Question

Principle: Contract is an agreement entered into between the parties.
Factual Situation: Ramlal was a dealer in cement. The Government of India, by an order issued under the Essential Commodities Act, fixed the price of cement and also, the quantity which a person can buy from the dealer, Ramlal carried on his business under this new order for sometime, but he refused to pay sales tax on his sales transactions on the ground that these were not the contracts freely entered into by him.

• A. Ramlal would succeed because free consent between the parties were there despite the restriction on price and quantity
• B. Ramlal would not succeed because free consent between the parties were there despite the restriction on price and quantity
• C. Ramlal would succeed because the government under the new order, forced him to enter into contracts
• D. None of the above

Answer 1

The correct option is D None of the above

Option D is correct as sales tax is the tax levied by the government which is binding on all the persons encompassed under its rulings. Firstly sales tax does not come under contract law further any individual contract can't have an effect on salestax so Ramlal cannot avoid its liability to pay sales tax.