to the common conclusion reached by us on the facts of the cases before us. CHANDRAC!IUD, J. These appeals have been placed for bearing 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 sal.,' 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 tlje 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 licenc~. 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. 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 Mis Vishnu Agencies (Pvt.) Ltd., is the appellant. It carries on business as an agent and distributor of cement in the ! _r VISHNU AGENCIES v. c. T. 0. (Chandrachwl. J.) 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 of produ.ctiorr, 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 notifkd 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 tfie dealer, he is bounu 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 Mis. Marble & Cement products Co. Pvt. Ltd., 2, Brabourne Road, Calcutta-I to be supplied by Mis. 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 Tonnage Country Cement at Rs. 144.58 Ton , Cwt. per M.T. exclusive of S. T. 10 M/T (Ten MIT only)" A B c D E F G H A B c D E F G H 442 SUPREME COURT REPORTS [1978] 2 S.C.R. 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. Com111issioner 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 respondent 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 o ragreement between it and the allottees, the transactions were not 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 appea1 hy 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. • y VISHNU AGENCIES v. C.T.O. (Chandrachud, J.) 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 commerce 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 jlrovide for regulating or controlling the prices at which cement may be purchas- ~ 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 kepr for sale; and for requiring any person holding stock of cement to sell the whole or specified part of the stock at such prices A B c 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 witil impriD sonment 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 coutranvention, may direct that any property in respect ot which the Conrt is satisfied that the order has been contravened shall be forfeited to the Government. In exercise of the powers conferred by section 3 (1) read with clauses (b) to (h) of section 3(2) of the Act, an Order which may conveniently be called the Cement Control Order was promrilgated by E the Governer 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 F Consumer Goods, West Bengal, or any officer authorised by him in writing in this behalf. By paragraph 2, no person shall disPoSe of G 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 a~ee 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 Benaal or the authorities specified in the paragraph. Bv p;ragraph 4, b n~ 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 arid to whom a written order has been issued under paragraph 2 shall refuse to sell the same, "at a price not exceed"no the notified price'', and the seller shall deliver the cement to the buyer H "within a reasonable time after the payment of price". By para!!raph 8A, every stockist or every person employed by him shall, if so re3-1146 SCT/77 444 SUPREME COURT REPORTS (1978] 2 S.C.R. A quested by the person acquiring ceme11t 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. B c D E F G H We are not concerned with the amendments made by the Government of West Benga1 to the Cement Control Order on December 30, 1965 by which, inter alia paragraphs 2. 3, 4, 8 and SA 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 Saks 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 agents 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 tum 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.