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2002 DIGILAW 220 (GAU)

Union of India v. State of Assam

2002-05-23

P.G.AGARWAL

body2002
P.G. AGARWAL, J. — This is an application under Article 226 of the Constitution of India which has been filed by Union of India through the General Manager, N.F. Rly, Maligaon, Guwahati-11, challenging the collection of sales tax by the State of Assam, stating inter-alia, that the same is violative of the provisions of Article 285(1) of the Constitution of India. 2. The petitioner runs a Departmental Canteen in various Railway Stations within the State of Assam through which foodstuff is supplied/sold, to the Railway employees and Railway passengers on No-Profit/No-Loss basis. According to the petitioners, the State of Assam was collecting sales tax from them on such sale of foodstuff and the amount of sales tax paid by them is as under:- Year Amount 1993-94 1,77,005,00 1994-95 1,91,557.00 1995-96 2,20,563.00 1996-97 2,17,1Q1.00 1997-98 2,46,562.00 3. That the amount of sales tax paid from. April 1998 to July 1998 is shown below: Month Amount April 1998 22,214.00 May 1998 25,082.00 June 1998 22,986.00 July 1998 22,613.00 Total 92,895.00 4. The petitioner thereafter informed the concerned authority that the Railways are not liable to pay sales tax whereupon the respondent State of Assam vide Annexure-3 dated 3.8.98 informed the petitioner as under- “Ref: Your letter No. Nil dated 19.6.98 Sir, With reference to the above, I have the honour to state that tax is levied on sales made by you in your catering unit as per provision of AGST Act, 1993. In this connection, it may be stated that there is no provision to exempt of due tax on sales under the AGST Act except the goods listed under Schedule I of the AGST Act, 1993. Yours faithfully, Sd/- 3.8.98 Superintendent of Taxes Guwahati Unit 'B' Panbazar, Kalpataru Building.” Hence the present petition. 5. The sole argument of the learned counsel for the petitioner is that the petitioner is not involved in any business and the Departmental Catering serve the Railway employees and the Railway passengers on No-profit/No-loss basis. Further, in view of the provisions of Article 285(1) of the Constitution of India, the State has no authority to levy sales tax on the property of the Union of India. 6. The petitioner has placed reliance on a decision of the Hon'ble Punjab High Court in the case of Union of India-Vs-State of Punjab reported in 34 STC 394. Further, in view of the provisions of Article 285(1) of the Constitution of India, the State has no authority to levy sales tax on the property of the Union of India. 6. The petitioner has placed reliance on a decision of the Hon'ble Punjab High Court in the case of Union of India-Vs-State of Punjab reported in 34 STC 394. Article 285 (1) of the Constitution reads as follows: “The property of the Union shall save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by State orby any authority within a State.” 7. In Union of India (supra) the Hon'ble Punjab High Court held as below:- “ 1. That the goods were purchased and sold by the railways and the tax was imposed on the sale of goods. At the time of sale, the goods belonged to the railways and the tax had to be paid by the Railways. In view of the provisions of Article 285 (1) the sales by the Government are immuned from taxation under any State law and, therefore, no sales tax could be levied on the sale of foodstuffs by the railways; 2. That the Union of India was not a dealer within the meaning of Section 2(d) of the Act and therefore was not liable to pay sales tax on its sales turnover.” 8. It may be mentioned here that the above decision of the Hon'ble Punjab High Court was challenged by the State of Punjab before the Apex Court in the case of State of Punjab-Vs-Union of India reported in 79(1990) STC'437. The Apex Court held as follows:- “Before the High Court (Union of India-Vs-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 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- Vs-Thirumangal Mills Ltd. (1972) 29 STC; AIR 1972 SC1148, and in State of Andhra Pradesh-Vs-H. Abdul Bakhsi and Brothers (1964) 15 STC 644 ; AIR 1965 SC 531 . The first question according to the High Court was concluded by the view taken by this Court in State of Tamil Nadu- Vs-Thirumangal Mills Ltd. (1972) 29 STC; AIR 1972 SC1148, and in State of Andhra Pradesh-Vs-H. Abdul Bakhsi and Brothers (1964) 15 STC 644 ; AIR 1965 SC 531 . This aspect of the matter has not been seriously disputed and indeed cannot be disputed. On the second question, there remains little for consideration. There is no dispute that the Union of India is owner of the Northern Railway Departmental Catering, Railway Station, Pathankot The goods were purchased by the railways were sold by the railways. The tax were 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.” 9. In view of the above decision of the Apex Court, it is held that the petitioner is not liable to pay sales tax in respect of sale/ supply of foodstuff through its Departmental Canteen and the respondent State of Assam is not entitled to collect tax. In the result, the writ petition is allowed and the respondents are directed not to levy sales tax on the sale and supply of foodstuff of the Departmental Catering Units. 10. The amount already realized as claim by the petitioner be refunded.