Judgment

SHAH, J.: The appellants who are dealers in food grains supplied to the Regional Food Controller diverse quantities of wheat in compliance with the provisions of the U. P. Wheat Procurement (Levy) Order, 1959. The Sales Tax Officer levied tax under the U. P. Sales Tax Act on the aggregate of the price of wheat by the appellants rejecting the contention raised by the appellants that the wheat supplied was not sold by them to the Controller. In appeal the Assistant Commissioner (Judicial) Sales Tax held that the turnover resulting from supplies of wheel was not taxable since there was no "sale" within the meaning of the U. P. Sales Tax Act, 1948. The order was confirmed by the Additional Judge (Revisions) Sales Tax.

2. The Additional Judge (Revisions) Sales Tax referred the following questions to the High Court of Allahabad for opinion:

"(1) Whether the sales made to the Regional Food Controller under the U. P. Wheat Procurement (Levy) Order, 1959, are sales within the meaning of "sale" under S. 2 (h) of the U. P. Sales Tax Act?

(2) Whether in the circumstances of the case, the assessee are liable to pay sales tax on the sales made to the Regional Food Controller under the provisions of the U. P. Wheat Procurement (Levy) Order, 1959?"

3. The questions raised were defective in form. The word "sales" when it first occurs in Question No. (1) should be "supplies". The expression "sales made" in Question No. (2) should be "on the price for wheat supplied". We modify the questions accordingly.

4. The High Court of Allahabad, following their earlier judgment in Commr. of Sales Tax, U. P. Lucknow v. Ram Bilas Ram Gopal, 1969 All LJ 424 answered the two questions in the affirmative. The appellants have appealed to this Court with special leave.

5. The expression "sale" is defined in S. 2 (h) of the U. P. Sales Tax Act, 1948 as meaning any transfer of property in goods for cash, deferred payment or other valuable consideration, but not including a mortgage, hypothecation, charge or pledge. Power of the Provincial Legislature by virtue of Entry 42 List II of the Government of India Act, 1935, was restricted. The Legislature was competent to legislate for levy of tax, only on transactions which were "sales" within the meaning of the Indian Sale of Goods Act, 1930, State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd., 1959 SCR 379  M/s. New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar, 1963 Supp. (2) SCR 459 It was observed in M/s. New India Sugar Mills case (1963) Supp (2) SCR 459 :

"In popular parlance sale means transfer of property from one person to another in consideration of price paid or promised or other valuable consideration. But that is not the meaning of sale in the Sale of Goods Act, 1930. Section 4 of the Sale of Goods Act provides by its first sub-section that a contract of sale of goods is a contract where the seller agrees to transfer the property in goods to the buyer for a price. "Price" by cl. (10) of S. 2 means the money consideration for sale of goods, and "where under a contract of sale property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell" (sub-section (3), Sec. 4). It is manifest that under the Sale of Goods Act a transaction is called sale only where for money consideration property in goods is transferred under a contract of sale. Section 4 of the Sale of Goods Act was borrowed almost verbatim from Section 1 of the English Sale of Goods Act 56 & 57 Vict. c. 71. As observed by Benjamin in the 8th Edn. of his work on Sale , "to constitute a valid sale there must be a concurrence of the following elements, viz., (1) parties competent to contract; (2) mutual assent; (3) a thing, the absolute or general property in which is transferred from the seller to the buyer; and