Compulsory levy supply treated as disposal otherwise than by sale, attracting purchase tax under the sales tax law.

Compulsory supply of wheat and juwar to the Food Corporation of India under the Foodgrains Levy Order was treated as disposal of goods otherwise than by sale for purposes of purchase tax. The Madhya Pradesh High Court followed its earlier Division Bench view on the same statutory provision and levy scheme, and held that the involuntary nature of the supply did not exclude section 7 of the M.P. General Sales Tax Act, 1958. The supply was therefore exigible to purchase tax, and the issue was answered against the assessee.

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Issues: Whether the supply of foodgrains to the Food Corporation of India under the Foodgrains Levy Order amounted to disposal of goods otherwise than by way of sale so as to attract purchase tax under section 7 of the M.P. General Sales Tax Act, 1958.

Analysis: The assessee's supply of wheat and juwar to the Food Corporation of India was made under the compulsory levy regime. The question was whether such involuntary supply nevertheless constituted a disposal of goods in a manner other than by sale within the meaning of section 7. The Court followed its earlier Division Bench decision on the same statutory provision and same levy arrangement, and found no reason to depart from that view. It held that the statutory requirement of supply did not exclude the operation of purchase tax.

Conclusion: The question was answered in the affirmative and against the assessee. The supply was held exigible to purchase tax under section 7.

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