Compulsory transfer of cement under a control order was held not to be a sale for sales tax purposes.

Compulsory delivery of cement under a control order was not a taxable sale because the producer had no real freedom to choose the buyer or negotiate terms, and the Corporation was equally bound to accept the goods. The arrangement was a compulsory transfer of title at a controlled price, not a consensual agreement supported by consideration. The use of the word "sale" in the Order did not change the transaction's legal character. On that basis, cement supplied under the Control Order fell outside the scope of sales tax under the Orissa Sales Tax Act.

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Issues: Whether the compulsory delivery of cement to the State Trading Corporation under the Cement Control Order amounted to a sale taxable under the Orissa Sales Tax Act.

Analysis: The Cement Control Order required every producer to deliver the entire stock and future production of cement to the Corporation at the price fixed in the schedule, leaving no real freedom to choose the purchaser or negotiate terms. The essential element of a sale is an agreement between parties supported by consideration, with transfer of property pursuant to such agreement. Where the producer is bound by law to transfer the goods and the Corporation is equally bound to accept them, the transaction is a compulsory transfer of title and not a consensual sale. The controlled-price arrangement and the use of the word "sale" in the Order did not alter the true legal character of the transaction.

Conclusion: The transaction was not a sale within the meaning of the Orissa Sales Tax Act and no sales tax was leviable on the cement supplied to the Corporation.

Final Conclusion: The reference was answered in favour of the assessee by holding that the cement transactions under the Control Order did not attract sales tax.

Ratio Decidendi: A compulsory transfer of goods made without free consent, negotiation, or an agreement to sell does not constitute a sale for the purposes of sales tax .

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