Statutory control and validation laws limit sales tax and revived assessments require a fresh assessment before enforcement.

Statutory control over the purchase, extraction and disposal of wheat products under the Essential Commodities Act left no real mutual assent between the miller and recipients, so the essential elements of sale were absent and the transactions were not taxable as sales. Where an assessment had earlier been set aside and was later sought to be revived by a validating statute, the authority was required to make a fresh assessment before enforcing any demand. On that basis, the demand notice founded on the revived assessment could not be sustained and was quashed, with liberty reserved to proceed according to law by fresh assessment.

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Issues: (i) Whether transactions involving sale and disposal of wheat products manufactured under a statutory licensing and control regime could be treated as sales liable to tax under the sales tax law. (ii) Whether an assessment sought to be revived by a Validation Act could be enforced without a fresh assessment.

Issue (i): Whether transactions involving sale and disposal of wheat products manufactured under a statutory licensing and control regime could be treated as sales liable to tax under the sales tax law.

Analysis: The licensing order made under Section 3 of the Essential Commodities Act, 1955 required the miller to comply with directions regarding purchase of wheat, extraction of products, and distribution or disposal of the products, with breach punishable under Section 7 of that Act. The Court held that, on the facts, the statutory control left no room for real mutual assent in the dealings between the miller and the recipients. Since the essential elements of sale were absent, the transactions could not be treated as sales.

Conclusion: The transactions were not sales liable to tax, and the reference was answered in the negative in favour of the assessee.

Issue (ii): Whether an assessment sought to be revived by a Validation Act could be enforced without a fresh assessment.

Analysis: The governing legal position was treated as settled: where an assessment had earlier been set aside and was later sought to be revived by a validating statute, the authority had to proceed by making a fresh assessment. On that basis, the demand notice founded on the revived assessment was quashed.

Conclusion: A fresh assessment was necessary, and the demand notice could not be sustained.

Final Conclusion: The assessee succeeded on both the taxability question and the writ relief, and the impugned demand was set aside with liberty to make a fresh assessment according to law.

Ratio Decidendi: Where statutory control over disposal of goods leaves no real scope for consensus and the ordinary elements of sale are absent, the transaction is not taxable as a sale; and an assessment revived by a validating law must be preceded by a fresh assessment.

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