Government press not a dealer where supplies are purely governmental; waste paper auction and penalty also fall outside tax liability.

A Government press supplying forms, registers and stationery only to Government departments against payment was held not to be carrying on trade under section 2(c) of the Haryana General Sales Tax Act, 1973, because its activities were part of governmental functioning and not a commercial venture. As it was not a dealer, the public auction sale of waste paper could not be treated as ancillary or incidental to trade and was not exigible to tax. The penalty orders also failed because they depended on the incorrect premise that the press was taxable as a dealer. The references were answered against the Revenue.

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Issues: (i) Whether the Government press, in printing and supplying forms, registers and other stationery to Government departments against payment, carried on trade so as to be a dealer under section 2(c) of the Haryana General Sales Tax Act, 1973; (ii) whether the disposal of waste paper by public auction was ancillary or incidental to such trade and exigible to tax; (iii) whether the penalty orders were liable to be quashed.

Issue (i): Whether the Government press, in printing and supplying forms, registers and other stationery to Government departments against payment, carried on trade so as to be a dealer under section 2(c) of the Haryana General Sales Tax Act, 1973.

Analysis: A department of Government can fall within the definition of dealer only if it carries on the activity of purchasing, selling, supplying or distributing goods as contemplated by the Act. The press was wholly owned by the Government of India and its supplies were made only to Government departments and instrumentalities, not to private persons. The activity was held to be part of governmental functioning and not a commercial venture, and there was no sale in law for consideration in the relevant sense.

Conclusion: The press was not carrying on trade and was not a dealer.

Issue (ii): Whether the disposal of waste paper by public auction was ancillary or incidental to such trade and exigible to tax.

Analysis: Casual sales are exigible only when they are ancillary or incidental to an existing trading or commercial activity. Since the press was not engaged in business or commerce and its principal function was merely to serve Government departments, the sale of waste paper could not be treated as incidental to trade. It was a consequence of its non-commercial governmental activity and did not acquire the character of taxable trade.

Conclusion: The disposal of waste paper was not ancillary or incidental to trade and was not exigible to tax.

Issue (iii): Whether the penalty orders were liable to be quashed.

Analysis: Penalty was founded on the assumption that the press was a dealer and that its transactions were taxable. Once the press was held not to be a dealer and its activities were found outside the definition of trade, the foundation for penalty ceased to exist.

Conclusion: The penalty orders were rightly quashed.

Final Conclusion: The references were answered against the Revenue, and the orders of assessment and penalty were upheld as having been correctly set aside by the Tribunal.

Ratio Decidendi: A Government department is liable as a dealer only when it conducts a real purchasing, selling, supplying or distributing activity amounting to trade or commerce; where its operations are purely governmental and non-commercial, occasional disposal of surplus material does not become ancillary trade.

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