JUDGMENT
P.O. Agarwal, J.
1. This is an application under Article 226 of the Constitution of India which has been filed by the Union of India through the General Manager, N.F. Railway, 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 food-stuff 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 food-stuff 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
2,17,101.00
1997-98
2,46,562.00
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
3. 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 August 3, 1998 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 the 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/-3-08-98
Superintendent of Taxes,
Guwahati Unit “B”,
Panbazar, Kalpatam Building”
Hence the present petition.
4. The sole argument of the learned counsel for the petitioner is that the petitioner is not involved in any business and the departmental catering serves 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.
5. The petitioner have placed reliance on a decision of the honourable Punjab High Court in the case of Union of India v. State of Punjab reported in [1974] 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 a State or by any authority within a State.”
6. In Union of India v. State of Punjab [1974] 34 STC 394 the honourable 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 immune from taxation under any State law and, therefore, no sales tax could be levied on the sale of food-stuffs 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.”
7. It may be mentioned here that the above decision of the honourable Punjab High Court was challenged by the State of Punjab before the apex Court in the case of State of Punjab v. Union of India reported in [1990] 79 STC 437. The apex Court held as follows :
“Before the High Court Union of India v. 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 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?
The first question according to the High Court was concluded by the view taken by this Court in State of Tamil Nadu v. Thirumagal Mills Ltd. [1972] 29 STC 290 ; AIR 1972 SC 1148, and in State of Andhra Pradesh v. H. Abdul Bakshi and Bros. [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 the owner of the Northern Railway Departmental Catering, Railway Station, Pathankot. The goods were purchased by the railways and were sold by the railways. The tax was 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.”
8. 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 food-stuff 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 food-stuff of the departmental catering units.
9. The amount already realised as claim by the petitioner be refunded.