The central legal point established in the judgment is that the provision of telephone connections and instruments by the Department of Telecommunications did not amount to a sale under the Haryana General Sales Tax Act, 1973.

Nirmal Singh, J.

1. In these petitions, the petitioners have prayed for striking down Section 2(1)(iv) of the Haryana General Sales Tax Act, 1973 (as amended by Haryana Act No. 11 of 1984) (hereinafter referred as "the 1973 Act") and also for quashing of the assessment orders passed by the Assessing Authority, Ambala Cantonment (respondent No. 2), as well as the demand notice issued by the said authority.

2. On September 25, 1996 a division Bench had adjourned these petitions sine die with the direction that the same be listed for hearing after the decision of S.L.P. No. 5247 of 1986 filed by the petitioners against the order dated November 14, 1985 passed by this Court, dismissing Civil Writ Petition No. 5381 of 1985, filed by the petitioners for grant of similar relief.

3. A perusal of the record shows that Civil Writ Petition No. 5381 of 1985 filed by the petitioners for quashing of the order of assessment passed in relation to the assessment year 1983-84 was dismissed on November 14, 1985 on the ground of availability of alternative remedy. The S.L.P. filed by the petitioners was allowed by the Supreme Court on August 25, 1998 in the following terms :

"Having heard learned counsel for the parties at length, we are of the view that these are the matters which should not have been dismissed by the respective High Courts in suggesting an alternative remedy. The question raised was pristinely legal which requires determination as to whether provision of telephone connections and instruments amounted to sale and even so why was the Union of India not exempt from payment of sales tax under the respective statutes. The respondents counter such stance. We think the question raised was fundamental in character and need not have been put through the mill of statutory appeals in the hierarchy. For this reason alone, we set aside the respective impugned orders of the High Courts and remit the writ petitions back to them for decision in accordance with law. The recovery of tax would stand stayed till the disposal of the writ petitions. Ordered accordingly. No costs."

4. In view of the order passed by the Supreme Court, the petitions have been listed for hearing on merits.

5. The petitioners have averred that the Department of Telecommunications of the Government of India is engaged in the providing of the telephone connections to the subscribers in accordance with the provisions of the Indian Telegraphs Act, 1885 (for short, "the 1885 Act") and the rules framed thereunder and in lieu of the services provided to the subscribers, rent is charged at the prescribed rates. They have averred that after coming into force of the Haryana Act No. 11 of 1984, the Assessing Authority, Ambala (respondent No. 2) issued notices for assessing them under the 1973 Act for the assessment years 1985-86 and 1986-87, and ultimately passed orders directing them to pay sales tax amounting to Rs. 41,10,832 in respect of the assessment year 1985-86 and Rs. 54,35,056 in relation to the assessment year 1986-87. Immediately thereafter, respondent No. 2 issued demand notices in form S.T. 28 requiring them to pay the amount of tax with a threat of making recovery by treating the same as arrears of land revenue.

6. The petitioners have challenged the orders of assessment and the demand notices primarily on the ground that the Telecommunications Department of the Government of India does not fall within the definition of "dealer" under Section 2(c) of 1973 Act. They have averred that the department does not carry on any business, trade in telecommunication system, but merely discharge the public duties of modern Government and realise the rent for the public utility service rendered to the citizens. They have further averred that the subscribers enjoy the facility provided by the Telecommunications Department under the 1885 Act and Indian Telegraph Rules, 1951 (for short, "the 1951 Rules") framed thereunder and this facility cannot be described as "sale" as de