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Report No. 61

1C.2. Case law as showing a fluid position.-

A study of the case law on the subject shows that the position in this respect is fluid1. Broadly speaking, the test adopted is, whether the area of bargaining is or is not large enough to permit the element of consent to operate. If the area of bargaining is large enough, the transaction is a sale. It was held in one judgment of the Supreme Court2 that sales tax can be imposed on the sale of such commodities, notwithstanding that some of the terms and conditions of the sale (e.g., the price) are regulated by or under statute. An earlier judgment of the Supreme Court3 had, however, held that if the area of bargaining is very small, the transaction is not a "sale" because the element of consensuality is missing.

1. See para. 1C.6, infra.

2. Indian Steel Wire Products v. State of Madras, AIR 1968 SC 478 (480, 483): (1968) 1 SCR.

3. New India Sugar Mills Ltd. v. C.S.T., Bihar, AIR 1963 SC 1207: (1963) Supp 2 SCR 459.

Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back

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