The Revising Authority, Varanasi, has referred the following three questions for the opinion of this Court :

" (1) Whether, on the facts and circumstances of this case, the supply of cement from churk Cement Factory to dalla Cement Factory amounted to sale, and liable to sales tax ?

(2) Whether, on the facts and circumstances of the present case, the amount of freight is to be excluded from the taxable turnover ? and

(3) Whether, on the facts and circumstances of the case, the amount of freight is to be taxed at the rate of 10 per cent. under the Central Sales Tax Act, even though the primary transaction is covered by form D ?"

The U. P. Government owned a cement factory known as "churk Cement Factory". It thereafter decided to establish another factory at Dalla. Cement was required for constructing the Dalla Cement Factory, and the State Government decided that cement be supplied from the "churk Cement Factory". The Churk Cement Factory started billing the Dalla Cement Factory for supplies of cement. The Dalla unit paid for the cement supplied by the Churk Cement Factory. Although, the Churk Cement Factory had billed the Dalla Cement Factory for the supply of the cement, and had received the price thereof, it took up the stand during the assessment proceedings that the transactions did not amount to sale, as both the Churk Cement Factory and the Dalla Cement Factory were owned by the State Government. This contention has been rejected by the Sales Tax Officer, the appellate authority, and the revising authority. Apart from these transactions, the assessee sold cement to various purchasers, some of whom were covered under the rate contract with the Director General of Supplies and Disposals. In the bills prepared, the gross amount charged for the cement was worked out by multiplying the quantity by a fixed rate which included the national all-India average freight. However, while calculating the actual amount to be charged from the purchasers, the amount of freight was deducted from the gross amount. The assessee received only the amount that was left after deducting the amount chargeable for freight. The system of supply adopted by the assessee was twofold. Some of the purchasers took their supply by road. In such cases, the purchasers brought their own transport and carried away the goods on their carriers. In the case of despatch by rail, the goods were despatched at the sellers risk, and the purchasers paid freight at the destination and bore the entire responsibility for transit losses, damages, etc. The taxing authorities have included the charge for freight in the turnover of the assessee.

Turning now to the first question, section 3 of the Act imposes liability to tax on the turnover of sales of every dealer. "turnover" has been defined in section 2 (i) of the Act. According to this provision, it means the aggregate amount for which goods are supplied or despatched by way of sale. "sale" is defined in section 2 (h) in the following manner :

" (h) sale means within its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration. . . . . . . . . . . . "

It will be seen that before a transaction can be taxed and included in the turnover of a dealer, it has to be a sale. Although the word "sale" as defined in section 2 (h) does not specifically mention that the transaction must be between the two entities, but inasmuch as it contemplates transfer of property, it is obvious that before a transaction can amount to a sale, there must be two entities involved in the transaction, so that there may be a transfer of property in the goods sold. It would be anomalous to hold that a person can sell goods to himself. In the case of Mahendra Kumar Ishwarlal & Co. v. State of Madras ([1968] 21 S. T. C. 72), it was held that in order to constitute a sale within the definition of that word in the Central Sales Tax Act, 1956, there must be