UNION OF INDIA Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) The Union of India along with Collector, Customs and Central Excise, Guntur and Additional Collector of Customs, New Customs House, Port Area, Visakhapatnam has moved this Court under article 226 of the Constitution of India for a declaration that section 2(e) of the A.P. General Sales Tax Act, as amended by Act 18 of 1985, is ultra virus the Constitution of India as well as arbitrary and a consequential direction to refund to them Rs. 4,45,077.38 being the sales tax collected by the respondent - State of Andhra Pradesh. According to them, whenever there are violations of the provisions of the Customs Act, 1962, goods involved are confiscated, they are put to sale and upon the sale of such goods the State Government has been imposing sales tax. They have been paying the tax until, however, they learnt that the Collectors of Customs of Bombay and Calcutta had filed writ petitions in their respective High Courts and the High Courts of Bombay and Calcutta had granted stay of collection of sales tax on the proceeds of sale of confiscated goods under the Customs Act, 1962. Deciding, for the said reason, to move this Court in the petition they, i.e. the Union of India and others have averred that Collectors of Customs exercise statutory duties and functions of administering Customs Act, 1962 which is enacted by the Union Legislature on the subject of customs duties and other ancillary subjects. The of "customs duties" in enumerated under entry 83, List I of the Seventh Schedule to the Constitution of India. While administering the said Act, petitioners, as enjoined by law, make disposal of confiscated contraband goods as well as unclaimed goods. In doing so, they discharge the sovereign function of the Union. They are not engaged in any business. The transaction of disposal of goods is involuntary and not voluntary sales in the course of business or otherwise. It is a process of recovering Government revenue. Thus, when engaged in the transaction of disposal of goods which are confiscated under the Customs Act, 1962 or are otherwise with them, they are not "dealer or dealers carrying on business" or "a deemed dealer or dealers".

(2.) Respondent's return, inter alia, states, however, that goods that are confiscated under the Customs Act are put in sale by auction and after mentioning about the definition of "dealer" under section 2(1)(e) of the A.P. General Sales Tax Act, 1957 and mentioning about Explanation (iii) to the same, point out that the amendments carried out in the A.P. General Sales Tax Act are similar to one in section 2(b), Explanation (2) in the Central Sales Tax Act, 1956.

(3.) Learned Additional Solicitor-General has taken us through the various provisions in the A.P. General Sales Tax Act and particularly to the definition of "business" in section 2(bbb), definition of "dealer" in section 2(e), definition of "goods" in section 2(h) and the definition of "sale" in section 2(n) of the Act. He has contended that Explanation (iii) to the definition of "dealer" in section 2(e) of the Act and Explanation (viii) to the definition of "sale" in section 2(n) of the Act conflict with the definition of "business" in section 2(bbb) of the Act and go beyond definition to create liability upon the Central Government or the State Government which, whether or not in the course of business buys, sells, supplies or distributes goods directly or otherwise for cash or for deferred payment or for commission, remuneration or other valuable consideration. Learned Additional Solicitor-General has placed reliance upon article 285 of the Constitution and contended that the property of the Union, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State.