Rama Jois, J.
1. Whether the compulsory sale of cement by a manufacturer to the State Trading Corporation (hereinafter referred to as the STC) as regulated under the Cement Control Orders promulgated by the Central Government under section 18G of the Industries (Development and Regulation) Act, 1951, amounts to a sale as defined in section 2(t) of the Karnataka Sales Act, 1957 (hereinafter referred to as the Act), and consequently liable to sales tax under section 5(3)(a) of the Act, is the precise question that arises for consideration in these five revision petitions presented by a cement manufacturer under section 23(1) of the Act against the order of the Karnataka Sales Tax Appellate Tribunal.
2. The brief facts of the case are as follows : The petitioner in all these petitions is Messrs. Bagalkot Udyog Ltd., Bagalkot, which is a manufacturer of cement. Under section 5(3)(a) of the Act, sales tax is made payable at the earliest sale of commodities specified in column (2) of the Second Schedule to the Act at the rates specified against the corresponding entry in column (3) of the said schedule. The Central Government in exercise of its power under section 18G of the Industries (Development and Regulation) Act, 1951, promulgated an Order dated 30th June, 1958, called the Cement Control Order, 1958. According to that order, every manufacturer of cement was required to sell the entire quantity of cement manufactured by him to the State Trading Corporation (hereinafter referred to as the STC) and at the price fixed in the schedule to the said Order except such quantity as may be mutually agreed upon between the concerned manufacturer and the Central Government. The said Order was replaced by a subsequent Order dated 31st October, 1961. The price fixed under the 1958 Cement Control Order for the sale of cement by the manufacturer to the STC was at Rs. 62.50 per metric tonne and for the sale of cement by the STC was at Rs. 117.50 per metric tonne and the corresponding prices under the 1961 Cement Control Order was Rs. 69.50 and Rs. 97.00, respectively. There is no dispute that the clauses which are relevant for these cases in both these Cement Control Orders are substantially similar. The STC in turn appointed the petitioner-manufacturer as their agent under an agreement for the sale of cement to the customers. The petitioner, in accordance with the Cement Control Orders, sold the cement to STC in the first instance at the prescribed price and thereafter sold the cement to others as directed by the STC and as their agent in accordance with the price specified by the STC. The Commercial Tax Officer, Bagalkot, who is the assessing officer, made assessment for the five assessment years in question and levied sales tax at the rates prevailing during the relevant period. He fixed the sales turnover of the assessee taking into account the sale price of the cement sold by the assessee as the agent of the STC. In other words, the assessing officer declined to consider the first sale by the assessee in favour of the STC as required under the Cement Control Orders as sale for purposes of the Act and treated the sale by the petitioner as agent of the STC in favour of others as the first sale and fixed the sales turnover and tax liability on that basis. The relevant particulars to the five assessment years, which are the subject-matter of the five revision petitions, are as follows :
---------------------------------------------------------------------- STRP Year of Date of Cement sales liable Tax levied No. assessment assessment to tax and rate Rs. Rs. ---------------------------------------------------------------------- 18/75 1959-60 17-9-1970 56,97,468.00 @ 5% 2,84,873.40 19/75 1961-62 28-6-1969 101,15,194.00 @ 5% 5,05,959.90 20/75 1962-63 17-9-1970 60,07,495.00 @ 5% 3,00,374.75 64,40,514.00 @ 6% 3,86,430.84 21/75 1963-64 18/20-2-1967 160,57,330.00 @ 6% 9,63,439.80 22/75 1964-65 17-9-1967 112,33,695.00 @ 6% 6,75,055.46----------------------------------------------------------------------
The assessment for the year 1960-61 was also made on the same basis, but as the same has been concluded against the assessee by an earlier decision of this Court, it has become final. The assessments for the aforesaid five years, however, have been the subject-matter of several proceedings before the authorities and are now the subject-matter of these five revision petitions. Another relevant fact for the purpose of this case is that the cement is subject to excise duty and the amount of excise duty paid by a manufacturer has to be deducted from the sale price under rule 6(4)(i) of the Karnataka Sales Tax Rules, 1957 (hereinafter referred to as the Rules), in order to determine the sales turnover exigible to tax under section 5(3)(a) of the Act. The assessing officer refused to deduct the excise duty paid by the assessee on the ground that the sale of cement which was liable to tax wa the sale by the petitioner-assesses as agent of the STC to other parties and not a sale by a manufacturer of cement to the STC and, therefore, the excise duty paid in the capacity of a manufacturer was not deductible from such sales turnover. Aggrieved by the five assessment orders, the petitioner preferred appeals before the Deputy Commissioner of Commercial Taxes (Appeals), Dharwar, under section 22(1) of the Act. The appeals were dismissed by him by a common order dated 31st March, 1973. Against the said order, the petitioner preferred five appeals to the Karnataka Sales Tax Appellate Tribunal. The Appellate Tribunal also by its order dated 5th December, 1974, dismissed the appeals. The contention before the appellate authorities was that the sale by the petitioner in favour of the STC constituted the first sale and that alone was exigible to sales tax under section 5(3)(a) of the Act and as the sale by the petitioner as agent of the STC to others being the second sale, it could not be subjected to tax under that section. Further, it was the contention of the petitioner that as it was the manufacturer of cement, the amount of excise duty paid by it ought to have been deducted from the sales turnover as required under rule 6(4)(j) of the Rules. Both these contentions were negatived by the appellate authorities. They held that the sale of cement by the petitioner as agent of the STC in favour of others alone constituted the first sale and, consequently, attracted the levy of tax under section 5(3)(a) of the Act and the transfer of title in cement from the petitioner to the STC having taken place under the provisions of the Cement Control Orders, it did not constitute sale as defined in section 2(t) of the Act. Consistent with this view, they also held that the excise duty paid by the petitioner in the capacity of a manufacturer was not deductible, as the sale of cement, the turnover of which was exigible to tax under section 5(3)(a) of the Act, was effected by the petitioner in the capacity of an agent of the STC and not as a manufacturer. Aggrieved by the orders, the petitioner has presented these revision petitions.
3. It is common ground that under section 5(3)(a) of the Act, only the first sale of cement is exigible to sales tax and at the rates specified in the Second Schedule to the Act. From the facts stated above, it may be seen that under the Cement Control Orders, the petitioner-manufacturer is under a legal obligation to sell the entire quantity of cement manufactured by it except to the extent exempted by the Central Government to the STC. The rate fixed under the 1958 Cement Control Order was Rs. 62.50 per metric tonne. It is also not in dispute that an agreement entered into between the STC and the petitioner, the petitioner became the sole selling agent of the STC and the price at which the cement could be sold by the STC to others was at Rs. 117.50 per metric tonne. The controversy between the petitioner and the department is whether the sale of cement by the petitioner in favour of the STC at Rs. 62.50 per metric tonne constitutes the first sale exigible to tax under section 5(3)(a) of the Act or whether the sale cement by the petitioner as agent of the STC to others at the rate of Rs. 117.50 per metric tonne constitutes the first sale which attracts levy of tax under section 5(3)(a) of the Act. The word 'sale' is defined in section 2(t) of the Act thus :
''Sale' with all its grammatical variations and cognate expressions means every transfer of property in goods by one person to another in the course to trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge.'
Sri S. G. Sundaraswamy, the learned counsel appearing for the petitioner, and Sri Rajendra Babu, the learned High Court Government Pleader, appearing for the department, addressed arguments in support of their respective cases. The rival contentions urged for the petitioner-assesses and the department are as follows :
(1) Learned counsel for the assessee contended that the sale of cement which was exigible to sales tax under section 5(3)(a) of the Act was the first sale by the manufacturer-assesses to the STC as required under the Cement Control Orders and not the subsequent sales effected by the assessee in favour of others, only as an agent of the STC and, as such, the assessee was also entitled for deduction of the amount of excise duty from the sales turnover as provided in rule 6(4)(j) of the Rules.
(2) Learned counsel for the department contended that the sale of cement by the assessee, as an agent of the STC to others was, in truth and substance, the first sale and the so-called sale of cement by the manufacturer-assesses to the STC was not sale at all within the meaning of that word as defined in section 2(t) of the Act and, therefore, sales tax was exigible on the said sales of cement effected by the assessee as an agent of the STC and, consequently, the assessee was not also entitled to have the benefit of deduction of excise duty under rule 6(4)(j) of the Rules as the excise duty was paid earlier in the capacity of a manufacturer and the sales tax was exigible only on the sales effect as an agent of the STC.
4. Though, on the question as to what are the essential ingredients which render the transfer of property in the form of goods from one person to another, for a price, a sale, the decisions of the Supreme Court disclose divergence of views on certain aspects, a detailed discussion of those decisions with reference to the relevant criteria to be applied, in deciding the question is rendered unnecessary in view of the latest decision of the Supreme Court in Vishnu Agents v. Commercial Tax Officer : [1978]2SCR433 . The said decision fully supports the contentions urged on behalf of the assessee. Therefore, it would have been sufficient to set out only the ratio in Vishnu Agencies' case : [1978]2SCR433 and to proceed to answer the questions arising for consideration in these cases. But as the learned counsel for the department maintained that the question arising for consideration in these cases was not covered by the said judgment, in order to make the order a self-contained one, we proceed to summarise briefly the views expressed by the Supreme Court in several earlier decisions and the view taken in Vishnu Agencies' case : [1978]2SCR433 , either approving or dissenting from those views, as follows :
(1) State of Madras v. Gannon Dunkerley & Co. : [1959]1SCR379 : In that case, which arose out of assessment proceedings under the Madras General Sales Tax Act, the two points decided were as follows :
(i) that the words 'sale of goods' in entry 54 of the State List in the Seventh Schedule to the Constitution should be interpreted broadly and should be given the legal sense in that, the transfer of properly in goods taken place from one person to another for a price; and
(ii) that the words 'sale of goods' should be given the meaning assigned to it under the Sale of Goods Act and should not be allowed to vary in accordance with the definition of 'sale' in the laws relating to sale of goods as may be in force time to time and, therefore, the essential attribute of sale is that it must be in pursuance to an agreement between the buyer and the seller and the transaction, resulting in transfer of title in goods from one to another in which they have no volition or option to bargain, is no sale.
(2) New India Sugar Mills v. Commissioner of Sales Tax : AIR1963SC1207 : In this case, the Supreme Court relying on Gannon Dunkerley's case : [1959]1SCR379 held by a majority that a transaction resulting in the transfer of title in goods from one to another in accordance with certain obligatory terms of a statute was not a sale. Hidayatullah, J., who dissented from the majority opinion, held that to make a transaction a sale, consent in the elementary form was unnecessary and that though the buyer and the seller were brought the together by the operation of law, a contract emerged, and the consent must be held to exist impliedly.
(3) Indian Steel and Wire Products Ltd. v. State of Madras : [1968]1SCR479 : In that case, which raised the question as to whether certain supplies of steel made to several persons in the State of Madras in accordance with the directions of the Steel Controller in exercise of his powers under the Iron and Steel (Control of Production and Distribution) Order, the Supreme Court held that, so long mutual consent was not completely excluded, the transaction amounted to sale.
(4) Andhra Sugars Ltd. v. State of Andhra Pradesh : [1968]1SCR705 : In this case, the Supreme Court held that though under the provisions of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961, the owner of a sugar factory was under a legal compulsion to purchase sugarcane grown when the grower offered to sell, the purchase by the factory owner was by free consent as it was not caused on account of coercion, undue influence, fraud or mistake as defined in section 14 of the Contract Act and that a legal compulsion did not amount to coercion as defined in section 15 of that Act. It was also held that, as parties were competent to contract and the sale was for lawful consideration and lawful object, the purchases were exigible to tax by the State Legislature under entry 54 of the Seventh Schedule to the Constitution.
(5) Salar Jung Sugar Mills v. State of Mysore : [1972]2SCR228 : This case arose under the provisions of the Act (then called the Mysore Sales Tax Act) itself. In this case though the factory owner were under a statutory obligation to purchase sugarcane from growers, and at a price not less than the minimum price statutorily fixed, the Supreme Court held that in spite of those conditions contained in the relevant Control Orders, there was still option to the parties in regard to purchase of higher quantities of sugarcane at higher rates and to reject the goods after inspection and also as regards the manner of payment of price and the combination of these factors rendered the transaction a 'sale' as defined in section 2(t) of the Act. This view was followed in the case of Oil and Natural Gas Commission v. State of Bihar : [1977]1SCR354a .
(6) Chittar Mal Narain Das v. Commissioner of Sales Tax, U.P. : [1971]1SCR671 : In that case, having regard to the provisions of the U.P. Wheat Procurement (Levy) Order, 1959, the Supreme Court held as follows :
(i) that the foodgrains supplied to the Food Controller was in the nature of compulsory acquisition and cannot be regarded as sale and, consequently, could not be exigible to sales tax under the U.P. Sales Tax Act; and
(ii) that even if there was scope for consensual arrangement in the matter of place of delivery or place of payment of price, the transaction would not amount to a sale.
(7) State of Tamil Nadu v. Cement Distributors : [1973]2SCR1019 : In this case, the transaction which came up for consideration was the sale of cement by a manufacturer to the STC under the 1958 Cement Control Order. In that case, the court proceeded on the basis that there was no dispute on the question that such a transaction did not amount to a sale and further even regarding the gunny bags in which the cement was supplied the parties did not dispute that, if the price of the gunny bags was also controlled, even that part of the transaction by which the title to the gunny bags was transferred to the STC could not be considered as a sale. As it was found that price of the gunny bags had also been fixed by the Government, it was held that it did not constitute a 'sale'. The decision rested on the earlier decision in New India Sugar Co. : AIR1963SC1207 and the second point decided in Chittar Mal's case : [1971]1SCR671 .
5. In the case of Vishnu Agencies : [1978]2SCR433 , the Supreme Court considered all the above decisions and the views expressed with reference to those decisions are as follows :
(1) Regarding Gannon Dunkerley's case : [1959]1SCR379 , in Vishnu Agencies' case : [1978]2SCR433 the Supreme Court observed that the view taken in that case required further consideration, but preferred to proceed on the basis that the aforesaid view might to taken as representing the correct legal position and, by applying those principles, held that the transactions by which goods in the form of cement were sold by persons, who became dealers of cement by taking licence, only to permit-holders and at a price fixed statutorily under the terms to the West Bengal Cement Control Order did constitute sale as there were several matters in respect of which consent was necessary, notwithstanding statutory limitation on the normal rights of dealers and purchasers. The relevant portion of the judgment reads as follows :
'33. In order, therefore, to determine whether there was any agreement or and Salar Jung Sugar Mills' case consensuality between the parties, we must have regard to their conduct at or about the time when the goods changed hands. In the first place, it is not obligatory on a trader to deal in cement nor or any one to acquire it. The primary fact, therefore, is that the decision of the trader to deal in an essential commodity is volitional. Such volition carries with it the willingness to trade in the commodity strictly on the terms of the Control Orders. The consumer too, who is under no legal compulsion to acquire or possess cement, decides as a matter of his volition to obtain it on the terms of the permit or the order of allotment issued in his favour. That brings the two parties together, one of whom is willing to supply the essential commodity and the other to receive it. When the allottee presents his permit to the dealer, he signifies his willingness to obtain the commodity from the dealer on the terms stated in the permit. His conduct reflects his consent. And when, upon the presentation of the permit, the dealer acts upon it, he impliedly agrees to supply the commodity to the allottee on the terms by which he has voluntarily bound himself to trade in the commodity. His conduct too reflects his consent. Thus, though both parties are bound to comply with the legal requirements governing the transaction, they agree as between themselves to enter into the transaction on statutory terms, one agreeing to supply the commodity to the other on those terms and the other agreeing to accept it from him on the very terms. It is, therefore, not correct to say that the transactions between the appellant and the allottees are not consensual. They, with their free consent, agreed to enter into the transactions.
34. We are also of the opinion that though the terms of the transaction 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.'
(2) As regards other earlier decisions, after discussing the decisions in New India Sugar Mills : AIR1963SC1207 , Indian Steel and Wire Products Ltd. : [1968]1SCR479 , Andhra Sugar Mills Ltd. : [1968]1SCR705 and Salar Jung Sugar Mills : [1972]2SCR228 , the Supreme Court approved the dissenting view of Hidayutullah, J., in New India Sugar Mills' case : AIR1963SC1207 , and the observations in Andhra Sugar Mills' case : [1968]1SCR705 , which cautioned against the majority view in New India Sugar Mills' case : AIR1963SC1207 and held that the majority view in New India Sugar Mills' case : AIR1963SC1207 was not good law. The view so taken also agrees with the view taken in Indian Steel and Wire Products : [1968]1SCR479 , Salar Jung Sugar Mills : [1972]2SCR228 and Oil and Natural Gas Commission : [1977]1SCR354a .
(3) Considering he view in Chittar Mal's case : [1971]1SCR671 , the Supreme Court approved the view taken on the first point, i.e., that cases of compulsory acquisition in favour of the State did not constitute 'sale'. However, on the second point, the court disagreed and held that the correct position in law is that the case of compulsory acquisition only stands apart and could not be regarded as sale and that the view taken in that case to the effect that even if in respect of the place of delivery and the place of payment of price there was scope for agreement, such transaction would not amount to sale, was not correct law (see page 467, para 45; page 57 of 42 S.T.C.). The view taken therefore in Vishnu Agencies' case : [1978]2SCR433 is that so long mutual consent, express or implied, is not completely excluded and is available even in respect of some of the matters concerning the transaction, transfer of title of goods from one person to another for a price, though most of the matters are under statutory compulsion, still amounts to a sale. In the result, the law laid down in Salar Jung Mills : [1972]2SCR228 and Oil and Natural Gas Commission : [1977]1SCR354a is approved.
(4) As regards Cement Distributors' case : [1973]2SCR1019 , the Supreme Court in Vishnu Agencies' case : [1978]2SCR433 held that the above judgment to the extent it was inconsistent with the minority judgment of Hidayutullah, J., in New India Sugar Mills' case : AIR1963SC1207 and the view in Indian Steel and Wire Products' case : [1968]1SCR479 and Salar Jung Sugar Mills' case : [1972]2SCR228 was not good law.
6. The two cases which arose in Vishnu Agencies : [1978]2SCR433 were decided by applying the above principles. The first case, namely, Vishnu Agencies v. Commercial Tax Officer : [1978]2SCR433 arose out of assessment proceedings in respect of sales of cement made by M/s. Vishnu Agencies in accordance with the provisions of the West Bengal Cement Control Act and the Orders made thereunder to the allottees from time to time pursuant to the allotment order issued by the competent authority in the State of West Bengal. The Supreme Court held that the sale of cement by M/s. Vishnu Agencies in favour of allottees though made in accordance with the directions of the competent authority under the West Bengal Cement Control Act and the Orders passed thereunder amounted to sales under section 2(g) of the Bengal Finance (Sales Tax) Act, 1941, and, consequently, exigible to sales tax. The other case Dhanyalakshmi Rice Mills v. Commercial Tax Officer : [1978]2SCR433 decided in the same judgment arose out of the assessment proceedings taken in the State of Andhra Pradesh against procuring agents, rice mill owners and the growers on the one hand and the wholesale dealers and retail dealers on the other. It was held that these were transactions of sales within the meaning of section 2(n) of the General Sales Tax Act of Andhra Pradesh and, consequently, exigible to sales tax or purchase tax, as the case might be under the said Act, though the procuring agents and rice mill owners were compelled to sell the rice in accordance with the provisions of the Andhra Pradesh (Procurement, Levy and Restriction of Sale) Order, 1967.
7. To put it shortly, the law declared by the Supreme Court in Vishnu Agencies' case : [1978]2SCR433 is as follows :
(i) If the process by which title to the goods stands transferred from one person to another in a given case is in fact or in substance in the nature of compulsory acquisition of goods in favour of the State, it cannot be considered as 'sale' and, consequently, cannot be subjected to levy of sales tax.
(ii) If in the process by which title to the goods stands transferred from one person to another for a price, however wide may be the area in which statutory compulsion operates, so long it does not amount to compulsory acquisition in favour of the State, and there is some area left for consensus, however small it may be, the transaction has to be regarded as 'sale' and is exigible to sales tax if under the relevant law tax is leviable on the sale of such goods.
8. We shall now proceed to apply the above decision to the facts of these cases. Learned counsel for the department strenuously contended that in view of clause 3 of the Control Order, though the manufacturer was required to sell all the quantity of cement except to the extent exempted by the Central Government to the STC, in truth and substance, it was no sale, and the transfer of title in cement manufactured by the assessee in favour of the STC was in the nature of compulsory acquisition. The learned counsel for the assessee submitted that the transaction had to be regarded as sale as there were some areas in which consent of parties could operate, such as place of delivery, mode of payment of price, discount or commission, which the manufacturer might allow to the STC.
9. In order to appreciate the contention, it is necessary to set out the relevant provisions of the Cement Control Orders. As the 1958 and 1961 Cement Control Orders are in part materia, it is sufficient to set out the clauses in the latter and the same read as follows :
'3. Producers to sell cement to Corporation. - (1) Every producer shall sell -
(a) the entire quantity of cement which may be produced by him from the date of commencement of this Order up to 31st March, 1966 (inclusive), except such quantity as may be mutually agreed upon from time to time between him and the Central Government to the Corporation, and deliver the same to such person or persons as may be specified by the Corporation in this behalf from time to time.
(2) Notwithstanding any contract to the contrary, no producer shall dispose of cement held in stock or produced by him except in accordance with the provisions of sub-clause (1).
6. Controlled prices of cement. - (1) The price at which a producer may sell cement other than repaid hardening cement and low heat cement shall be as specified in the schedule : ........
Provided also that except in the case of any sale to the Government for the Directorate General of Supplies and Disposals, where a producer on the basis of a separate agreement has agreed or agrees to allow a rebate, discount or commission, the Corporation shall be entitled to deduct from the price payable in respect of the cement sold to it the amount of the rebate, discount or commission so agreed upon :
Provided also that in respect of cement intended for export outside India, it shall be open to the Corporation to negotiate which a cement producer the ex works price payment to him.
Explanation. - The price fixed in the schedule is exclusive of -
(i) the excise duty payable by the producer in respect of the cement; and
(ii) the cost of packing or of containers, if any .........'
The question for consideration is whether the 'sale' of cement by a manufacturer to the STC in terms of the Cement Control Orders is a sale as defined in the Act. In the first instance, it may be pointed out that the definition of the word 'sale' in the Act is similar to the definition in the Bengal Finance (Sales Tax) Act and the Andhra Pradesh Sales Tax Act, which were considered by the Supreme Court in Vishnu Agencies' case : [1978]2SCR433 . It is no doubt true that under the provisions of the Cement Control Orders in respect of three matters, namely, the extent of quantity, out of the cement manufactured, to be sold, the price at which it should be sold and the person to whom it should be sold, there is no choice to the manufacturer. In view of clause 3, all the cement, which was in stock on the date of promulgation of the Cement Control Orders and all the quantities of cement manufactured after that date, except to the extent allowed by the Central Government to be retained by a manufacturer, has to be sold, at the price fixed in the Cement Control Orders only to the STC. Even so, in our opinion, the process cannot be termed as compulsory acquisition in favour of the State. It may be seen that the manufacturer is required to sell the cement to the STC which is a company incorporated under the Companies Act and the cement is not acquired in favour of the State. Further, as far as the fixation of price is concerned, there is nothing special about it. The fixation of price statutorily in respect of all essential commodities is now a well-established feature of social control to ensure supply of such commodities at reasonable prices to the community. When prices are fixed, the owner of the goods is no doubt compelled statutorily to sell such goods at a rate not higher than the price so fixed. He can sell at lower price. Therefore, the fixation of price at which cement should be sold, which is a reasonable restriction imposed in public interest, does not affect the nature of the transactions as sale. As far as compulsion to sell to the STC is concerned, it is needless to state that a manufacturer manufactures cement only for the purpose of selling it. Hence the consent of the manufacturer to sell the cement manufactured by him is implicit in its manufacture itself. One aspect which prima facie gives an appearance of compulsory acquisition is the requirement to sell the entire quantity of manufactured cement to the STC. Even this on a closer examination does not affect the nature of the transaction as sale. In Vishnu Agencies : [1978]2SCR433 , the Supreme Court referred to Salar Jung Sugar Mills' case : [1972]2SCR228 , in which it was pointed that even when a commodity was required to be sold only to permit-holders or ration-card holders, that statutory compulsion to sell goods at a fixed price only to a permit-holder did not deprive the transaction of the ingredients of sale and there was indisputably a sale. If we examine the statutory compulsion to sell the entire quantity of manufactured cement to the STC in that light, all that it means is instead of there being several permit-holders to whom alone cement could be sold at the price fixed by law, there is only one sole permit-holder, i.e., the STC, to whom alone a manufacturer has to sell all the cement manufactured by him except to the extent of the quantity, the Central Government allows the manufacturer to retain. Therefore, in substance, the facts of the present cases are in no way different from those of the two cases considered by the Supreme Court in Vishnu Agencies : [1978]2SCR433 . As the manufacturer produces cement only to sell and he is bound to sell at a price fixed by law, it matters little whether he is required to sell to several persons to whom permits are issued by the prescribed authority or to one person, like the STC, as in this case, and the only effect of the Cement Control Orders is that the seller and the buyer are brought together for effecting the transaction of sale of cement. Apart from the above reasoning, which persuades us to hold that the sale of cement by the manufacturer to the STC in terms of the Cement Control Orders amounts to 'sale' within the meaning of that word as defined in section 2(t) of the Act, notwithstanding the statutory compulsion to sell to the STC at fixed price, there are also other matters in respect of which there is scope for agreement between the manufacturer and the STC as pointed out for the assessee. They are :
(i) The rebate or commission which the manufacturer may allow to the STC.
(ii) The place and time at which cement could be delivered.
(iii) The mode of payment of price by the STC to a manufacturer, i.e., whether in cash or on credit facility or whether in a limp sum or in instalments.
(iv) Cost of packing and the price of bags in which cement is supplied [see clause 6(1), explanation (ii)].
Therefore, applying the ratio of Vishnu Agencies' case : [1978]2SCR433 , we hold that 'sale' of cement by the manufacturer-assesses in these cases to the STC is 'sale' within the meaning of that word as defined in section 2(t) of the Act and, as it constitutes the first sale, it is exigible to tax under section 5(3)(a) of the Act read with entry 36 of the Second Schedule to the Act. As the manufacturer-assesses, who has paid the excise duty on the cement, is also the seller, who is liable to pay sales tax on the sales turnover calculated on the basis of the cement sold to the STC, it follows that the assessee is also entitled to the deduction authorised by rule 6(4)(j) of the Rules. Therefore, the orders of the assessing offer, the appellate authority and the Appellate Tribunal are liable to be set aside.
For the reasons aforesaid, we make the following order :
(i) The common order of the Sales Tax Appellate Tribunal dated 5th December, 1974, confirming the common order passed by the Deputy Commissioner of Commercial Taxes (Appeals), Dharwar, dated 31st March, 1973, and the five assessment orders made by the Commercial Tax Officer, Bagalkot, viz., (i) dated 17th September, 1970, for the assessment period 1st April, 1959, to 31st March, 1960; (ii) dated 28th June, 1969, for the assessment period 1st April, 1961, to 31st March, 1962; (iii) dated 17th September, 1970, for the assessment period 1st April, 1962, to 31st March, 1963; (iv) dated 18th/20th February, 1967, for the assessment period 1st April, 1963, to 31st March, 1964; and (v) dated 17th September, 1970, for the assessment period 1st April, 1964, to 31st March, 1965, are set aside.
(ii) The matters are remanded to the Commercial Tax Officer, Bagalkot, with a direction to make fresh assessments in the light of this order.
(iii) No costs
10. Ordered accordingly.