Compulsory supply without consensual contract is not a sale for sales tax purposes

Deliveries of sugar made under compulsory directions of the Controller were not sales because a contract of sale requires consensual assent and transfer of property for a price. The Controller acted under statutory authority, not as an agent of the purchaser, so there was no offer capable of acceptance by the Province and no voluntary bargain by the manufacturer. Mere compliance with mandatory supply directions, even with payment received, did not create a sale within the Bihar Sales Tax Act. The Act could not be construed so broadly as to exceed the Provincial Legislature's competence to tax only sales of goods. The supplies were therefore outside taxable turnover.

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Issues: Whether deliveries of sugar made under the Sugar and Sugar Products Control Order, 1946, pursuant to directions of the Controller and without voluntary bargain between the Province and the manufacturer, constituted sales liable to be taxed under the Bihar Sales Tax Act.

Analysis: The charging provision in the Bihar Sales Tax Act reached only transactions that answered the legal conception of a sale. Under the Sale of Goods Act, 1930, a sale requires a contract of sale and the transfer of property in goods for a price. The majority held that the Controller acted under statutory authority and not as an agent of the purchaser, so there was no offer by the Province capable of acceptance and no voluntary assent by the manufacturer. Mere obedience to compulsory directions, coupled with receipt of price, did not create a contract of sale. The statutory definition in the Bihar Act could not be construed so widely as to exceed the legislative competence of the Provincial Legislature under Entry 48 of List II of the Seventh Schedule to the Government of India Act, 1935.

Conclusion: The despatches were not sales within the meaning of the Bihar Sales Tax Act and the amounts received for those supplies were not taxable turnover.

Ratio Decidendi: Where goods are supplied solely in compliance with statutory compulsion and without a consensual contract of sale, the transaction is not a sale for purposes of sales tax legislation confined to taxes on the sale of goods.

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