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Judgment
S.V. Maruthi, J
These writ petitions are taken up pursuant to the remand made by the Supreme Court in Civil Appeal Nos.967 to 969 of 1986. The said Civil Appeals arose out of a common judgment of this Court in these writ petitions.
Briefly the facts are that the petitioner is a dealer in paddy and rice at Sattenapalli, Guntur. For the year 1983-84, he filed monthly returns showing the turnover of about Rs. 12,34,302.00 rice supplied to the Food Corporation of India and the Andhra Pradesh State Civil Supplies Corporation (for short ''the said Corporations''). The petitioner claimed exemption the said turnover of rice as voluntary sales. However, the respondents subjected the turnover of supply of rice to the said Corporations to sales tax. Aggrieved by the same Writ Petition No.7101 of 1985 was tiled by the petitioner seeking direction to the respondents not to collect sales tax in respect of the turnover of rice supplied to the said Corporations.
Writ Petition Nos.7102 of 1985 and 7103 of 1985 were filed claiming the same relief for the assessment years 1984-85 and 1985-86 respectively.
The writ petitions came up before a bench consisting of the then Acting Chief Justice and another learned Judge. Relying on the judgment of the Supreme Court in Vishnu Agencies (Pvt.) Ltd. Vs. Commercial Tax Officer and Others, , the learned Judges dismissed the writ petitions on the ground that the said turnover is liable to tax.
The petitioner, therefore filed Civil Appeal Nos.967 to 969 of 1986 before the Supreme Court. The Supreme Court granted special leave and set aside the order in the writ petitions and remitted the matters to the High Court with a direction to restore the writ petitions to its file and dispose of the same on the limited issue of the question as to whether the Andhra Pradesh Rice Procurement (Levy) Order, 1984 (for short ''the Order'') left any scope for bargaining or not applying the ratio of the decision of the Supreme Court in Vishnu Agencies (supra). Thus, the matter is posted before us.
The main argument of the learned Counsel for the petitioner is that a perusal of the Order makes it clear that there is absolutely no scope for bargaining between the petitioner and the Government. Under the Procurement Order, the petitioner who is a licensed Miller shall sell to the Food Corporation/State Corporation at the procurement price 50% of the total quantity of each variety of rice conforming to the specifications purchased or otherwise acquired by him for the purpose of sale from persons other than a licensed miller or a licensed dealer. The licensed miller is bound to supply the rice conforming to the specifications at the price fixed by the Government. He has no option except to supply the rice at that particular price. Therefore, there is no scope for bargaining. Hence, it is a compulsory sale and the ratio laid down by the Supreme Court in Chhitter Mal Narain Das Vs. Commissioner of Sales Tax, , is applicable to the facts of the present case.
While the Special Counsel for the State relying on the Vishnu Agencies case (supra) submitted that the Supreme Court in the same case overruled the judgment in Chittar Mal''s case (supra) and, therefore, Chittar Mal''s case (supra) is no longer a good law. Further Clause 6 of the Order gives him a freedom of bargaining on the determination of price of rice procured and, therefore, there is a minimum scope for bargaining. Consequently, it is not a compulsory sale and the petitioner is liable to pay tax. The Counsel also submitted that in Vishnu Agencies case (supra), the Supreme Court held that in all the cases of transactions under statutory sales, there is an implied consent and in view of the implied consent the transaction between the petitioner and the said Corporations is a sale and not a compulsory acquisition. In Vishnu Agencies case (supra), the Supreme Court was considering whether supply of cement under the Cement Control Act by the stockist to the person in whose favour allotment orders are issued at the price stipulated and in accordance with the conditions of the permit issued by the authority is a compulsory sale or a sale within the meaning of Bengal Finance (Sales Tax) Act, 1941. The Supreme Court held that "a transaction which is effected in compliance with the obligatory terms of a statute may nevertheless be a sale in the eye of law. Compulsory acquisition of property would exclude the element of mutual assent, which is vital to a sale, but so long as mutual assent, express or implead, is not totally excluded in a transaction, it will amount to a sale". While holding as above, the learned Judges had referred to the judgment in Chittar Mal''s case (supra), and observed that "this decision is clearly distinguishable since the provisions of the Wheat Procurement Order were construed by the Court as being in the nature of compulsory acquisition of property, obliging the dealer to supply wheat from day to day. Cases of compulsory acquisition of property by the State stand on a different footing since there is no question in such cases of offer and acceptance nor of consent, either express or implied." In other words, the Supreme Court agreed with the view in Chittar Mal''s case (supra) that the procurement of wheat under the procurement order is in the nature of compulsory acquisition. However, by agreeing with the said view, the learned Judges commented that in Chittar Mal''s case (supra) the learned Judges are not right in holding that even if in respect of the place of delivery and the place of payment of price, there could be a consensual arrangement, the transaction will not amount to a sale. In other words, while holding that the procurement of food grains under the Procurement Levy Order is a compulsory acquisition, still if there is any element of mutual assent in respect of the place of delivery and place of payment of price, then the transaction will amount to sale. The true position, according to the learned Judges, is that so long as mutual assent, express or implied, is not totally excluded the transaction will amount to sale. In other words, even in the case of Procurement Orders which amount to compulsory acquisition. If there is scope for mutual assent in certain areas, viz., place of delivery and place of payment of price, then it ceases to be compulsory acquisition of property.
In the light of the above, we have to examine whether under the Rice Procurement Order, there is any scope for mutual assent between the parties. In this context, we may refer to the following observations in Vishnu Agencies case (supra) :
"We are also of the opinion that though the terms of the transactions are mostly predetermined by law, it cannot be said that there is no area at all in which there is no scope for the parties to bargain. The West Bengal Cement Control Act, 1948, empowers the Government by Section 3 to regular or control the prices at which cement may be purchased or sold. The Cement Control Order, 1948, provides by paragraph 4 that no person shall sell cement at a "higher than notified price", leaving it open to the parties to charge and pay a price which is less than the notified price, the notified price being the maximum price which may lawfully be charged. Paragraph 8 of the Order points in the same direction by providing that no dealer who has a stock of cement in his possession shall refuse to sell the same "at a price not exceeding the notified price", leaving it open to him to charge a lesser price, which the allottee would be only too agreeable to pay. Paragraph 8 further provides that the dealer shall deliver the cement "within a reasonable time" after the payment of price. Evidently, within the bounds of reasonableness, it would be open to the parties to fix the time of delivery. Paragraph 8A which confers on the allottee the right to ask for weighment of goods also shows that he may reject the goods on the ground that they are short in weight just as indeed, he would have the undoubted right to reject them on the ground that they are not of the requisite quality. The circumstances that in these areas, though minimal, the parties to the transactions have the freedom to bargain militates against the view that the transactions are not consensual."
In other words, if there is a scope, though minimal, for bargain, then the transactions are consensual and not compulsory acquisitions.
Let us now examine whether the Rice Procurement Order provides for any scope for bargaining purpose.
Clause 3(c) of the Order says that every licensed miller shall sell to the Food Corporation/State Corporation at the procurement price fifty percent of the total quantity of each variety of rice conforming to specifications purchased or otherwise acquired by him for the purpose of sale from persons other than a licensed miller or a licensed dealer. From this Clause, it is clear that the prices are fixed by the Government and the Miller has no option except to supply the variety of rice conforming to the specifications to the said Corporations at the price fixed by the said Corporations for that particular variety of rice.
Clause 6 of the Order provides for the delivery of levy rice. Under sub-clause (3) of Clause 6, the Purchase Officer shall, on taking delivery of the rice, pay ninety five percent of the price for the quantity and variety of rice so delivered calculated on the basis of the procurement price and obtain a receipt from the seller therefor. The payment of balance five percent of the price shall be made after making such deductions in the total price as are allowed in Schedule V assessed on the basis of analysis as provided in sub-clause. Under sub-clause (4) of Clause 6, it is provided that the Purchase Officer has to take three representative sealed samples of rice delivered under Clauses 3 and 4, hand over one sample to the licensed dealer or his agent and send the other two samples to the Foodgrains Analytical Laboratory established by the State Government and one of the two samples analysed in the said Laboratory and the other shall be retained with him. Under sub-clause (5) of Clause 6, the price payable for the stocks of rice shall be determined on the basis of the result of the analysis which shall be communicated to the licensed miller or the licensed dealer as the case may be. Under sub-clause (6) of Clause 6, if the licensed miller or the licensed dealer, within 30 days of the receipt by him of the result of the analysis, dispute the correctness of the result, the Purchase Officer shall arrange to get the other sample retained in the laboratory reanalysed after previous intimation to the licensed miller or licensed dealer about the date and time fixed for such analysis. The licensed miller or the licensed dealer, if he so desires, may either present himself or depute his representative to be present at such analysis. However, no analysis shall be conducted after the lapse of ninety days from the date of delivery of the stocks. Under sub-clause (7) of Clause 6, the result of the re-analysis referred to in sub-clause (6) shall be binding on both the parties and the price payable for the stock of rice shall finally be determined on the basis of that result.
From the above, it is clear that the licensed miller or the licensed dealer have the right to dispute the correctness of the result of the analysis of the variety of rice procured by the Government. In other words, if the miller or the dealer is of the view that the rice supplied is of particular specification, that the price should be of that specification and that the report given by the Analyst is not acceptable to him, he can raise a dispute within a particular period. On such dispute having been raised, there is an obligation on the Purchase Officer to get the sealed sample of rice retained by him analysed once again and the view of the Analyst is binding on both the parties.
In view of the observations made in Vishnu Agencies case (supra) referred to above, there is a minimal scope to bargain as regards the variety of rice procured by the Government. Since there is minimal scope for bargaining, it cannot be said that mutual assent, express or implied, is totally excluded. Therefore, in view of Clause 6 of the Procurement Order enabling the Licensed miller or the Licensed dealer to raise a dispute as to the correctness of the Analyst''s report, we are of the view that it is a sale and not compulsory acquisition of property. In other words, there is scope for bargaining, though minimal.
In view of the above, we hold that even under the Andhra Pradesh Rice Procurement (Levy) Order, 1984, the supply of rice amounts to sale within the meaning of A.P. General Sales Tax Act. The writ petitions are, therefore, dismissed. However, there will be no order as to costs.
T. Ranga Rao, J:--I am in respectful agreement with the conclusion reached by my learned Sister, S.V. Maruthi, J., I would like to supplement some more reasons in reaching the said conclusion.
Sub-clause 8 of Clause 6 of the Order provides, in case of delivery of levy rice at a place other than the mill premises or the business premises of the licensed miller or the licensed dealer, as the case may be, he shall be entitled to the payment of other charges incidental to such delivery including transportation charges, as regulated in accordance with the instructions issued by the Government from time to time. Sub-clause 9 thereof provides that every miller or the licensed dealer, shall ensure the packing of rice in bags of specifications and capacity, as may be prescribed by the State Government.
Schedules are also appended to the said Order. Schedule II thereof prescribes classification of various kinds of rice. Schedule III prescribes price for different varieties of paddy and rice and Schedule V provides mat rice shall be sound, mechantable condition, sweet, dry, clean, wholesome of good food value, uniform in colour and size of the grains, and free from moulds, smell, discolouration admixture of deleterious substances or colouring agents and all impurities except to the extent in the table appended to Schedule V. It also prescribes the percentage of permissible tolerance limit, damages, brokens, foreign matters, discolouration grains, etc.
It appears that the Purchase Officer or the Food Corporation or the Slate Corporation has got right to reject the rice if it does not conform to the specifications prescribed as per Schedule V.
Thus it is manifest from the above provision that under Clause 6, rice mill owners or the dealers as the case may be, have to deliver the rice to the Purchase Officer in such manner at such place and at such time, as the Government or the Food Corporation or the State Corporation may direct.
If the rice is delivered other than the mill premises or the business premises of the miller or dealer, he shall be entitled to other charges incidental to such delivery, including transportation charges as regulated by the Government from time to time. The incidental charges is a matter for bargain and negotiations between the parties though transportation charges may be regulated by the Government.
Rice is also classified as common, fine and super fine as per Schedule III giving length and breadth of the rice and there is possibility of bargaining or negotiating so far as the classification of the rice also is concerned. It is also relevant to mention clauses 4 to 6 of Schedule V and they read as under:
"4. Inorganic foreign matter shall not exceed 0.5% in any lot of rice. If it is more the stocks should be cleaned and brought within the limit.
If the red grains in begmi rice are beyond rejection limit, the stock may not be rejected but millers offering such stock should repolish and bring the same within the same rejection limit.
In case of par boiled rice, prepared by pressure par boiling technique it will be ensured that correct process of par boiling is adopted i.e., pressure applied, the time for such pressure is applied proper gelatinisation, aeration and drying before milling are adequate so that the colour and cooking time of par boiled rice are good and free from encrustation of the grains."
It is also evident from the above clauses that if there is any objection from the Food Corporation or the Purchase Officer with regard to the rice sold as not conforming to the specifications, then the miller or the dealer can take back the rice, clean and repolish and bring back to sell the same to the said Officers. Thus there is scope for bargaining and negotiations between the rice miller or the dealer and the Food Corporation or the Purchase Officer, as the case may be, with regard to the sale of rice though they are under obligation under clauses (3) and (4) to sell 50% of the milled rice at the procurement price. Therefore, in view of the principle laid down in Vishnu Agencies''s case (supra), it amounts to sale as defined u/s 2(n) of the Andhra Pradesh General Sales Tax Act and the charging Section is Section 5 of the said Act. Thus there is no merit in the writ petitions.