1979 (10) TMI 208 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the Northern Railway is liable to pay sales tax on the sale of coal-ash made by it.

Analysis:
The case involved a reference under section 15(2) of the Rajasthan Sales Tax Act, 1954, to determine if the Northern Railway was considered a 'dealer' under the Act and thus liable to pay sales tax on the sale of coal-ash. The Divisional Superintendent, Northern Railway, Jodhpur, was assessed for sales tax for the period from 1st April, 1956, to 31st March, 1957. The Sales Tax Officer and Deputy Commissioner (Appeals) held the Divisional Superintendent as a 'dealer,' but the Board of Revenue for Rajasthan overturned this decision. The Commercial Taxes Officer then sought a reference to the High Court, which was allowed, leading to the current judgment.

The definition of 'dealer' under the Act was crucial in this case. Initially, the term 'dealer' included any person carrying on the business of selling and supplying goods in the State, with subsequent amendments broadening the definition to include the Central Government and its departments. The Northern Railway argued that as a department of the Central Government, it should be exempt from the Act. However, the Court emphasized that engaging in business activities, as defined under the Act, qualified an entity as a 'dealer.' The Court referred to a Supreme Court case where even activities like selling unserviceable materials were considered business under the Act.

The Court further analyzed previous judgments to determine the applicability of the Act to government entities. It was highlighted that unless expressly exempted, both State and Central Governments were subject to the general law. The Court rejected the argument that the Central Government was exempted from the Act, emphasizing that when a government department engages in business activities, they should be considered as a 'dealer' under the Act. The Court also referenced a Maharashtra High Court case but ultimately relied on the authoritative decision of the Supreme Court in a similar matter.

In conclusion, the Court answered the reference in the affirmative, stating that the Northern Railway fell within the definition of a 'dealer' under the Act. The judgment clarified that unless specifically exempted, government entities engaging in business activities are subject to the general law, including tax liabilities.