LexFOOD CORPORATION OF INDIA versus STATE OF KERALA
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A
FOOD CORPORATION OF INDIA
v.
STATE OF KERALA
JANUARY 6 AND 28, 1997
B
(AM. AHMADI, CJ., SUJATA V. MANOHAR AND K.
VENKATASWAMI, JJ.]
Sales Tax: U.P. Sales Tax Act, 1948:
C
Sales Ta:t~Sale-<:ompuls01y or Statut01y--Purchase of food
grains-By Food C01poration of lndia-Pursua11t to levy orders issued under
S. 3 of Essential Commodities Act-Held : amounted to sale as there was
scope for co11sensual agreement in the pa1ties to the procurement transac-
tio11s-He11ce, withi11 the pwview of E11t1y 54 List II of Schedule VII and
liable to sales/purchase tax levied by States-Essential Commodities Act,
D 1955, S. 3--Constitutio11 of 111dia, 1950, Sch. VII List II Ent1y 54.
E
F
Sales Tfil~Section 3D(I) Explanation II-Held : intra vires Enlly
54-<:011stitution of b;dia 1950, Sch VII List II Entl)' 54.
Section 3D(l)-Sales Ta:t~Sale-First sale-Provision in statute--
Treated paiticular sale or purchase as first sale for pwpose of sales tax within
competence of State Legislature-Held : Valid-Constitution of India, A1ts.
245 & 246 and Sch. VII List II Ent1y 54.
Constitution of India, 1950 : AJticle 14.
Sales Tfil~Taxing Statutes-Proviso to S. 3-F of U.P. Sales Tax Act
subjected dealers whose tumover exceeded the limit mentioned therein to an
additional tfil~nly a si11gle dealer in the entire State fell withi11 that
clas.1~Held : Classification of dealers on basis of gross tumover was
valid--t:ontention that proviso was arbitrary and discriminato1y as only one
G dealer was affected thereby, rejected-{}.?. Sales Tax Act, 1948, S. 3-F.
Essential Commodities Act, 1955 : Section 3.
Sales Ta.i~Sale-Compulso1y or Statut01y--Dist1ibutio11 of fe1tilizers to
State Govemments/nominees by Food Co1poratio11 of India under Fe1tilizer
H (Co11trol) Orde1~High Cowt 1ightly held sale exigible to sales ta:t~Fenilizer
24
\.
F.C.L v. STATE
25
(Control) Orde1; 1957.
Sale Tax-Twnove1-Food grains-Purchase of-By Food C01poration
of India pursuant to le~y orders under S. 3 of E.C. Act-Gunny bags used as
packing matelials-includibility of-In taxable tumover of said C01pora-
tion-Questio11 left open.
U.P. IVishi Utpadan Mandi Adhiniyam, 1964:
Awicultural Produce-CompulsiNy procurement of 1ice under lery or-
ders under E..C. Act-Demand of market fee-Held : amounted to
sale-Hence, demand of market fee was valid.
Words and Phrases :
"Sale''-Meaning of-In the context of S.17(iii)(b) of the U.P. Klishi
Utpadan Mandi Adhiniyam, 1964.
A
B
c
The appellant-Corporation purchased food grains from the State D
Governments for the purpose of maintaining the national pool of food
grains. The Sales Tax Department of the State sought to levy purchase tax
upon the appellant on the point it made purchases from the State vide
Explanation II added to Section 3-D(l) of the U.P. Sales Tax Act, 1948. An
additional surcharge of five per cent was also payable by the appellant E
since its turnover was more than Rs. 10 crores vide Section 3F of the U.P.
Sale Tax Act, 1948. The appellant filed a writ petition before the High
Court challenging the aforesaid levies. The High Court dismissed the writ
petition. Hence this appeal.
On behalf of the appellant it was contended that the levy procure-
F
ment of food grains issued under Section 3 of the Essential Commodities
Act, 1955 by the State Government, being a compulsory acquisition, were
not 'sales' within the meaning of Entry 54 of List II of Schedule VII to the
Constitution ol' India and were not taxable under the U.P. Sales Act, 1948;
that the transactions entered into in exercise of the power under the levy
orders between the millers and the dealers on the one hand and the State G
on the other hand and thereafter between the States and the appellant and
then between the appellant and the States was one composite process
which owed its origin to the arrangements arrived at between the State
Governments and the Central Government under which the States were
required to contribute to the Central Pool which in turn passed on to the H
26
SUPREME COURT REPORTS
[1997] 1 S.C.R.
A deficit States through the agency of the appellant; that there was, therefore,
no area where the parties could have any volition; that the Explanation II
added to Section 3-D(l) of the U.P. Sales Tax Act was ultra vires Entry
54 as the same assumed, by a fiction oflaw, the existence of sale, even when
there was none; that Section 3F of the U.P. Sales Tax Act which levied a
B
surcharge of5% Excerpt shown. Read the full judgment & AI analysis in Lexace.