V. Balakrishna Eradi, J.
1. The common question that arises in these cases is whether the supply and distribution of fertilisers effected by the Food Corporation of India on behalf of the Ministry of Food and Agriculture, Government of India, to the State Government of Kerala or its nominees constitutes 'sale' so as to attract liability to sales tax under the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the Act). A subsidiary question is also raised in T. R. C. No. 70 of 1973 and that concerns the legality of the levy of sales tax on the turnover relating' to the disposal by the Food Corporation of damaged foodgrains.
2. Even as early as in 1944 a scheme for ensuring fair and equitable distribution of fertilisers had been formulated and brought into force by the Government of India by letter No. F. 42-12/43-P dated 13th March, 1944. Subsequently, by a notification dated 29th March, 1957, issued by the Central Government in exercise of the power conferred by Sub-clause (xi), Clause (a), of Section 2 of the Essential Commodities Act, 1955, fertilisers were declared to be an essential commodity for the purpose of the said Act. Thereafter, on 23rd April, 1957, the Fertiliser (Control) Order, 1957, was promulgated by the Central Government under Section 3 of the said Act providing, inter alia, for control of prices, the licensing of dealers, prescription of standards in respect of mixture of fertilisers, registration of fertiliser mixtures and for the imposition of restriction on manufacture or sale, etc., of fertilisers which are not of the prescribed standards. The talk of importation and distribution of fertilisers was taken over by the Government of India itself and the Food Corporation was made the agency through which the distribution was to be effected on a no loss no profit basis. The distribution is effected on a State-wise basis, the procedure followed being that the State Governments will place indents with the Food Corporation of India specifying their requirements and against those indents supplies will be made by the Food Corporation of India to the State Governments or their nominees, the cost being recovered from the concerned State Governments through 'Central Adjustment Accounts'.
3. The Sales Tax Officer, Special Circle, Mattancherry, assessed the Food Corporation of India to sales tax under the Act in respect of the turnover relating to the supply of fertilisers effected by the Food Corporation to the State Government of Kerala or their nominees during the years 1965-66, 1966-67, 1967-68 and 1968-69 as per four separate orders of assessment. The contention of the assessee that the supply and distribution of fertilisers effected by it did not constitute 'sale' and that hence the turnover in question was not liable to be taxed was rejected by the assessing authority. On appeals filed by the Food Corporation of India, to the Appellate Assistant Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam, the assessments were confirmed. The assessee thereupon filed four second appeals before the Kerala Sales Tax Appellate Tribunal and they were disposed of by the Tribunal under a common order dated 16th June, 1973, whereby the Tribunal after an elaborate consideration of the contentions put forward by the assessee held that the transactions in question clearly amounted to 'sales' and were taxable as such under the Act. The Tribunal also held that there was no merit in the objection raised by the assessee against the levy of tax on the turnover relating to the sales of damaged foodgrains for the assessment year 1968-69. The four appeals filed by the assessee were accordingly dismissed by the Tribunal. It is against the said decision of the Tribunal that the assessee, namely, the Food Corporation of India, has come up to this Court by filing these four tax revision cases.
4. Though a point has been taken in these revision petitions that the petitioner cannot be regarded as a 'dealer' for the purposes of the Act in view of the fact that the distribution of fertilisers Was effected by the petitioner on a no profit basis, the said contention cannot stand in view of explanation (2) to Clause (viii) of Section 2 of the Act, which clause defines the expression 'dealer'. That explanation reads:
The Central Government or a State Government which, whether or not in the course of business, buy, sell, supply, or distribute goods, directly or otherwise, for cash or for deferred payment, or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of this Act.
There can be no doubt that the petitioner--Food Corporation of India --was functioning as the agent of the Central Government in effecting the supply and distribution of the fertilisers. Hence, by virtue of the terms of the above explanation, the petitioner has to be deemed to be a dealer for the purpose of the Act. For the purpose of the said explanation, the supply or distribution of the goods need not be in the course of business and hence the existence or otherwise of a profit-motive is of no material relevance. The Tribunal was, therefore, right in holding that the petitioner was a 'dealer' in respect of the transactions of distribution of fertilisers.
5. That takes us to the more important question as to whether the supply and distribution of fertilisers effected by the petitioner to the State Government and their nominees constituted 'sales' so as to attract, liability to sales tax under the Act. It was argued on behalf of the petitioner that the Government of India in carrying out the distribution of fertilisers through the agency of the petitioner is only discharging a statutory obligation vested in it under the Fertiliser (Control) Order and that there is no element of volition or mutuality of agreement in these transactions. Reference was made to the provisions contained in the Fertiliser (Control) Order relating to the fixation of prices and providing for licensing of dealers and imposition of restrictions on manufacture, sale, etc., of fertilisers. It was contended op behalf of the petitioner that the effect of those provisions contained in the Fertiliser (Control) Order is to role out completely any scope for the exercise of any volition in relation to the distribution or purchase of fertilisers and that since the freedom of contract is thereby excluded, the transaction cannot be held to be a sale in law. Strong reliance was placed in support of the above contention on the decisions of the Supreme Court reported in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar  14 S.T.C. 316 (S.C.), and Chittar Mal Narain Das v. Commissioner of Sales Tax, U.P.  26 S.T.C. 344 (S.C.) In New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar  14 S.T.C. 316 (S.C.), the Supreme Court held that the supply of sugar by a sugar factory to a Provincial Government in obedience to the direction of the Sugar Controller given under the Sugar and Sugar Products Control Order was not a sale taxable under entry 48, List II, Schedule VII, of the Government of India Act, 1935, because on the special facts of that case, as revealed by a detailed examination of the provisions of the Sugar and Sugar Products Control Order, 1946, it was found by the Supreme Court that, in complying with the allotment orders passed by the Controller, there was no scope at all for the exercise of any volition by the assessees and that the elements of offer and acceptance that are necessary for the formation of a contract were totally absent. It was in those circumstances that the Supreme Court held that the despatches of sugar by the assessees pursuant to the directions of the Sugar Controller were not the result of any contract of sale and that hence there was no sale in the eye of law. The question that arose for decision before the Supreme Court in Chittar Mal Narain Das v. Commissioner of Sales Tax, U. P.  26 S.T.C. 344 (S.C.), was whether the assessees, who were dealers in foodgrains, were liable to pay sales tax under the U. P. Sales Tax Act, 1948, on the aggregate value of the diverse quantities of wheat supplied by them to the Regional Food Controller in compliance with clause 3 of the U. P. Wheat Procurement (Levy) Order, 1959, whereby every licensed dealer was required to sell to the State Government at controlled prices 50 per cent of the wheat held in stock by him at the commencement of the Order and 50 per cent of the wheat procured or purchased by him every day beginning with the date of commencement of the Order. On an analysis of the provisions of the Levy Order, the court found that their effect was really to set up a machinery for compulsory acquisition by the State Government of stocks of wheat belonging to the licensed dealers and that the obligation to deliver wheat of the quantity specified was not founded in any contract, but only in the statutory order which contained a bald injunction to supply the specified quantity day after day, and also enacted that, in default of compliance, the dealer was liable to be punished. The Levy Order took no account of the volition of the licensed dealers nor did it envisage any consensual arrangement. It was in the context of these facts and circumstances that the Supreme Court held that the supplies of wheat made by the assessees under the Levy Order were not sales taxable under the U. P. Sales Tax Act.
6. The facts of the present case are materially different from those which were before the Supreme Court in the two cases referred to above. Unlike in those cases, there is no provision in the Fertiliser (Control) Order, which completely excludes the exercise of volition or the freedom of contract. No doubt, under the provisions of the said Order the price of fertilisers is controlled, quality standard has been prescribed for mixture of fertilisers and persons carrying on the business of selling fertilisers are required to obtain licences. But there is no statutory compulsion in the matter of sale or purchase of fertilisers and parties are left free to enter into consensual contractual agreement in the exercise of their volition subject only to the restrictions aforementioned regarding price fixation, compliance with quality requirements in respect of mixtures, the obtaining of licences by dealers and other minor provisions of a purely regulatory character. The afore-cited decisions of the Supreme Court relied on by the petitioner are, therefore, clearly distinguishable.
7. As noticed already, the procedure evolved by the Central Government for the distribution of fertilisers is that indents will be placed by the concerned State Governments with the Food Corporation of India specifying the requirements of each State and, as against these indents, supplies are made by the Food Corporation of India to the State Governments or their nominees and the cost is recovered from the concerned State Government through Central Adjustment Accounts. The indents so placed by the State Governments are clearly in the nature of offers made by them for purchase of fertilisers and it is as a consequence of the acceptance of those offers by the petitioner that the supplies are made by the petitioner to the concerned State Governments. Thus, all the elements of a consensual contractual agreement are present in this case and the transaction is clearly a sale. We are supported in this view by the decisions of the Supreme Court in Andhra Sugars Ltd. and Anr. v. The State of Andhra Pradesh and Ors.  21 S.T.C. 212 (S.C.), The State of Rajasthan and Anr. v. Karam Chand Thappar and Brothers (Cod Sales) Ltd., Jaipur  23 S.T.C. 210 (S.C.) and Salar Jung Sugar Mills Ltd. v. State of Mysore and Ors.  29 S.T.C, 246 (S.C.).
8. The Tribunal was, therefore, perfectly right in holding that the turnover of the petitioner relating to the supply and distribution of fertilisers is exigible to sales tax under the Act.
9. We find no merit in the petitioner's contention that the sales tax was not leviable on the turnover relating to the sale of damaged foodgrains. The sale in question was effected in the course of the regular business of the petitioner and no valid ground has been shown as to why the said turnover should be treated as exempt from tax.
10. In the result, we confirm the orders passed by the Tribunal and dismiss these four tax revision cases. The parties will bear their respective costs.