M.N. ROY, J.
(1) THE petitioner Messrs. Metal Alloy Company Private Limited (hereinafter referred to as the said company), a company registered under the Companies Act, 1956, obtained this rule against an order of assessment dated 8th September, 1971, made in Case No. 80e/68-69, by the Commercial Tax Officer, Bhawanipur Charge (respondent No. 1) and the appellate order dated 16th February, 1973, made in Appeal Case No. 777 of 1971-72 by the Assistant Commissioner, Commercial Taxes, Calcutta (South) Circle (respondent No. 2). The said company has also challenged the consequential issue of the certificate under Sections 4 and 6 of the Public Demands Recovery Act, in Certificate Case No. 15-ST (BH) 72-73 for the year 1967 under the Central Sales Tax Act, 1956.
(2) THE said company has stated that at all material times the same carried on and still carries on business of manufacture and supply, inter alia, of stirrup pumps and is regularly assessed to sales tax under the Bengal Finance (Sales Tax) Act as well as the Central Sales Tax Act (hereinafter referred to as the State Act and the Central Act respectively). It has also been contended by the said company that the same has so far paid all the tax demands as raised.
(3) IT appears that on or about 3rd March, 1967, the said company obtained a contract from the Directorate of Health Services, Madhya Pradesh, for the supply of stirrup pumps and such supplies were to be made according to specifications laid down by the Malaria Institute of India, New Delhi, subject to a further stipulation that the pumps so supplied would be checked at unit level and payments should be made if they were according to specifications and were perfectly in order. Apart from such contract, a similar order for the supply of stirrup pumps was also secured by the said company from the Medical Health and Family Planning Directorate, Rajasthan, on the stipulation that the pumps so supplied would be checked and should be according to the approved standard specifications as laid down by the World Health Organisation. The said company in its turn duly effected the supplies of stirrup pumps to Madhya Pradesh Government as well as Rajasthan Government under the contracts as aforesaid.
(4) THE Directorate of Health Services, Madhya Pradesh, as well as the Medical Health and Family Planning Directorate, Rajasthan, rejected some of the stirrup pumps supplied by the said company on the ground that they were not according to the stipulated specifications. Such rejection would be apparent from the letters dated 14th August, 1970, written by the Deputy Director of Medical and Health Services, Rajasthan and 28th October, 1968, from the Director of Health Services, Madhya Pradesh. The total value of the stirrup pumps so rejected by the authorities concerned was Rs. 88,882. 80. In its balance sheet for the year ending 31st December, 1967, the said company duly noted that "sales returns from the Government of Madhya Pradesh and the Government of Rajasthan are Rs. 65,100. 80 and Rs. 23,782. 00 totalling to Rs. 88,882. 80 have been deducted for the sales and transferred to stocks of finished and semi-finished goods, as on 31st December, 1967".
(5) IN the impugned assessment order dated 8th September, 1971, the respondent-Commercial Tax Officer, however, added back the said amount of Rs. 88,882. 80 for the year ending 31st December, 1967 and levied sales tax on the value of the entire pumps supplied by the said company including the pumps rejected by the said two Governments. From such assessment, the said company admittedly preferred an appeal under the provisions of the said Central Act to the respondent-Assistant Commissioner,commercial Taxes, Calcutta (South) Circle, who by the impugned order of 16th February, 1973, was pleased to hold that the said amount of Rs. 88,882. 80 had rightly been added back to the value of the turnover. It was held by the said respondent that the goods that were rejected by the two Governments as aforesaid and, consequently, returned back to the said company were liable to be included in the taxable turnover for the purpose of the Central Act. From a reference to the impugned order, it appears to have been held that "even if I concede that no sale was completed in this case, I will be unable to allow any relief to the petitioner because of a restriction imposed under Section 8a (1) (b) of the Act, which has been incorporated by an enactment on 9th June, 1969, with retrospective effect". The said Section is to the following effect: 8a. Determination of turnover.-- (1) In determining the turnover of a dealer for the purposes of this Act, the following deductions shall be made from the aggregate of the sale prices, namely : -. . . .
(b) the sale price of all goods returned to the dealer by the purchasers of such goods,- (i) within a period of three months from the date of delivery of the goods, in the case of goods returned before the 14th day of May, 1966 ; (ii) within a period of six months from the date of delivery of the goods, in the case of goods returned on or after the 14th day of May, 1966 : provided that satisfactory evidence of such return of goods and of refund or adjustment in accounts of the sale price thereof is produced before the authority competent to assess or, as the case may be, reassess the tax payable by the dealer under this Act; and. . . .
(6) IT has further been held in the impugned appellate order that as the return of goods took place after more than 6 months from the date of delivery of such goods, the said company was not entitled to any deduction in respect of such goods returned under Section 8a (1) (b) of the said Central Act. As a result of such determination and the assessment, a total sum of Rs. 12,148. 89 became due and payable by the said company and a penalty of Rs. 1,000 was also imposed on it by the respondent-Commercial Tax Officer. Admittedly, the said company has paid off the admitted tax liability of Rs. 1,888. 01 and not the balance amount of Rs. 10,260. 88 being the disputed amount in respect of which the appeal in question was filed. In the appeal the said company made an application for stay of realisation of the said amount of Rs. 10,260. 88 but such stay was not granted. Thereafter, on 14th July, 1972, the said company was served with a certificate by the Certificate Officer, 24 Parganas (respondent No. 4), under Sections 4 and 6 of the Bengal Public Demands Recovery Act, demanding payment of Rs. 9,260. 88 as tax and Rs. 1,000 as penalty. Such certificate was issued during the pendency of the connected appeal as mentioned above. The said company has termed the said certificate to be mala fide and issued in colourable exercise of power and jurisdiction. However, before the Certificate Officer also, an application was made for stay of the certificate proceedings till the disposal of the appeal. Such prayer was rejected and on 24th April, 1973, the Certificate Officer concerned issued a warning notice to the said company for payment of the certificate demand. Immediately thereafter the present rule was obtained.
(7) MR. Sen appearing in support of the rule contended that since in the instant case there was a contract for sale of stirrup pumps according to the stipulated specifications and the goods were rejected by the respective Governments as mentioned hereinbefore, on the ground that they were not in accordance with the stipulated specifications, the goods had not passed to the purchaser and, as such, there was no completed sale. Mr. Sen further argued that there was no completed sale in view of the admitted rejection of the goods, so the authorities concerned were not empowered to impose a levy of the tax or penalty as mentioned hereinbefore.
(8) IT may be mentioned herein, that although this rule was made ready as regards service on 27th November, 1973, neither any return to the same was filed nor anybody appeared at the time of the hearing of the rule to oppose the prayers as made.
(9) FOR the purpose of determining the points as raised and argued by Mr. Sen, the definitions of "sale" and "turnover" as in Sections 2 (g) and 2 (j), which are to the following effect:.
2. (g) 'sale', with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration and includes a transfer of goods on the hire-purchase or other system of payment by instalments, but does not include a mortgage or hypothecation of or a charge or pledge on goods.
2. (j) 'turnover' used in relation to any dealer liable to tax under this Act means the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period (and determined in accordance with the provisions of this Act and the Rules made thereunder)would be of relevant consideration.
(10) "sale" is a transfer of property in goods for monetary consideration. The words "by one person to another" occurring in the definition clause clearly indicate that in order to constitute or bring about a "sale" there must be two different parties so as to effect a transfer of property in goods from one, "the seller", to the other, "the buyer". There cannot be a sale or supply of goods by the seller to himself. "turnover" would mean the aggregate of the sale prices received and receivable by the dealer in respect of sale of any goods in the course of inter-State trade or commerce and "sale price", which has been defined in Section 2 (h) of the said Central Act, means the amount payable to a dealer as consideration of the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade. In many State Laws as in West Bengal, the definition of "turnover" includes either sale price received or sale price receivable. But under the definition of the said Central Act, the conjunction is "and" and not "or", between the words "sale prices received" and "sale prices receivable". The two expressions "sale prices received" and "sale prices receivable" have in their background, reference to the two well-known systems of keeping accounts, namely, the "cash system" and "mercantile system". In order to determine "turnover" under the said Central Act, the conjunction "and" between the expressions sale prices "received" and "receivable" in the definition portion, it seems, intends only the mercantile system of keeping accounts as the basis for such determination. For the parties keeping a cash system of accounts, determination of turnover would still be inclusive of unrealised sales. Section 8a as aforementioned has been inserted, with retrospective effect, by Section 5 of the Central Sales Tax (Amendment) Act, 1969 (Act 28 of 1969). The deductions so long provided in Rule 11 (2) of the Central Sales Tax (Registration and Turnover) Rules, 1957, as amended from time to time, regarding the tax element and the goods returned to a dealer have been incorporated in this Section. The sale price under Section 8a (1) (b) of the Central Act of all goods returned by the purchasing dealer has to be deducted from the category of sale price, since such sales, on return of the goods, are ineffectual but Clause (b) of Section 8a (1) prescribed a time-limit for returning the goods. The time-limit is :
i) for goods returned before 14th May, 1966, the goods must have been returned within a period of 3 months from the date of delivery of the goods, (ii) for goods returned on or after 14th May, 1966, the goods must have been returned within a period of 6 months from the date of the delivery of the goods.
(11) THE deduction under Section 8a (1) (b) is allowable only on production of satisfactory evidence by the selling dealer of the return of such goods and the refund (in "cash", "cheque" or by adjustment) of the purchase price. The onus of such proof is on the selling dealer. The return of goods and rejection of the same admittedly stand on different footing. Section 8a (1) (b) has application when the goods are returned by the purchaser. Return of goods is a bilateral transaction brought about by the consent of the seller and the purchaser, which consent may have been effected either prior to the delivery of the goods or subsequent to such delivery. Rejection of the goods on the other hand is an unilateral transaction governed by the provisions of the Contract Act or the Sale of Goods Act, open only to the purchaser. The time-limit of
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Section 8a (1) (b) thus has no application in case of rejection of goods because the very act of rejection gave a go-by to the transactions which were in furtherance of a supposed sale. (12) IN view of the above, I am of the view that the respondent-Assistant Commissioner, Commercial Taxes, Calcutta (South) Circle, was wrong in making the determination in the manner which was done and since the goods in the instant case were rejected and thereafter returned, the demand which was raised and the consequent penalty as imposed was improper. Since, in the instant case, there was a contract for sale of stirrup pumps according to the stipulation and the goods supplied were rejected on the ground that they were not in accordance with the stipulated specifications, there was no completed sale of the property as aforesaid and, as such, the rejected goods had not passed to the purchaser. In view of the fact that no property in the said goods was transferred or passed to the purchaser, there was no sale of goods within the meaning of the said Central Act or the Sale of Goods Act. (13) THUS the points as argued by Mr. Sen succeed, so also the application and as such this rule is made absolute. There will, however, be no order for costs. Let appropriate writs be issued directing the respondents and each one of them not to give effect to the impugned orders or to act on the basis thereof.