Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1990 Supreme(SC) 477

K. Jagannatha Shetty, Kuldip Singh, JJ.
STATE OF PUNJAB AND OTHERS
Versus
UNION OF INDIA AND OTHERS
Civil Appeals Nos. 83 to 90 of 1976. Appeals by special leave from the judgment and order dated April 3, 1974, of the Punjab and Haryana High Court in General Sales Tax References Nos. 21 to 28 of 1972. The judgment of the High Court is reported at [1974] 34 STC 394
Decided On: Decided On : 30-08-1990

Advocates Appeared:
N. S. Das Behl and C. M. Nayyar, Advocates, for the appellants.
Dr. V. Gauri Shankar, Senior Advocate (B. Parthasarathy and C. V. Subba Rao, Advocates, with him), for the respondents.

The immunity provided by article 285(1) of the Constitution shields certain sales from taxation under the State law.

Headnote:
Sales Tax - Interpretation of Article 285 of the Constitution - The court concluded that the petitioner was not liable to pay sales tax on its sales turnover as the sales were immune from taxation under the State law due to the provisions of article 285(1) of the Constitution.
Fact of the Case:

The High Court considered whether the petitioner is a 'dealer' liable to pay sales tax and whether no sales tax can be levied in view of the provisions of article 285 of the Constitution.
Finding of the Court:

The court concluded that the petitioner was not liable to pay sales tax on its sales turnover due to the immunity provided by article 285(1) of the Constitution.
Issues: 1. Whether the petitioner is a 'dealer' liable to pay sales tax. 2. Whether no sales tax can be levied in view of the provisions of article 285 of the Constitution.
Ratio Decidendi: The court relied on the interpretation of article 285(1) of the Constitution to conclude that the sales were immune from taxation under the State law.
Final Decision: The appeal was dismissed, and the petitioner was not liable to pay sales tax on its sales turnover.

ORDER

Before the High Court [Union of India v. State of Punjab [1974] 34 STC 394 (P&H)], the following two questions came up for consideration :

"1. Whether the petitioner is a 'dealer' within the meaning of section 2(d) of the Punjab General Sales Tax Act, 1948, and is liable to pay sales tax on its sales turnover ?

2. Whether, in the circumstances and on the facts of the case, no sales tax can be levied in view of the provisions of article 285 of the Constitution ?"

The first question according to the High Court was concluded by the view taken by this Court in State of Tamil Nadu v. Thirumagal Mills Ltd. [1972] 29 STC 290; AIR 1972 SC 1148, and in State of Andhra Pradesh v. H. Abdul Bakshi and Brothers [1964] 15 STC 644; AIR 1965 SC 531. This aspect of the matter has not been seriously disputed and indeed cannot be dispute. On the second question, there remains little for consideration. There is no dispute that the Union of India is the owner of the Northern Railway Departmental Catering, Railway Station, Pathankot. The goods were purchased by the railways and were sold by the railways. The tax was imposed on the sale of goods. At the time of the sale, the goods belonged to the Railways. In view of the provisions of article 285(1) of the Constitution, such sales were immune from taxation under the State law. That was also the view of the High Court. The appeal, therefore, is dismissed but no order as to costs.

Appeal dismissed.

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