Civil Appeals Nos
1393 1398 of 1975
Appeals by Special Leave Petitions from the Judgment and Order dated 31 1G 1975 of the Andhra Pradesh High Court in Revision Case No 3 to 8 of 1974
VP Raman Addl
Solicitor General of India GL Sanghi and Girish Chandra for the appellant
A K Sen and PP Rao for the respondent
The Judgment of the Court was delivered by KRISHNA IYER J
This batch of cases between a State Government Andhra Pradesh and the Union Government sug gests the need for litigative discipline for our governments and a periodical postauditing in that behalf
And now we make good this inaugural observation by narrating briefly the necessary facts and examining closely the few points tersely presented by the Additional Solicitor General ap pearing for the common appellant in all these cases
Our Constitution mandates on the State welfare activism and contemplates its undertaking distribution of commodities essential to the life of the community at large through trade and business directly organised or in other suit able ways
Foodgrains and fertilisers are strategic items and the Union of India has in fulfilment of high governmen tal functions been procuring these vital goods and selling them lo the States or their nominees so as to ensure equita ble supplies and price discipline
Pursuant to this com mendable programme the Central Government constructed an infra structure and pertinent to our purpose appointed inter alia a Joint Director of Food stationed in the port town of Visakapatnam
This Officer sold for the price fixed by his Government food  grains and fertilisers to the Andhra Pradesh State and other States
These transactions in the language of sales tax law fell within the twin categories of intra State and inter State sales
A vigilant State Sales Tax Officer directed the filing of returns by the appellant under the Andhra Pradesh General Sales Tax Act 1957 Act VI of 1957 for short the State Act and the for short the Central Act
This was complied with in six returns for the span of three years but was coupled with a plea of immunity from tax on grounds which will be presently discussed
The adverse fate of those contentions at the hands of the Sales Tax Officer and the appellate officer eventuated in further appeals to the Tax Tribunal
The three appeals covered by the Central Act were remanded for the narrow purpose of determining the presence of profit motive in the Central Government while undertaking these dealings as that element 61 is decisive of the appellant being a dealer doing business and therefore liable to tax under the Central Act
The other three appeals were duly dismissed and these successive defeats notwithstanding the Central Government s Joint Director moved the High Court in all the
six cases
Un daunted by discomfiture there the appellant has arrived here discretion not being the better part of valour even where public money is involved
The learned Additional Solicitor General has rightly discarded some of the rhetorical but lifeless contentions urged before the High Courtbased on Part IV of the Consti tution
The surviving points pressed before us may now be set out and discussed
A hyper technical point half heartedly urged may be mentioned first it being easy of rejection Argued counsel that since in any view
the sales were by the Central Government the Joint Director could not be the assessee
Obviously this official represented his Government in the sales and therefore could legitimately be dealt with for sales tax
proceedings as representing the Union Govern ment
The less said about such obstructive contention on behalf of a public functionary the better
Devoid of presentability we decline to spend more space on this plea
Next in order was the argument that the defination of dealer  in section 2b of the Central Act read in implicit harmony with s9 excludes the Central Government as an exigible entity
The thrust of the argument if we may say so is that the Central Government being the taxing authori ty may not without being guilty of grotesqueness tax itself
Counsel was cautious to concede that legally it was not impossible for the Central Government as a statutorily empowered agency to collect tax that falls due from it is as an assessee
Indeed if the statute deafly states that government is liable to pay tax qua dealer it is not a legal plea to say that government is also the taxing author ity
We have therefore to examine whether  there is any necessary exclusion from exigibility or other provision of immunisation which can be spelt out of section 2 or section 9
Section 2b Of the
Central Act reads 2
b In this Act unless the context otherwise requires dealer  means any person who carries on the business of buying or selling goods and includes a Government which carries on such business
Quite plain is the conclusion from a bare reading of this provision that a government ergo any government is by express inclusive definition made a dealer
The Central Government being a govern ment is squarely covered by the definition
Nor does section 9 rescue the appellant
True it is that the tax shall be levied by the Government of India
But it does so for the benefit of the other State Governments and indeed through the machinery of the State tax agency
Section 93reads The proceeds in any financial year of any tax including any penalty levied and collected under this Act in any State other than a Union Territory on behalf of the Government of India shall be assigned to that State and shall be re tained by it and the proceeds attributable to Union territories shall form part of the Consoli dated Fund of India
 62 Again article 269g of the Constitution speaks in the same strain viz that the real beneficiary of Central sales tax is the State designated in the above provisions the Union Government being empowered to levy behalf of and thereafter to assign to the respective States eventually entitled to the tax
We see no flaw in the reasoning of the High Court that the Central Government may tax itself if it comes to that
A subsidiary contention calculated to insulate the Central Government from liability was set up by the learned Additional Solicitor General to the effect that an undertak ing to distribute essential commodities by the State in implementation of its governmental obligations cannot be described as trading  activity or carrying on of busi ness without doing violence to the concepts of governmental functions and business operations
Indubitably the State has the power to carry on trade or business as is manifest from Art 196ii and other provisions
In dubitably the State distributes essential commoditise in a fair and equitable way for the survival of the community under its protection
It does not follow that we cannot harmonize the tow functions
It is well on the agenda of State activity that it carries on trade or business in essential commodi ties because it has the power to do carries on trade or business it it obligated to ensure even distribution of vital goods and because sections of the people We see no difficulty in inferring that the style martic activity of buying food grains and fetrilisers and selling them by the State although in fulfilment of a benificant national policy is never theless trade or business
Necessarily Government becomes a dealer  by definition and carries on busi ness within the meaning of the central
Act and the State Act omitting for a moment the distiction in the two defi nitions based upon the motive to make gain or profit
The conclusion therefore is inacvitable that the appellant representing the Central Government is rightly held to be the assessee We may hasten to mention that the ordinary concept of business has the element of gain or profit whose absence negatives the character of the activity as business in section 2b of the Central Act
A person becomes a dealer only if he carries on business and the Central Government can be designated as dealer  only if there
is profit motive
This question not having been investigated by the fact finding authorities has been directed to be gone into by the Tax Tribunal in the three
case revolving round the Central Act
So far as the State Act is concerned this question does not arise for the straight forward reason that the definition in section 21bbb of that Act expressly includes within the concept of business  any trade or any adventure or concern in the nature of trade or commerce carried on or undertaken whether or not with a motive to make gain or profit whether or not profit accrues therefrom 
Profit making in the State Act it was conceded by counsel for the Union was irrelevant in contrast to its pertinence in the Central Act
If this be the correct position in law it follows that the State Sales Tax Officer is entitled 10 collect sales tax from the appellant in regard to intra State sales even assuming that there is no profit motive or profit accrual
The reverse is the case so far as Central sales tax is concerned
In the result the orders passed by the Sales Tax Appel late Tribunal in all the six appeals affirmed as it were by the High Court are correct and these appeals deserve to be dismissed
63 We are conscious of the social implications of sales tax being leviable on essential commodities like food grains and fertilisers
Both these items are vital to the common man and his fragile budget
Any tax especially on food casts an extra burden on the poor who are the ultimate consumers of the article and victims of the impost
But this socially desirable objective can surely be achieved by appropriate notifications and if need be by necessary legislative direction
The Court has to interpret the law and apply it
The State through its agencies
makes the law for socially beneficial ends
It is not for the former to salvage the latter from the legal coils which are its own
handiwork
We make these observations lest it should be felt that judicial constructions has contributed to extra food tax
The blame if any must belong to the authors of the law
The appeals are dismissed with costs one set
PHP Appeals dismissed


Summary:
The Joint Director of Food stationed in the Port of Visakapatnam sold food grains and fertilizers to the Andhra Pradesh State and other States at the price fixed by the Central Government
The Sales Tax Officer of the Andhra Pradesh imposed the tax under the Andhra Pradesh General Sales Tax Act 1957 on the intra State sales and imposed tax under on the inter State sales
The Joint Director of Food claimed immunity from the tax on the ground that the element of profit motive was absent
Under the Andhra Pradesh Act the profit motive is irrelevant
The High Court of Andhra Pradesh therefore dismissed the appeals filed by the Central Government as far as they related to the tax under the Andhra Pradesh Act
The High Court however remanded the three appeals which per tained to the tax under the for deter mining the presence of profit motive in the Central Govern ment while undertaking the dealings in question
In appeals by Special Leave the appellant contend ed 1
Since the sales were by the Central Govern ment the Joint Director could not be the assessee
Section 2b of the Central Act read with section 9 excludes the Central Government as an exigible entity
An undertaking to distribute essential com modities by the State in implementation of its governmental obligations cannot be described as trading activity or carrying on of business without doing violence to the concepts of governmental functions and business operations
Dismissing the appeal HELD 1 Since the Joint Director represented the Central Government in the sales he can legitimately be dealt with for sales tax proceedings as representing the Union Government
61 C 2 Section 2b
of the Central Act in terms states that a dealer means any person who carries on the business of buying and selling goods and includes a Government which carries on such business
61 F 3 Section 93 of the Central Act provides that the tax and penalty collected shall be assigned to the State which recovers the tax
Therefore the real beneficiary of the Central Act is the State concerned
In any event there is no flaw in the reasoning of the High Court that the Central Government way tax itself
62 A B 4 The State has the power to carry on the trade or business as is manifest from article 196ii and other provi sions
Systematic activity of buying foodgrains and ferti lizers and selling them by the State although in fulfilment of the beneficiant national policy is never the
less trade or business
Necessarily Government may become a dealer which carries on business within the meaning of the different definitions in one Central Act and the State Act
62 B E 5 The question of profit motive is relevant for the purpose of Central Act
Since the question has not been investigated by the fact finding authorities the High court has rightly directed the authorities below to go into the said question
So far as the Andhra Act is concerned since the profit motive is 60 irrelevant because of the special definition in the Act the State Sales Tax Officer is entitled to collect sales tax from appellant in regard to intra State sales even assuming that there is no profit motive
62 E H 6 The Court observed that it is conscious of the social implications of the Sales Tax being leviable on the essential commodities like foodgrains and fertilizers
Any tax on food and fertilizers is bound to cause an extra burden on the poor who are the ultimate consumers but the court has to interpret the law and apply it
Necessary objective can be achieved by appropriate notifications or if need be necessary legislative directions
63 A B