Civil Appeal Nos
2815 2819NT of 1977 From the Judgment and Order dated 18101976 of the Punjab  Haryana High Court in Civil Writ Nos
1183 1184 1795 1796 and 1797 of 1970
OP Sharma LK Gupta and Miss A Subhashini for the Appellant
ST Desai JD Jain and Ms Kawaljit Kochar for the Respondents
The Judgment of the Court was delivered by PATHAK J
These appeals by special leave are directed against the judgment and order of the High Court of Punjab and Haryana dismissing the writ petitions filed by the appellant against proceedings for the assessment of sales tax
The appellant the Government Medical Store Depot Karnal is a Depot functioning under the Assistant Director General Stores who is in charge of the Medical Stores Organisation in the country under the Directorate General of Health Services Ministry of Health Government of India New Delhi
It is a department of the Central Government and supplies medicines and hospital equipment manufactured in India or imported from abroad to Government hospitals 453 Government institutions Health Centres Dispensaries and Primary Health Units located in northern India some of which are run by local bodies such as Panchayats Panchayat Samitis Zila Parishads and Municipalities
It does not deal with private hospitals and individuals
The organisation works as a public utility service on a no profit no loss  basis
The medical stores and hospital equipment are purchased by the appellant and supplied to the hospitals and medical institutions after adding a service charge of 10 per cent on the cost of the indented stores
During the year 1956 57 a question arose whether the activities of the appellant brought it within the definition of the expression dealer  as defined in section 2d of the Punjab General Sales Tax Act 1948
The Excise and Taxation authorities took the view that the appellant was not a dealer because the transactions conducted by it did not include an element of profit
By a letter dated July 15 1957 the appellant was informed by the Excise and Taxation Commissioner Punjab that it need not be registered under the Punjab General Sales Tax Act
On August 21 1968 the Excise and Taxation Officer Karnal took note of a decision of this Court in Deputy Commercial Tax Officer Saidapet Madras vs Enfield India Ltd Co operative Canteen 1968 21 STC 317 and called upon the appellant to produce its account books for the years 1965 66 1966 67 and 1967 68 for the purpose of assessment to sales tax on the Medical Stores and equipment supplied by it
The appellant was also directed to get itself registered as a dealer under the Act
The appellant replied on August 24 1968 that it did not fall within the scope of the definition of dealer  and it seems that the Government of India in the Ministry of Health also intervened in the matter
The Excise and Taxation Officer however continued to maintain that the appellant was a dealer within the meaning of the Act
The Excise and Taxation Officer then issued formal notices to the appellant for the production of its account books for the years 1964 65 to 1968 69 and after giving an opportunity to the appellant to be heard he proceeded to make assessment orders dated March 25 1970 for the years 1964 65 and 1965 66 and also passed penalty orders for each year under the Punjab General Sales Tax Act as well as under the Central Sales Tax Act
He also initiated assessment proceedings for the years 1966 67 1967 68 and 1968 69
454 The appellant filed five writ petitions in the High Court of Punjab and Haryana challenging the assessment proceedings pertaining to the assessment years 1964 65 to 1968 69 respectively taken under the Punjab General Sales Tax Act and the Central Sales Tax Act
The writ petitions were dismissed by the High Court by a common judgment and order dated October 18 1976
The High Court held that the appellant was a dealer notwithstanding that it was not carrying on a business for earning profit
Learned counsel for the appellant contends that the appellant is not a dealer because the activity carried on by it is pursued without any motive of earning profit and therefore it cannot be described as a business
It is pointed out that the definition of the word dealer  in section 2d of the Punjab General Sales Tax Act is different from the definition of that word in section 2c of the Haryana General Sales Tax Act
While the Haryana Act states that a person is a dealer whether or not he is inspired by a profit motive in carrying on his business no such statement is contained in the definition under the Punjab Act
It is urged that these appeals are governed by the Punjab General Sales Tax Act and not by the Haryana General Sales Tax Act
When the Punjab General Sales Tax Act 1948 was enacted it applied to the territories of the State of Punjab as that State was constituted on the partition of India on August 15 1947
The State of Punjab so constituted continued in existence until it was again partitioned under the with effect from the appointed day November 1 1966
The Punjab General Sales Tax Act which had operated in the territories constituting the original State of Punjab up to October 31 1966 continued as the law in force on and from November 1 1966 even in those territories which now comprised the State of Haryana
This was pursuant to section 88 of the 
Its continuance was subject to any change in the law effected by the Haryana Legislature
The Haryana Legislature could permit the Punjab General Sales Tax Act to continue in force subject to legislative modifications made by it in that law
Alternatively it could supersede and repeal the Punjab Act by enacting an independent Haryana Act to replace it
The Haryana Legislature amended the Punjab Act from time to time
It did so for instance by the Punjab General Sales Tax Haryana Amendment and Validation Act 1969
Later the entire Punjab Act was repealed by the enactment of the Haryana General Sales Tax Act 1973 which came into effect from May 5 1973
Some provisions of the Haryana Act came into 455 force from an earlier date among being them the definition of dealer  set forth in section 2c of that Act which operated retrospectively with effect from September 7 1955
The present appeals are concerned with the assessment years 1964 65 to 1968 69 and the question is whether they are governed by the definition of the word dealer  in section 2d of the Punjab Act or by section 2c of the Haryana Act
During that period section 2d of the Punjab Act in its application to the State of Haryana defined the word dealer  as follows S2d
Dealer means any person including a Department of Government who in the normal course of trade sells or purchases goods that are actually delivered for the purpose of consumption in the State of Haryana irrespective of the fact that the main place of business of such person is out side the said State and where the main place of business of any such person is not in the said State dealer  includes the local manager or agent of such person in Haryana in respect of such business Section 2c of the Haryana General Sales Tax Act however defines the word dealer  in the following terms section 2c
dealer means any person including a department of Government who carries on whether regularly or otherwise trade whether with or without a profit motive directly or otherwise whether for cash deferred payment commission remuneration or other valuable consideration of purchasing selling supplying or distributing any goods in the State or importing into or exporting out of the State any goods irrespective of the fact that the main place of business of such person is outside the State and where the main place of business of such person is not in the State includes the local manager or agent of such person in the State in respect of such business
 It is apparent that the existence or absence of a profit motive is irrelevant when identifying a dealer  under the Haryana Act
No such statement of immateriality is contained in the definition of the word dealer  under the Punjab Act as applied to the State of Haryana
456 What is important to note is that the definition of the word dealer  in the Haryana Act has been framed only for the purpose of the provisions of that Act
The opening words of the definition section section 2 make it clear that the expressions defined by that section are the expressions as used in the Haryana Act
Wherever the word dealer  is used in the Haryana Act one must turn to the definition contained in section 2c of that Act
Now except for a few specified provisions the Haryana General Sales Tax Act came into force on May 5 1973
Section 6 its charging provision commenced to operate from that date
Section 61 of the Haryana Act declares that the first year of which the turnover is liable to tax under that Act is the year immediately preceding the commencement of this Act
 It is obvious that section 6 does not govern the assessment years which are the subject of these appeals
Therefore it is immaterial for our purposes that the definition of the word dealer  under the Haryana Act has to be read retrospectively with effect from September 7 1955
Because as we have pointed out section 2c relates to the word dealer  contained in the provisions of the Haryana Act and the charging provision of the Haryana Act did not operate during the assessment years with which these appeals are concerned
These appeals will be governed by the Punjab General Sales Tax Act and it is section 2d of that Act which must be looked to for ascertaining the definition of the word dealer  in that Act
It may be mentioned that section 65 of the Haryana General Sales Tax Act repealed the Punjab General Sales Tax Act
Section 65 contains a proviso that such repeal will not affect the previous operation of the repealed Act or any right title obligation or liability already acquired accrued or incurred thereunder
The liability incurred by a dealer in respect of the years under consideration in these appeals is a liability incurred under the charging provision section 4 of the Punjab General Sales Tax
To ascertain who such dealer is one must read the definition of the word dealer  in the Punjab General Sales Tax Act
No reference is permissible for that purpose to the definition in the Haryana General Sales Tax Act
No doubt the further language in the proviso to section 65 of the Haryana General Sales Tax Act provides that anything done or any action taken in respect of the liability incurred under the Punjab General Sales Tax Act will be deemed to have been done or taken in the exercise of the powers conferred by or under the provisions of the Haryana Act as if that Act was in force on the date on which such thing was done or action taken
This merely refers to the provisions enacted for the purpose of enforcing the liability and realising the tax and does not affect the position that the charge is under section 4 of the Punjab General Sales Tax Act and to appreciate who the 457 dealer  mentioned therein is one must turn to section 2d of the Punjab Act
It will be noticed that the definition of the word dealer  in section 2d of the Punjab Act does not treat the existence of a profit motive in the business as an immaterial factor
In Govt
Medical Store Depot Gauhati vs The Supdt
of Taxes Gauhati  Ors   the question was whether a Government Medical Store Depot set up at Gauhati by the Central Government in the Ministry of Health Family Planning and Urban Development for the purpose of procuring and supplying medical stores to Central and State Government institutions could be made liable to sales tax under the Assan Finance Sales Tax Act 1956 and under the 
The appellant the Government Medical Store Depot took the stand that the supply of medical stores to the Government institutions were without any profit motive on the basis of no loss no profit and unless it was found that the transactions had been carried on with a view to making a profit the appellant could not be held to be a dealer  liable to tax
This Court observed that in the definition of business  the profit motive had not been omitted and therefore without anything more it could not be said that the person carrying on those transactions was a dealer
The Court rested the burden on the Revenue to show that the transactions carried on by the appellant were carried on with a profit motive
In the end inasmuch as the appeals before it were concerned with the years 1965 66 to 1967 68 having regard to the lapse of time the Court while allowing the appeals and quashing the assessments did not think it fit to remand the cases for fresh assessment proceedings
We think we should do likewise
Accordingly the appeals are allowed the judgment and order of the High Court are set aside and the assessment proceedings which are the subject of these appeals are quashed
In the circumstances of the case there is no order as to costs
MLA Appeals allowed


Summary:
Pursuant to section 88 of the  the Punjab General Sales Tax Act 1948 continued as the law in force on and from Nov 1 1966 even in those territories which now comprise the State of Haryana
The Punjab Act was repealed by the enactment of the Haryana General Sales Tax Act 1973 which came into effect from May 5 1973
Some Provisions of the Haryana Act came into force from an earlier date among being them the definition of dealer  set forth in section 2c of that Act which operated retrospectively with effect from Sept 7 1955
The appellant Government Medical Store Depot Karnal set up by the Central Government used to purchase medical stores and hospital equipment and supplied them only to Government hospitals Government institutions health centres dispensaries and primary health clinics located in northern India on a no profit no loss  basis
On August 21 1968 the Excise and Taxation officer Karnal after giving an opportunity to the appellant held that the appellant was a dealer under the Punjab Act and proceeded to make assessment orders for the years 1364 65 and 1365 66 and also passed penalty orders for each year
He also initiated assessment proceedings for the years 1966 67 to 1968 69
The appellant s writ petitions in the High Court challenging the aforesaid assessment proceedings were dismissed
Allowing the appeals by the appellant  HELD li The existence or absence of a profit motive is irrelevant when identifying a dealer  under the Haryana Act
No such 451 statement of immateriality is contained in the definition of the word dealer  under the Punjab Act as applied to the State of Haryana
The definition of the word dealer  in the Haryana Act has been framed only for the purpose of the provisions of that Act
The opening words of the definition under section 2 make it clear that the expressions defined by that section are the expressions as used in the Haryana Act
Wherever the word dealer  is used in the Haryana Act one must turn to the definition contained in section 2c of that Act
Now except for a few specified provisions the Haryana General Sales Tax Act came into force on May 5 1973
Section 6 its charging provisions commenced to operate from that date
Section 61 of the Haryana Act declares that the first year of which the turnover is liable to tax under that Act is the year Immediately preceding the commencement of this Act
 It is obvious that section 6 does not govern the assessment years which are the subject of these appeals
Therefore it is immaterial as to whether the definition of the word dealer  under the Haryana Act has to be read retrospectively with effect from Sept 7 1955
Section 2c relates to the word dealer  contained in the provisions of the Haryana Act and the charging provision of the Haryana Act did not operate during the assessment years with which these appeals are concerned
These appeals will be governed by the Punjab General Sales Tax Act and it is section 2d of that Act which must be looked to for ascertaining the definition of the word dealer  in that Act
455H 456A D 1ii The definition of the word dealer  under section 2d of the Punjab Act does not treat the existence of the profit motive in the business as an immaterial factor and the burden is on the revenue to show that the transactions carried on by the appellant were carried on with a profit motive
The assessment proceedings which are the subject of these appeals are therefore quashed
Having regard to the lapse of time it is not right to remand the cases for fresh assessment proceedings
457D E 2
Section 65 of the Haryana General Sales Tax Act repealed the Punjab General Sales Tax Act
Section 65 contains a proviso that such repeal will not affect the previous operation of the repealed Act or any right title obligation or liability already acquired accrued or incurred thereunder
The liability incurred by a dealer in respect of the years under consideration in these appeals is a liability incurred under the charging provision section 4 of the Punjab General Sales Tax
To ascertain who such dealer is one must read the definition of the word dealer  in the Punjab General Sales Tax Act
No reference is permissible for that purpose to the definition in the Haryana General Sales Tax Act
No doubt the further language in the proviso to section 65 of the Haryana 452 General Sales Tax Act provides that anything done or any action taken in respect of the liability incurred under the Punjab General Tax Act will be deemed to have been done or taken in the exercise of the powers conferred by or under the provisions of the Haryana Act as if that Act was in force on the date on which such thing was done or action taken
This merely refers to the provisions enacted for the purpose of enforcing the liability and realising the tax and does not affect the position that the charge is under section 4 of the Punjab General Sales Tax Act and that to appreciate who the dealer  mentioned therein is one must turn to section 2d of the Punjab Act
456E H 457A Deputy Commercial Tax Officer Saidapet Madras vs Enfield India Ltd Co operative Canteen 1968 21 STC 317 and Government Medical Store Depot Gauhati vs The Supdt of Taxes
Gauhati  Ors   referred to