Deemed dealer status and consensual sales under a control scheme sustained tax on fertiliser and damaged foodgrain turnover.

A statutory deeming provision treated the Food Corporation as a dealer in fertiliser distribution because it acted as an agent of the Central Government and profit motive was immaterial. The fertiliser supplies to the State Government or its nominees were held to be sales, as the control scheme regulated the transaction but did not remove offer, acceptance and contractual assent. Turnover from the sale of damaged foodgrains was also taxable because those sales were made in the course of regular business and no exemption applied.

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Issues: (i) Whether the Food Corporation of India was a dealer for the purposes of the Kerala General Sales Tax Act, 1963 in respect of the fertiliser distribution transactions; (ii) whether the supply and distribution of fertilisers to the State Government or its nominees constituted sales exigible to sales tax; and (iii) whether the turnover relating to the sale of damaged foodgrains was liable to tax.

Issue (i): Whether the Food Corporation of India was a dealer for the purposes of the Kerala General Sales Tax Act, 1963 in respect of the fertiliser distribution transactions.

Analysis: The statutory definition deemed the Central Government or a State Government to be a dealer when it buys, sells, supplies or distributes goods, directly or otherwise, for cash, deferred payment, commission, remuneration or other valuable consideration. The Food Corporation acted as the agent of the Central Government in the distribution scheme, and the absence of a profit motive was immaterial because the deeming provision extended to supply or distribution even outside the course of business.

Conclusion: The Food Corporation of India was a dealer for the purposes of the Act in relation to the fertiliser transactions.

Issue (ii): Whether the supply and distribution of fertilisers to the State Government or its nominees constituted sales exigible to sales tax.

Analysis: The fertiliser control scheme regulated price, quality and licensing, but it did not exclude volition or freedom of contract. The State Governments placed indents specifying their requirements, which operated as offers to purchase, and the Food Corporation accepted those offers and supplied the goods. The transactions therefore contained the essential elements of a consensual contractual agreement, unlike cases of compulsory acquisition or statutory levy where offer, acceptance and mutual assent were absent.

Conclusion: The fertiliser supplies constituted sales and were liable to sales tax under the Act.

Issue (iii): Whether the turnover relating to the sale of damaged foodgrains was liable to tax.

Analysis: The damaged foodgrains were sold in the course of the regular business of the assessee, and no valid ground was shown for exempting that turnover from tax.

Conclusion: The turnover from the sale of damaged foodgrains was taxable.

Final Conclusion: The revision cases failed in full, and the tribunal's assessments were sustained on all contested points.

Ratio Decidendi: A regulated supply arrangement remains a taxable sale where the parties retain freedom to contract and the transaction is completed by offer and acceptance; a statutory deeming provision may also render the supplier a dealer notwithstanding the absence of profit motive.

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