9911796707
TMI Blog1982 (9) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... file returns. In compliance with that quarterly returns, after registration, were filed. On 21st May, 1982, the petitioner submitted a preliminary objection dated 17th May, 1982, to the assessing authority, contending that the railway could not be termed to be a dealer of scrap material. In fact the auction is an occasional feature which takes place thrice or four times in a year and as the petitioner is not a dealer of scrap material under the Act, it is not liable to pay tax. The petitioner further contended that scrap material sold by petitioner No. 2 was the property of the Union of India and was exempt from all taxes under article 285 of the Constitution of India. The jurisdiction to pass assessment order of the Commercial Taxes Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p material for the period in question, (b) whether the provisions of section 2(f)(i) of the Act are ultra vires of article 285 of the Constitution and (c) whether petitioner No. 2, Commercial Taxes Officer, 'A' Circle, Kota, had jurisdiction to assess the petitioner. Section 2(f) of the Act defines the word "dealer". The definition of "business" has been provided in clause (cc) of section 2 of the Act. The argument advanced before us is that the railway was not carrying on the business of buying and selling, and therefore, the sale of unserviceable material and scrap iron, etc., would not be a transaction in connection with, or incidental or ancillary to trade, commerce, manufacture, adventure or concern In the case of District Controller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in clause (1) shall, until Parliament by law otherwise provides prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State." Part XII of the Constitution has made elaborate provisions as to the revenue of the Union and of the States and as to how the Union will share the proceeds of duties and taxes imposed by it and collected either by the Union or by. the States. Sources of revenue which have been allocated to the Union are not meant entirely for the purpose of the Union, but have to be distributed according to the principles laid down by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the Union Government are not meant exclusively for the benefit of the Union activities. They are also meant for subsidising the activities of the States in accordance with their respective needs irrespective of the amount collected by or through them. In other words, the Union and the States together form one organic whole for the purposes of utilisation of the resources of the territories of India as a whole. Bearing the scheme of our Constitution in mind, let us now turn to the words of article 285. The contention on behalf of the Union Government is that article 285 provides for exemption of the property from all taxes imposed by the State or by any authority within a State save in so far as Parliament may by law otherwise prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Attorney General of New South Wales v. Collector of Customs for New South Wales (1908) 5 CLR 818. In this case an action was brought by the State of New South Wales to recover the customs duties realised by the Collector of Customs in respect of certain steel rails imported by the plaintiff from England for use in the construction of railways of the State. The State claimed that these rails were not liable to customs duties on the ground that they were the property of the Government and as such exempt from customs duties by virtue of section 114 of the Constitution. Section 114 reads as under: "A State shall not, without the consent of the Parliament of the Commonwealth, raise or maintain any naval or military force, or impose any tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in that event they will really become the same tax. It would thus appear that duties of excise partake of the nature of indirect taxes as known to standard works on economics and are to be distinguished from direct taxes like taxes on property and income." Following the above decision, a Division Bench of the Punjab and Haryana High Court in Government Medical Store Depot, Karnal v. State of Haryana [1977] 39 STC 114; 1977 Tax LR 1713, held as under: "It is no doubt true that article 285 of the Constitution lays down that the property of the Union of India shall be exempt from all taxes imposed by a State or by any authority within a State, but under the sales tax laws the incidence of taxation is the transaction of sale or purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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