Levy procurement of rice as compulsory acquisition, not sale, cannot be taxed; later control-order precedent did not overrule that rule.

Compulsory levy procurement of rice under a statutory order was treated as compulsory acquisition, not a consensual sale, because the obligation arose from the mandate itself rather than mutual assent; sales tax was therefore not attracted. The Punjab and Haryana High Court also held that Vishnu Agencies did not impliedly overrule the earlier levy-procurement ruling, as it concerned different control orders where sufficient volition and consensuality were found. Departmental instructions assuming that all levy procurement transactions were taxable sales lacked legal foundation and were quashed, with relief granted to the assessee.

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Issues: (i) Whether the compulsory supply of rice under the levy procurement order constituted a sale liable to sales tax; (ii) Whether the Supreme Court decision in Vishnu Agencies had overruled the earlier view that such levy transactions were not sales and thereby justified the impugned departmental instructions.

Issue (i): Whether the compulsory supply of rice under the levy procurement order constituted a sale liable to sales tax.

Analysis: The controlling distinction was between a transaction involving mutual assent and a transaction amounting to compulsory acquisition by the State. The earlier levy order case law treated procurement under such orders as compulsory acquisition, where the obligation to supply arose from the statutory mandate itself and not from an agreement of sale. The later decision in Vishnu Agencies dealt with a different species of control order, where the Court found sufficient volition and consensuality in the conduct of the parties. That reasoning did not displace the principle applicable to levy procurement orders that operate as compulsory acquisition.

Conclusion: The levy procurement transaction did not become a sale merely because the goods were delivered to the Government under statutory compulsion; the issue is answered in favour of the assessee.

Issue (ii): Whether the Supreme Court decision in Vishnu Agencies had overruled the earlier view that such levy transactions were not sales and thereby justified the impugned departmental instructions.

Analysis: The relevant observations in Vishnu Agencies were confined to the control orders there in question and did not impliedly overrule the earlier levy procurement ruling. The earlier decision continued to hold the field for compulsory acquisition under levy orders. Since the departmental instructions proceeded on the mistaken premise that all levy procurement transactions were taxable sales, they lacked legal foundation.

Conclusion: Vishnu Agencies did not overrule the earlier levy procurement ruling, and the impugned instructions could not be sustained; the issue is answered in favour of the assessee.

Final Conclusion: The writ petition succeeded, the departmental instructions treating levy procurement of rice as taxable sales were quashed, and the assessee obtained relief with costs.

Ratio Decidendi: A transaction effected under a levy procurement order that amounts to compulsory acquisition, without real mutual assent or consensual bargain, is not a sale for sales tax purposes, and a later decision dealing with different control orders does not impliedly overrule that principle.

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