Railway scrap sales can constitute taxable business activity; constitutional immunity for Union property does not block sales tax.

Sale of railway scrap was treated as business activity under the Rajasthan Sales Tax Act because the sale of unserviceable material and scrap iron was held ancillary to commerce. Article 285 of the Constitution did not exempt such sales, as sales tax is levied on the transaction of sale and not directly on Union property. The transfer of the case to another assessing authority was upheld under the Rajasthan Sales Tax Rules, and the jurisdictional objection failed.

---

---

Issues: (i) whether the sale of scrap material by the railways constituted business and attracted sales tax under the Rajasthan Sales Tax Act; (ii) whether article 285 of the Constitution of India exempted the Union property from sales tax on such sales; and (iii) whether the Commercial Taxes Officer, A Circle, had jurisdiction in view of the transfer of cases.

Issue (i): whether the sale of scrap material by the railways constituted business and attracted sales tax under the Rajasthan Sales Tax Act.

Analysis: The definition of business under section 2(cc) of the Rajasthan Sales Tax Act was applied in the light of the Supreme Court ruling which had already held that the railway activity of selling unserviceable material and scrap iron amounts to business and that such sales are connected with or ancillary to commerce. The present challenge involved the same legal question and the earlier authoritative decision governed the issue.

Conclusion: The issue was decided against the Union of India and the railway sale of scrap was held taxable as business activity.

Issue (ii): whether article 285 of the Constitution of India exempted the Union property from sales tax on such sales.

Analysis: Article 285 protects Union property from taxes imposed directly on property. Sales tax, however, is levied on the transaction of sale and is an indirect tax, not a direct tax on property. Applying the constitutional scheme and the distinction between direct and indirect taxes, the exemption under article 285 was held inapplicable to sales tax on scrap sales by the railways.

Conclusion: The constitutional challenge failed and article 285 did not bar levy of sales tax.

Issue (iii): whether the Commercial Taxes Officer, A Circle, had jurisdiction in view of the transfer of cases.

Analysis: Reading rule 52 with rule 4 of the Rajasthan Sales Tax Rules, 1955, the Commissioner was empowered to transfer a case from one assessing authority to another after notice to the dealer. The transfer order was therefore treated as lawful and no jurisdictional infirmity was found in the assessing authority proceeding with the matter.

Conclusion: The jurisdictional challenge was rejected and the transfer of the case was upheld.

Final Conclusion: The writ petitions failed on all the substantive questions raised, and the assessment proceedings were permitted to continue before the transferee assessing authority.

Ratio Decidendi: Sales tax on the sale of railway scrap is a levy on the transaction of sale, not a tax directly on Union property, and the statutory definition of business covers such incidental sale activity.

---