Compulsory statutory wheat supply without mutual assent is not a sale, so sales tax cannot be levied.

Compulsory wheat supplies by licensed dealers under the U.P. Wheat Procurement (Levy) Order, 1959 were not sales within section 2(h) of the U.P. Sales Tax Act, 1948 because the definition of sale had to be read with the Sale of Goods Act, which requires a contract and mutual assent. The Levy Order imposed a statutory obligation to deliver fixed quantities at controlled prices, enforced by search, seizure and penalties, so the source of the transaction was the order itself, not consensual bargaining. As mutual assent was absent and the transaction was a compulsory acquisition rather than a contract of sale, sales tax could not be levied.

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Issues: Whether compulsory supplies of wheat made by licensed dealers under the U.P. Wheat Procurement (Levy) Order, 1959 constituted sales within section 2(h) of the U.P. Sales Tax Act, 1948 and were therefore liable to sales tax.

Analysis: The definition of sale under the sales tax law had to be read in the sense of a sale under the Sale of Goods Act, which requires a contract and mutual assent between buyer and seller. Clause 3 of the Levy Order imposed an obligation on licensed dealers to deliver specified quantities of wheat to the State Government at controlled prices, backed by search and seizure powers and penal consequences. The source of the obligation to deliver and pay was the statutory order itself, not any consensual arrangement. The transaction therefore lacked the voluntary element essential to a contract of sale and was in substance a compulsory statutory acquisition of wheat, not a sale. Earlier decisions were distinguished on the ground that they involved transactions where mutual assent or contractual freedom was not wholly excluded.

Conclusion: The supplies made under the Levy Order were not sales within the meaning of section 2(h) of the U.P. Sales Tax Act, 1948, and the levy of sales tax was not sustainable.

Ratio Decidendi: A compulsory supply imposed by statute, where the essential element of mutual assent is excluded and no contract of sale arises, is not a sale for sales tax purposes.

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