Article 285 immunity does not bar sales tax on railway catering transactions, and the public authority may be treated as a dealer.

Article 285 does not extend constitutional immunity to indirect taxes such as sales tax, so Railway departmental catering sales were not exempt on that ground. Where goods are supplied or transferred for consideration and property passes in a taxable transaction, the activity can satisfy the statutory concept of sale. On that basis, the Railway or Union of India could be treated as a dealer under the applicable sales tax law, and the levy was sustained. The earlier view treating such railway catering sales as immune was not accepted in light of the settled line of authority.

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Issues: (i) Whether the Railway departmental catering activity was protected from State sales tax by Article 285 of the Constitution of India. (ii) Whether the Railway or the Union of India could be treated as a dealer for the purpose of the sales tax law.

Issue (i): Whether the Railway departmental catering activity was protected from State sales tax by Article 285 of the Constitution of India.

Analysis: The constitutional exemption under Article 285 was held not to extend to indirect taxes such as sales tax. The Court relied on the settled position that immunity of Union property is confined to direct taxes on property and does not bar levy on the sale of goods. The earlier view treating sales by Railway catering departments as immune was not accepted in the light of the subsequent binding line of authority.

Conclusion: The contention based on Article 285 was rejected and the levy of sales tax was held to be valid.

Issue (ii): Whether the Railway or the Union of India could be treated as a dealer for the purpose of the sales tax law.

Analysis: The Court applied the settled principle that where goods are supplied or transferred and property passes for consideration, the transaction answers the statutory concept of sale. On that footing, the departmental catering activity and related transactions fell within the statutory definition attracting dealer liability under the sales tax law.

Conclusion: The Railway or Union of India was held to fall within the definition of dealer for the relevant sales tax purposes.

Final Conclusion: The challenge to the interim order failed on both grounds, and the writ petition was dismissed with the levy sustained.

Ratio Decidendi: Article 285 of the Constitution of India does not confer immunity from indirect taxes such as sales tax, and a public authority engaging in taxable sales transactions may be treated as a dealer under the applicable sales tax law.

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