Union property sales tax, dealer status of government departments, and interest on advance tax default upheld.

Sales tax on the transaction of sale of Union property was held not to be a tax directly on property under Article 285(1), so the constitutional exemption did not bar the levy. The amended Rajasthan Sales Tax Act, 1954 brought Government departments within the definitions of business and dealer, so the department was treated as a dealer and could not escape assessment. Advance tax payable under section 7(2A) formed part of tax under the Act, so default attracted interest under section 11B. All three issues were decided against the assessee and in favour of the revenue.

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Issues: (i) whether sales tax could be levied on the sale of property belonging to the Union in view of Article 285(1) of the Constitution of India; (ii) whether the Government department conducting the sales was a dealer within the meaning of the Rajasthan Sales Tax Act, 1954; (iii) whether advance tax payable under section 7(2A) of the Rajasthan Sales Tax Act, 1954 was tax so that interest under section 11B could be levied for default.

Issue (i): whether sales tax could be levied on the sale of property belonging to the Union in view of Article 285(1) of the Constitution of India.

Analysis: Article 285(1) exempts Union property from taxes imposed directly on such property, but the taxable event under sales tax is the sale transaction and not ownership of the goods. The distinction between a tax directly on property and a tax on the act of sale means that the constitutional exemption does not extend to sales tax levied on disposal of Union goods.

Conclusion: The levy was valid and this issue was decided against the assessee.

Issue (ii): whether the Government department conducting the sales was a dealer within the meaning of the Rajasthan Sales Tax Act, 1954.

Analysis: The amended definitions of business and dealer under the Rajasthan Sales Tax Act, 1954 brought Government departments within the taxing net. The statutory scheme treated the Central and State Governments and their departments as dealers, and casual or ancillary transactions connected with sale activity were also covered. On that footing, the department could not avoid dealer status.

Conclusion: The department was a dealer and this issue was decided against the assessee.

Issue (iii): whether advance tax payable under section 7(2A) of the Rajasthan Sales Tax Act, 1954 was tax so that interest under section 11B could be levied for default.

Analysis: Tax under section 2(r) includes tax leviable under the Act, and the advance monthly payment required under section 7(2A) formed part of the statutory tax collection mechanism. Default in payment of such advance tax therefore attracted the interest provision in section 11B.

Conclusion: Advance tax was treated as tax and interest was leviable; this issue was decided against the assessee.

Final Conclusion: All three referred questions were resolved in favour of the revenue, and the revision failed.

Ratio Decidendi: A sales tax levy on the transaction of sale is not a tax directly on Union property within Article 285(1), and statutory amendments may deem Government departments to be dealers while treating advance tax as tax for the purpose of interest on default.

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