Forward contracts without delivery cannot be deemed sales for tax purposes where the constitutional taxing entry is confined to sales.

Forward contracts without actual delivery were treated as agreements to sell, not completed sales, because property in goods had not passed. A deeming provision that attempted to treat such executory contracts as sales for tax purposes enlarged the statutory meaning of sale beyond the constitutional taxing entry and was therefore beyond legislative competence. On the facts, the impugned assessments on those contracts could not stand. The Court also held that writ jurisdiction was properly exercised despite statutory appeal and revision remedies, because the challenge raised a substantial constitutional issue and continued assessment proceedings would cause unnecessary multiplicity.

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Issues: (i) Whether forward contracts without actual delivery could be treated as sales liable to tax under section 2(h), Explanation III of the U.P. Sales Tax Act, 1948, and whether that provision was within legislative competence. (ii) Whether the High Court should exercise writ jurisdiction despite the availability of an appellate and revisional remedy under the Act.

Issue (i): Whether forward contracts without actual delivery could be treated as sales liable to tax under section 2(h), Explanation III of the U.P. Sales Tax Act, 1948, and whether that provision was within legislative competence.

Analysis: The statutory and constitutional scheme drew a distinction between a sale and an agreement to sell. Under the sales law, a sale involves transfer of property in goods, whereas a forward contract without delivery remains an executory arrangement unless property actually passes. Explanation III attempted to deem such contracts complete on the agreed date even where no delivery had taken place. That deeming provision enlarged the meaning of sale beyond what the taxing entry in the Government of India Act, 1935 contemplated. On the facts accepted in the case, no delivery had occurred in the contracts in question.

Conclusion: Explanation III was beyond legislative competence and the impugned assessments on such forward contracts could not stand.

Issue (ii): Whether the High Court should exercise writ jurisdiction despite the availability of an appellate and revisional remedy under the Act.

Analysis: Although the Act contained a machinery of appeal, revision, and reference, the Court treated that remedy as not sufficiently effective for the relief sought, particularly because the challenge raised a substantial constitutional question and proceedings relating to the same transactions were continuing. The Court considered that immediate intervention would avoid multiplicity of proceedings and unnecessary continuation of assessment action on a provision treated as invalid.

Conclusion: The writ jurisdiction was properly exercised and the challenge was entertained.

Final Conclusion: The assessments based on forward contracts without actual delivery were quashed, and further assessment proceedings on those transactions were prohibited.

Ratio Decidendi: A forward contract without actual delivery is only an agreement to sell and cannot be legislatively converted into a sale for tax purposes where the constitutional taxing entry is confined to sales of goods.

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