Controlled commodity transfer remains a taxable sale where mutual assent survives statutory regulation

A levy-controlled transfer of rice was treated as a sale exigible to sales tax because the control order fixed price and supply conditions but did not exclude all volition or mutual assent; regulated delivery, quality determination and related performance terms still left material contractual elements. On that principle, statutory control did not convert the transaction into compulsory acquisition, and tax liability followed. The purchaser was also bound to reimburse the miller under the undertaking because it covered tax liability arising under the law in force, and the tax had in fact been paid. The reimbursement clause was therefore enforceable according to its terms.

---

---

Issues: (i) Whether the transfer of rice under the Orissa Rice Procurement (Levy) Order, 1964 constituted a sale exigible to sales tax. (ii) Whether the purchaser was bound to reimburse the tax paid by the miller under the undertaking.

Issue (i): Whether the transfer of rice under the Orissa Rice Procurement (Levy) Order, 1964 constituted a sale exigible to sales tax.

Analysis: The levy order fixed the controlled price and regulated the supply, but it did not eliminate all elements of choice in the transaction. The terms of delivery, quality determination, and certain incidents of performance still left scope for volition between the parties. On the governing principle that a transaction remains a sale so long as mutual assent is not completely excluded, the compulsory features of control did not by themselves convert the transfer into a compulsory acquisition.

Conclusion: The transaction was a sale and was exigible to sales tax, in favour of Revenue.

Issue (ii): Whether the purchaser was bound to reimburse the tax paid by the miller under the undertaking.

Analysis: The undertaking provided for reimbursement if the consignor became liable to pay purchase or sales tax under the law in force. Since the transaction was held to be taxable and the tax had in fact been paid, the contractual undertaking operated according to its terms.

Conclusion: The purchaser was bound to reimburse the tax, in favour of Revenue.

Final Conclusion: The levy transaction was treated as a taxable sale, and the reimbursement obligation under the undertaking was enforceable, so the appeal could not succeed.

Ratio Decidendi: A transaction regulated by a control or levy order remains a sale where the parties retain some volition and mutual assent is not wholly excluded; statutory regulation of price, quantity, or mode of delivery does not by itself negate sale if contractual assent survives in any material sphere.

---