Article 285 immunity limited to direct taxes; sales tax on confiscated goods upheld as tax on the sale transaction.

Article 285 of the Constitution protects Union property from direct taxes, but not from indirect levies such as sales tax where the taxable event is the sale itself. The Supreme Court of India held that sales tax on the sale of confiscated goods by the Collector of Customs was an impost on the transaction of sale, not a direct tax on the goods. The earlier contrary view was distinguished, and the larger-bench distinction between direct and indirect taxation was applied. The Tribunal's view was therefore upheld, and Article 285 was held not to bar the levy.

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Issues: Whether Article 285 of the Constitution of India barred levy of sales tax on sale of confiscated goods by the Collector of Customs under the Bengal Finance (Sales Tax) Act, 1941.

Analysis: The sale of confiscated goods attracted sales tax as an impost on the act of sale, not as a direct tax on the goods themselves. Article 285 was held to confer immunity from direct taxes on Union property, but not from indirect taxes such as sales tax. The earlier view treating such a sale as immune was distinguished, and the later larger-bench view affirming the distinction between direct and indirect taxation was relied upon.

Conclusion: Article 285 did not bar the levy of sales tax on the sale of confiscated goods, and the Tribunal's view was upheld.

Ratio Decidendi: Article 285 immunises Union property from direct taxes only and does not extend to indirect taxes such as sales tax, where the taxable event is the sale.

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