UNION OF INDIA Vs. STATE OF PUNJAB

JUDGEMENT

(1.) THIS order will dispose of General Sales Tax References Nos. 21 to 28 of 1972. In all these references, the following two questions of law have been referred by the Tribunal for our opinion: (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?

(2.) THERE is no dispute that the Union of India is the owner of the Northern Railway Departmental Catering, Railway Station, Pathankot. They hold the registration certificate since the year 1955. They purchase provisions and goods on the strength of the registration certificate and sell foodstuffs at the canteen. This venture was sought to be taxed under the Punjab General Sales Tax Act (hereinafter referred to as the Act) on the plea that the railway canteen was carrying on the business of sale of foodstuffs. Penalties were also imposed under Section 10 (6) of the Act on their failure to file the return. The railway authorities raised the contention that no tax could be levied in view of the provisions of Article 285 (1) of the Constitution, and that they were not engaged in the business of sale of foodstuffs because what the railway was doing was providing these amenities on no profit no loss basis. It is on these facts that the questions of law referred to above have been referred to us.

(3.) SO far as the second question is concerned, it presents no difficulty. Article 285 (1) of the Constitution is in the following terms: The property of the Union shall, 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.