IMPORTANT POINT
Levy procurement of foodgrains pursuant to levy orders issued u/s 3 of Essential Commodities Act by the Government of Uttar Pradesh are sales within the meaning of Entry 54 List II of Seventh Schedule to the Constitution of India and the States were competent to levy sales/purchase tax on such transactions.

JUDGMENT

Venkataswami, J.-Leave granted in all the special leave petitions.

2. In all these cases, common questions of law arise and arguments were also addressed on that footing and consequently, they are disposed of by this common judgment. The principal common question of law that arises for consideration can be broadly stated as follows :-

"Whether the Food Corporation of India (hereinafter called "the FCI") is liable to pay sales/purchase tax to the States while purchasing foodgrains or in distributing fertilizers pursuant to orders issued under Section 3 of the Essential Commodities Act, 1955?"

3. There is a difference of opinion among the High Courts on this question. A division Bench of the Allahabad High Court (Lucknow Bench) has taken the view that the FCI is liable to pay purchase tax in the light of the provisions of the U.P. Sales Tax Act, 1948 (hereinafter called "the Act"). A Division Bench of the Punjab and Haryana High Court, however, has taken a view that the FCI is not liable to pay tax, on the purchase of foodgrains. We may at once state here that the Lucknow Bench of the Allahabad High Court in taking the view that the FCI is liable to pay tax after elaborately dealing with the case law up to the date of the Judgment has come to a conclusion that the decision of this Court in M/s. Chitter Mal Narain Das v. Commissioner of Sales Tax1, in view of subsequent decisions of larger benches of this Court does not hold good. The Division Bench of he Punjab and Haryana High Court, however, has taken exactly the opposite view holding that the decision of this Court in Chitter Mal s case holds good notwithstanding subsequent decisions of this Court and on that basis held that the FCI was not liable to pay tax. The Andhra Pradesh and Kerala High Courts while dealing with the liability of the FCI to pay tax on the distribution of fertilizers have taken the view that the FCI is liable to pay tax. It is under this background, arguments were advanced before us supporting and opposing the view taken by this Court in Chitter Mal s case.

4. Undoubtedly this Court in Chitter Mal s case positively has taken a view that there was no sale within the meaning of the definition of the word sale under Section 2(h) of the U.P. Sales Tax Act, 1948, when the stocks of wheat supplied by the appellants (in that case dealers in foodgrains) in compliance with the provisions of U.P. Wheat Procurement (Levy) Order, 1959 to the Regional Food Controller. Armed with that decision of this Court, Mr. Thakur, learned Senior Counsel addressed elaborate arguments distinguishing the subsequent decisions of larger benches of this Court projecting a liberal interpretation of the definition of sale occuring in various State statutes and tried to persuade us to hold that the ratio laid down by this Court in Chitter Mal s case holds the field. On the other hand, learned Senior Counsel, appearing for the States, placing reliance on the subsequent decisions of larger benches of this Court tried to persuade us to hold that the ratio laid down by this Court in Chitter Mal s case is no longer good law.

1.

5. As an illustrative of the cases, we would like to refer to the facts in the common judgment of the Lucknow Bench of the Allahabad High Court in W.P. 2077/1986 (corresponding to C.A. No. 2532/87) and then apply the same to other cases.

6. The facts as noticed by the High Court in the common judgment are given below in brief.

The Food Corporation of India is a Corporation incorporated under the Food Corporation Act, 1964, (Central Act No. 37 of 1964). As one of its functions it maintains a national pool of foodgrains. The different States have to make their contributions to this pool. The States issued different orders under the Essential Commodities Act known by different names as Levy Orders. Procurement Orders or Requisition Orders, for purchasing part of the produce or stocks of the foodgrains in question from farmers or millers. The pr