Corporate personality and Article 285 exemption: nationalisation of shares did not make company assets Central Government property.

The transfer of share capital to the Central Government under the General Insurance Business (Nationalisation) Act, 1972 did not make the company's assets the property of the Central Government. The company remained a distinct legal person, and its property could not be treated as Government property merely because the shareholding vested in the State; accordingly, exemption from sales tax under Article 285 was not available on that basis. The court also held that the writ challenge to the assessment notice was premature because the taxability of salvage transactions involved factual issues that had to be examined by the statutory authorities first.

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Issues: Whether the appellant-company, by reason of the nationalisation statute, became the Central Government or its property so as to claim exemption from sales tax under Article 285 of the Constitution of India, and whether the challenge to the show cause notice could be entertained at that stage.

Analysis: The statutory transfer of shares to the Central Government under the General Insurance Business (Nationalisation) Act, 1972 did not transfer ownership of the company's assets to the Central Government. The company retained a distinct legal personality, and its property could not be equated with the property of the Central Government merely because the share capital stood vested in the Government. In interpreting a taxing statute, the corporate veil could not be lifted to treat the company and its shareholder as the same entity. The challenge to the taxability of salvage transactions also involved factual questions which had to be examined by the statutory authorities in the first instance, making judicial interference at the notice stage premature.

Conclusion: The appellant-company was not entitled to claim exemption under Article 285 on the footing that its assets were the property of the Central Government, and the writ challenge to the assessment notice was premature. The appeal failed.

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