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1997 (1) TMI 459 - SC - VAT and Sales TaxWhether the Food Corporation of India 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? Held that:- Levy procurement is a sale/purchase and therefore, falls within the purview of entry No. 54 of List II of Seventh Schedule to the Constitution. The States were competent to levy sales/purchase tax on such transactions. In the light of the rulings of this Court referred to above in detail, we are unable to agree with the submission of the learned Senior Counsel for the appellants that there was no area left for consensual agreement in the parties to the procurement transactions. The view taken by the Full Bench of the Allahabad High Court in Ram Bilas Ram Gopal case [1969 (2) TMI 163 - ALLAHABAD HIGH COURT] is the correct view, and the High Court of Allahabad (Lucknow Bench) was right in applying the same in the judgment under appeal. The transactions in question are all sale and exigible to tax under the State Sales Tax Act. The contention that the Explanation newly added was ultra vires entry No. 54, List II of the Seventh Schedule to the Constitution, on the assumption that the disputed transactions are not sales and, therefore, by a fiction the impugned Explanation cannot deem a sale which is not a sale, is without substance. The learned counsel fairly concedes that it is open to the State Legislature to shape a point at which tax is levied, if may be equally permissible to the Legislature to treat a particular sale or purchase as the first sale or purchase, but it cannot by legislative device or fiction of law make something as a sale/purchase which in fact is not. This argument has to fail in view of our answer to proposition No. 1 in favour of the Revenue.
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