Statutory levy foodgrain purchases remain taxable sales when mutual assent survives and the dealer definition is wide enough.

The Food Corporation of India was treated as a dealer carrying on business because its organised purchase, storage, movement, distribution and sale of levy foodgrains constituted commercial activity within the wide statutory definitions. Levy purchases were held to be sales, not compulsory acquisition, because statutory compulsion did not exclude mutual assent entirely and some consensual elements remained in the transaction. Explanation II to section 3-D(1) and section 3-F of the U.P. Sales Tax Act, 1948 were upheld as valid; no hostile discrimination or arbitrariness was shown, and the retrospective amendment was within legislative competence. The levy transactions were therefore exigible to purchase tax, and the constitutional challenge failed.

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Issues: (i) whether the Food Corporation of India, while purchasing levy foodgrains for the national pool, carried on a business as a dealer liable to purchase tax under the U.P. Sales Tax Act, 1948; (ii) whether purchases made under levy or procurement orders amounted to compulsory acquisition outside the concept of sale; and (iii) whether Explanation II to section 3-D(1) and section 3-F of the U.P. Sales Tax Act, 1948 were unconstitutional as discriminatory, arbitrary or confiscatory.

Issue (i): whether the Food Corporation of India, while purchasing levy foodgrains for the national pool, carried on a business as a dealer liable to purchase tax under the U.P. Sales Tax Act, 1948.

Analysis: The statutory definition of "dealer" included a Government buying or selling goods in the course of business or otherwise, and the definition of "business" was wide enough to cover trade or commerce even without profit motive. The Corporation's purchase, storage, movement, distribution and sale of foodgrains were organised commercial activities, and the fact that they were undertaken in furtherance of food policy or public welfare did not take them outside the statutory concepts of business and dealer.

Conclusion: The Corporation was liable to be treated as a dealer carrying on business, and the levy transactions were exigible to purchase tax.

Issue (ii): whether purchases made under levy or procurement orders amounted to compulsory acquisition outside the concept of sale.

Analysis: The controlling principle applied was that a transaction under statutory compulsion is still a sale if mutual assent is not totally excluded and some area of consensual arrangement remains. The levy orders fixed certain terms, but the purchaser could reject goods not conforming to specifications, and other aspects such as payment and performance were not wholly eliminated. On that reasoning, the levy transactions were distinguished from true compulsory acquisition, where title vests by operation of law without any consensual element.

Conclusion: The levy purchases were sales within the amended statutory meaning and were not cases of compulsory acquisition.

Issue (iii): whether Explanation II to section 3-D(1) and section 3-F of the U.P. Sales Tax Act, 1948 were unconstitutional as discriminatory, arbitrary or confiscatory.

Analysis: Explanation II was upheld as a valid point-of-tax provision applying to purchases of levy foodgrains from the State Government or its purchasing agent, and no hostile discrimination was shown within the class of purchasers. Section 3-F created a classification based on turnover and was within legislative policy; the absence of more slabs did not by itself establish arbitrariness. The retrospective character of the amendment was also within legislative competence.

Conclusion: Both provisions were held valid and not violative of Article 14 of the Constitution of India.

Final Conclusion: The writ petitions failed in their entirety because the levy transactions were treated as taxable sales, the Corporation remained liable as a dealer, and the impugned statutory provisions were sustained.

Ratio Decidendi: A transaction effected under statutory compulsion remains a sale, and is taxable, so long as mutual assent is not totally excluded and some area of consensual arrangement survives; an inclusive statutory definition may validly bring such transactions within the tax net.

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