Statutory compulsion does not negate a sale where agreement, transfer of property and price remain intact under regulated procurement.

Supplies of wheat by licensed dealers to the Regional Food Controller under the U.P. Wheat Procurement (Levy) Order, 1959 were treated as sales for sales tax purposes because the statutory compulsion did not remove the essential elements of sale. The Levy Order regulated the terms of contracting and imposed a duty to sell specified quantities at controlled prices, but it still contemplated transfer by a dealer, with payment, delivery and passing of property remaining part of the transaction. A transaction compelled by statute remains a sale in law if agreement, transfer of property and price are preserved, and the statute merely regulates the contracting field without destroying mutual assent or free consent.

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Issues: Whether supplies of wheat made by a licensed dealer to the Regional Food Controller under clause 3 of the U.P. Wheat Procurement (Levy) Order, 1959 constituted sales within the meaning of section 2(h) of the U.P. Sales Tax Act and were therefore liable to sales tax.

Analysis: The liability turned on whether the transaction retained the essential elements of a sale as understood in the law of contract and the Sale of Goods Act. The Levy Order, made under section 3(2) of the Essential Commodities Act, 1955, required licensed dealers to sell specified quantities of wheat to the State Government at controlled prices and authorised penalties for breach under section 7 of that Act. The compulsory element came from legislation, not from any coercive act by the State Government as contracting party. The order still contemplated a transfer by a licensed dealer, a person engaged in the business of selling foodgrains, and left open important terms such as payment and delivery, thereby preserving the structure of offer, acceptance and passing of property for a price. The legal compulsion to contract did not destroy mutual assent or free consent, and a sale under statutory regulation remained a sale in law.

Conclusion: The transactions were sales within the meaning of section 2(h) of the U.P. Sales Tax Act and the assessee was liable to pay sales tax.

Ratio Decidendi: A transaction compelled by a regulatory statute is still a sale if it retains the essential elements of sale, including agreement, transfer of property and price, and the statutory restriction merely regulates the field of contracting without destroying mutual assent or free consent.

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