Controlled rice levy supplies can still be sales where mutual assent and consideration remain despite regulatory compulsion.

Supplies of rice under the Orissa Rice Procurement (Levy) Order, 1964 are treated as sales where the levy order fixes quantity and price but does not eliminate mutual assent or consideration. The controlling test is whether the regulatory framework leaves sufficient volition for a contract of sale despite compulsory features. On that reasoning, controlled supply transactions may still amount to taxable sales under the Central Sales Tax Act, and the earlier view treating similar levy supplies as non-sales was not accepted.

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Issues: Whether supplies of rice made under Clause 3 of the Orissa Rice Procurement (Levy) Order, 1964 constitute sales liable to tax under the Central Sales Tax Act.

Analysis: The controlling question was whether the levy order merely imposed a compulsory acquisition, or whether the transaction still retained the elements of a sale. The reasoning proceeded on the footing that the levy order fixed the quantity and price and restricted choice, but did not wholly exclude the element of agreement. The Court preferred the later line of authority holding that control orders may still leave sufficient volition for a contract of sale where the parties can accept the prescribed transaction and the transfer is for consideration. On that basis, the earlier view treating similar levy supplies as non-sales was not accepted.

Conclusion: The supply of rice under the Orissa Rice Procurement (Levy) Order, 1964 constituted a sale and was exigible to tax under the Central Sales Tax Act.

Ratio Decidendi: A controlled supply transaction is a sale where, notwithstanding regulatory compulsion as to quantity and price, the parties retain sufficient volition and the transfer occurs for consideration with mutual assent.

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