JOINT DIRECTOR OF FOOD, VISAKAPATNAM versus THE STATE OF ANDHRA PRADESH

Citation: [1977] 1 S.C.R. 59 · Decided: 27-07-1976 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Dismissed

Judgment (excerpt)

-
JOINT :QIRECTOR OF FOOD, VISAKAPATNAM 
v. 
THE STATE OF ANDHRA PRADESH 
July 27, 1976 
59 
[H. R. KHANNA, V. R. KRISHNA IYER AND N. L. UNTWALIA, JJ.] 
Central Sales Tax Act, 1956-Sec. 2(b), 9-Andhra Pradesh General Sales 
Tax Act 1957-Central Government selling foodgrains and fertilizer, whether 
a dealer-Profit motive, if relevant-Whether State carries on business. 
The Joint Director of Food stationed in the Port of Visakapl\tnam 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 Central Sales Tax Act 
1956 on the inter State sales. 
The Joint Director of Food claimed immunity 
from the tax ou 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, therefo!:f', 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 pertained to 
the tax under the Central Sales Tax Act for determining the presence of 
profit motive in the Central Government while undertaking the dealings in 
question. 
In appeals by Special Leave the appellant contended : 
1. Since the sales were by the Central Government, the Joint Director 
could not be the assessee. 
2. Section 2(b) of the Central Act read with s. 9 excludes the Central 
Government as an exigible entity. 
3. An undertaking to distribute essential commodities 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 CJ 
(2) Section 2(b) 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 Fl 
(3) Section 9(3) 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 
may tax i!s'Clf. [62 A-BJ 
( 4) The State has the power to carry on the trade or business as is manifest 
from Art. 19(6){ii) and other provisions. Systematic activity of buying f©od-
grains and fertilizers and selling them by the State although in fulfilment of the 
beneficiant hational policy is never the less trade <Ji" 
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 
B 
c 
,D 
E 
F 
G 
H 
A 
B 
c 
60 
SUPREME COURT REPORTS 
[1977] 1 S.C.R. 
irrelevant because of the special definition in the Act the State Salas 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 arc "the ultimate consumers but the court has to interpret the: 
law and apply it. Necessary objective can be achieved by appropriate notifica-
tions or if need be, 'necessary legislative directions. [63 A-Bl 
· 
- 1, 
C1V1L APPELLATE JuRrso1cnoN : Civil Appeals Nos. 1393-
1398 of 1975. 
(Appeals by Special Leave Petitions from the Judgment and Order 
dated 31-10~1975, of the Andhra Pradesh High Court in Revision 
Case No. 3 to 8 of 1974). 
~ 
V. P. Raman, Addi. Solicitor General of In

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