Union property immunity bars State sales tax on Railway sales of Union-owned goods under Article 285(1).

Sales of goods owned by the Union of India and sold by the Railways were held immune from State sales tax under Article 285(1) of the Constitution, because the levy operated on Union property and could not be sustained under State law. The issue whether the seller was a dealer under the State sales tax regime was treated as already concluded by earlier authority and was not re-examined. The constitutional protection against taxation of Union property therefore barred the impugned levy, and the tax demand failed.

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Issues: Whether sales of goods belonging to the Union of India and sold by the Railways were immune from sales tax under Article 285(1) of the Constitution.

Analysis: The goods were purchased and sold by the Railways while they belonged to the Union of India. Tax was sought to be levied on those sales under the State law. Article 285(1) protects property of the Union from State taxation, and the levy in question was on sales of Union-owned goods. The question whether the petitioner was a dealer under the State sales tax law was treated as concluded by earlier authority and did not require further examination.

Conclusion: The sales were immune from taxation under the State law, and the tax levy could not be sustained.

Final Conclusion: The appeal failed because the disputed sales were protected by the constitutional bar against State taxation of Union property.

Ratio Decidendi: Sales of goods owned by the Union of India and sold by the Railways are immune from State sales tax by virtue of Article 285(1) of the Constitution of India.

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