By-products from paddy milling are not taxable turnover unless the agreement shows transfer for valuable consideration.

Broken rice, husk and rice bran obtained during milling of paddy were not includible in turnover where the agreement fixed remuneration only at a stated rate per quintal and treated the by-products as the agent's property. The clause on sales tax for the by-products did not, by itself, establish a sale, because a taxable sale requires transfer of property in goods for cash, deferred payment, or other valuable consideration. As the agreement did not show that the by-products were transferred as part of milling charges or any other consideration, the inference of sale to the millers was unsustainable and the assessment was set aside.

---

---

Issues: Whether the value of broken rice, husk and rice bran obtained during milling of paddy was liable to be included in the petitioner's turnover as consideration for a sale to the millers.

Analysis: The agreement fixed remuneration only at a stated rate per quintal of paddy and separately provided that the by-products would be the property of the agent and not the responsibility of the Food Corporation of India. The clause relating to sales tax on such by-products did not by itself establish a sale. A sale requires transfer of property in goods for cash, deferred payment, or other valuable consideration, and the agreement contained no stipulation that the by-products were transferred as part of the milling charges or any other valuable consideration. The authorities' inference that the by-products were left to the millers towards hire charges was not supported by the agreement.

Conclusion: The value of the by-products was not liable to be added to the petitioner's turnover, and the finding of sale was unsustainable.

Final Conclusion: The assessment, appellate, and Tribunal orders were set aside, and the revision succeeded in full.

Ratio Decidendi: A transfer of by-products to a miller does not constitute a taxable sale unless the agreement itself shows that the transfer was made for valuable consideration as part of the contractual remuneration.

---