GOVERNMENT MEDICAL STORE DEPOT, KARNAL versus STATE OF HARYANA AND ANOTHER

Citation: [1986] 3 S.C.R. 450 · Decided: 05-08-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
GOVERNMENT MEDICAL STORE DEPOT, KARNAL 
v. 
STATE OF HARYANA AND ANOTHER 
AUGUST 5, 1986 
[R.S PATHAK AND SABYASACHI MAUKHARJI, JJ.] 
Punjab General. Sales Tax Act, 1948, s. 2(d)-Dealer-Who is-
Existence of profit motive-Whether an immaterial factor-Govern-
ment Medical Store Depot-Whether a 'dealer'. 
Pursuant to s. 88 of the Punjab Reorganisation Act, 1966, the 
Punjab General Sales Tax Act, 1948 continued as the law in force on 
and from Nov. I, 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 The Punjab Act was repealed by the enactment of the 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 s. 
2(c) of that Act which operated retrospectively with effect from Sept. 7, 
1955. 
The appellant, Government Medical Store Depot, Kamal, set up 
by the Central Government, used to purchase medical stores and hospi-
tal equipment and supplied them only to Government hospitals, Gov-
ernment 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 Kamal, 
after giving an oportupity to the appellant, held that the appellant was a 
dealer under the Punjab Act and proceeded to make assessment orders 
for the years 1964-65 anci 1965-66, 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 Higo Court challenging 
the aforesaid assessment proceedings were dismissed. 
Allowing the appeals by the appellant, 
HELD: 1.(i) The existence or absence of a profit. motive is 
H 
irrelevant when identifying a 'dealer' under the Haryana Act. No such 
450 
¥ 
~"
1 I
);. 
,.
GOVf. MED. STORE v. STATE OF HARYANA 
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 s. 2 make it clear that the expressions defmed 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 defini-
tion contained in s. 2(c) 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 6(1) 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 s. 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 2(c) relates to the word 'dealer' 
contained in the provisions of the Haryana Act, and the charging provi-
sion 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 s. 2(d) of that Act which 
must be looked to for ascertaining the definition of the word 'dealer' in 
that Act. [455H; 456A-D) 
!(ii) The definition of the word 'dealer' under s. 2(d) 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 appe-
als 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 
Pnbjab 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 
A 
B 
c 
D 
E 
F 
thereunder. The liahiliiy incurred by a dealer in respect of the years 
G 
under consideration in these appeals is a liability

Excerpt shown. Read the full judgment & AI analysis in Lexace.