Statutory coffee delivery scheme treated as compulsory sale, with purchase tax and export exemption challenge rejected.

Sections 2(t) and 6 of the Karnataka Sales Tax Act were treated as within legislative competence, with the challenge based on the Coffee Act and Articles 265 and 300-A rejected because the levy was authorised by law and taxation was not barred by Article 300-A. Coffee delivered by growers to the Coffee Board under the Coffee Act was analysed as a statutory sale rather than compulsory acquisition, since the scheme retained price, transfer of title, and limited rejection rights, and therefore attracted purchase tax. The Board's direct export sales were not treated as sales in the course of export, so the constitutional exemption did not apply. The rate of purchase tax, together with additional tax and surcharge, was upheld.

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Issues: (i) Whether the challenge to sections 2(t) and 6 of the Karnataka Sales Tax Act, 1957 on the grounds of inconsistency with the Coffee Act and violation of Articles 265 and 300-A of the Constitution could be sustained. (ii) Whether coffee delivered by growers to the Coffee Board under the Coffee Act was a compulsory acquisition or a compulsory sale attracting purchase tax under section 6 of the Karnataka Sales Tax Act, 1957. (iii) Whether the Board's direct export sales were sales in the course of export so as to escape purchase tax, and whether the rate of tax and consequential additional tax and surcharge were correctly levied.

Issue (i): Whether the challenge to sections 2(t) and 6 of the Karnataka Sales Tax Act, 1957 on the grounds of inconsistency with the Coffee Act and violation of Articles 265 and 300-A of the Constitution could be sustained.

Analysis: The provisions defining "sale" and imposing purchase tax were held to be within the State Legislature's competence and consistent with the scheme of the sales tax law. The challenge based on the Coffee Act was not substantiated. Article 265 was found to be inapplicable because the impugned levy was imposed by authority of law, and Article 300-A was held not to confer immunity from taxation.

Conclusion: The challenge to sections 2(t) and 6 failed and was rejected.

Issue (ii): Whether coffee delivered by growers to the Coffee Board under the Coffee Act was a compulsory acquisition or a compulsory sale attracting purchase tax under section 6 of the Karnataka Sales Tax Act, 1957.

Analysis: The Coffee Act was analysed as a regulatory and marketing statute, not an acquisition statute. The delivery scheme, the Board's power to reject non-conforming consignments, the vesting of coffee in the Board on delivery, the payment of price, and the growers' retained rights were treated as indicators of a statutory sale rather than eminent domain. The Court further held that, even in compelled transactions, the presence of express or implied assent is sufficient for sale, and the scheme disclosed enough consensuality to satisfy the legal concept of sale and purchase.

Conclusion: The deliveries were held to be compulsory sales and purchases, not compulsory acquisitions, and were exigible to purchase tax.

Issue (iii): Whether the Board's direct export sales were sales in the course of export so as to escape purchase tax, and whether the rate of tax and consequential additional tax and surcharge were correctly levied.

Analysis: The Court applied the settled distinction between sales "for export" and sales "in the course of export" and held that the Board's pooled purchases and subsequent exports did not satisfy the constitutional exemption. The export sales were not the immediate cause of export in the sense required by the governing law, and the purchases remained taxable at the rate applicable to coffee under the sales tax schedule. The levy of additional tax and surcharge was also treated as authorised by the relevant provisions of the Act.

Conclusion: The export exemption was denied, and the rate of purchase tax together with additional tax and surcharge was upheld.

Final Conclusion: The writ petitions failed in substance, the impugned purchase tax assessments were sustained, and the ancillary levy provisions were also upheld.

Ratio Decidendi: A statutory delivery scheme that preserves the elements of price, transfer of title, and limited rejection power may amount to a compulsory sale, and such transactions are taxable unless they fall within a specific constitutional exemption for sales in the course of export.

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