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Issues: (i) Whether the petitioner's post-corporatisation activity of printing and supplying currency notes to the Reserve Bank of India constituted a business so as to make it a dealer under the VAT law. (ii) Whether currency notes printed by the petitioner were goods and the transaction with the Reserve Bank of India amounted to sale. (iii) Whether protection under Article 285 of the Constitution of India barred levy of the impugned indirect taxes.
Issue (i): Whether the petitioner's post-corporatisation activity of printing and supplying currency notes to the Reserve Bank of India constituted a business so as to make it a dealer under the VAT law.
Analysis: The Court read the definitions of business and dealer under the State VAT law together with the memorandum of association of the corporation and the factual position after corporatisation. It found that the company had been formed to carry on the business of designing and printing currency and bank notes, and that the activity was being carried on on commercial lines with sales turnover and receipts. On that basis, the Court held that the petitioner was carrying on business and fell within the statutory definition of dealer.
Conclusion: The petitioner was held to be engaged in business and to be a dealer under the VAT law.
Issue (ii): Whether currency notes printed by the petitioner were goods and the transaction with the Reserve Bank of India amounted to sale.
Analysis: The Court held that before issuance under the Reserve Bank of India Act the printed notes were movable property and therefore goods within the broad statutory definition. It further held that the petitioner supplied the printed notes to the Reserve Bank of India for consideration, so the transaction involved transfer of property in goods for value. The Court distinguished authorities dealing with sovereign or non-transferable activities and concluded that the essential elements of sale were present.
Conclusion: Currency notes printed by the petitioner were treated as goods and their supply to the Reserve Bank of India was treated as a sale.
Issue (iii): Whether protection under Article 285 of the Constitution of India barred levy of the impugned indirect taxes.
Analysis: The Court held that Article 285 does not grant immunity from indirect taxes. Since the impugned levy was in the nature of VAT, entry tax and sales tax related imposts, the constitutional protection claimed by the petitioner was unavailable. The Court therefore rejected the contention that the petitioner, even as a government-owned entity, was exempt from the tax demands on that basis.
Conclusion: Article 285 did not bar the levy of the impugned taxes.
Final Conclusion: The writ petitions failed on all substantive grounds because the petitioner's activity was held to be business, the printed notes were treated as goods sold for consideration, and constitutional immunity from indirect taxation was denied.
Ratio Decidendi: A government-owned corporation that carries on commercial printing and supply of currency notes for consideration can be treated as a dealer engaged in business, and the printed notes supplied before issuance constitute goods sold for value; Article 285 does not exempt such indirect taxes.
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