Judgment

RANGANATH MISRA, J.:- The short point raised in these appeals by special leave directed against the judgment of the Gauhati High Court is as to whether the assessee appellant is liable to be taxed under the Assam Finance (Sales Tax) Act, 1956 (State Act for short), and the Central Sales Tax Act, 1956 (Central Act). When assessments were completed under the two Acts in spite of the resistance of the assessee which took the stand that it was not a dealer and, therefore, was not liable to tax, writ petitions were filed before the High Court challenging the demands by contending that the appellant was not a dealer and the certificate of registration issued to it without any application on its behalf should be cancelled and the demands should be quashed. The appellant contended that the Central Government in the Ministry of Health, Family Planning and Urban Development had set up a Medical Store Depot at Gauhati for the purpose of procuring and supplying medical stores to the Government institutions, both Central and State, as also the Railway establishments located in Assam, North Eastern Frontier Areas, Nagaland, Manipur, Tripura and other neighbouring places on payment. The Depot had been set up with a view to facilitating supply of medical stores to the Government institutions and the motive in locating the Depot was to function as a distributing centre for the purpose of supply of medical stores. The appellant contended, inter alia, before the High Court :

"That your petitioner does not carry on any business in medical stores, namely, medicine, drugs, surgical instruments and appliances, dressings and hospital equipments, but merely supplies the said goods to the institutions mentioned earlier on no profit - no loss basis. Your petitioner in recovering the value of the above-mentioned medical stores from the institutions mentioned earlier, adds 10 per cent of the purchase prices of such medical stores as Departmental charges to meet the administrative costs only.

That the supply of medical stores by the petitioner is neither its avocation nor profession and there is no element or object of profitmaking in all its dealings with the institutions mentioned earlier. The transactions carried on by the petitioner Depot are not of commercial nature and the Depot functions only as a distribution centre with the sole object of ensuring the supply of pure drugs and medicines at lesser prices than available in the market to the Central and State Government institutions within the State of Assam and other neighbouring places."

2. The appellant did not apply for registration in view of its stand but the Superintendent of Taxes got the appellant registered under S. 7(1) of the State Act with effect from December 1, 1965, and also treated it to be a dealer under the Central Act. Assessments followed under both the Acts overruling appellants stand whereupon the writ petitions as indicated were filed.

3. Before the High Court the appellant reiterated its stand that as it was not a dealer within the meaning of S. 2(b) of the Act, the action of the Taxing authority in compulsorily registering it was bad the assessments were illegal. Before the High Court appellant produced a letter written by it to the Superintendent of Taxes dated September 30, 1966, wherein it had been stated:

"The supply price is fixed on the basis of cost of acquisition plus departmental charges consistent with the overheads fixed absolutely on the principles of No loss - No profit. The formula of rate fixation and the levy of departmental charges are approved by the Government of India, who also watch and if required, revise such fixations annually to enforce the ruling principles of No loss - No profit."

It had been the consistent stand of the appellant from the very beginning that the transactions were without any profit motive and on the basis of No loss - No profit, and, therefore, unless the respondent found that the transactions had been carried on with a view to ma