Currency Notes printed for RBI held as goods , liable for VAT /Entry Tax

P.M. Choudhary, Advocate for the Petitioner. Sunil Jain and Rohit Mangal for the Respondent.

ORDER

Vivek Rusia, J – Petitioner has filed the present petition under Article 226 of the Constitution of India being aggrieved by the order of assessment passed by the Additional Assistant Commissioner, Commercial Tax, State of M.P by which assessment order has been issued under section 27(6) of the M.P. Commercial Tax Act, 1994 for the period from 10.02.2006 to 31.03.2006. Petitioner has filed 24 other connected writ petitions challenging the order passed by the assessing authority for different periods pertaining to Sales Tax, Entry Tax, Value Added Tax and Central Sales Tax. The list of writ petitions, nature of tax and period of assessment are as under:

2. All these writ petitions are being decided by a common order because common questions of law have been raised by the petitioner in all these writ petitions which are as under:

3. Petitioner/Bank Note Press, Dewas is a unit of Security Printing & Minting Corporation of India Ltd. (hereinafter referred to as ‘SPMCIL’) which is a Corporation established and incorporated as a wholly owned company by Government of India and the same came into existence w.e.f. 10.02.2006 as a corporate body. The said Corporation was formed after amalgamation of nine units including four Mints, four presses and one security paper mill i.e. India Government Mint Mumbai), India Government Mint (Kolkata), India Government Mint (Hyderabad), India Government Mint (Noida), Currency Note Press (Nashik), Bank Note Press (Dewas), India Security Press 9Nashik) and Security Printing Press which were earlier functioning under the Ministry of Finance, Govt. of India. SPMCIL is a company incorporated under the provisions of the Companies Act, 1956 with its headquarter at Jawahar Vyapar Bhawan, 16th Floor, Janapath, New Delhi. SPMCIL and the Govt. of India is engaged in the manufacture of security papers, minting of papers, printing currency and bank notes, non judicial stamp paper, postage stamp, travel documents etc. to meet the requirement of Reserve Bank of India for currency notes, coins, for State Government non-judicial stamp papers, for postal department stationery, stamps etc, for the Ministry of External Affairs, passport, VISA, stickers and other travel documents. All the aforesaid nine units (four security press, one security paper mill and four India Govt. Mints) including the petitioner were functioning under the Ministry of Finance, Govt. of India till 09.02.2006. Thereafter on a Union Cabinet decision dated 2.09.2005 by which the Government of India has decided to corporatise the functions of all nine units under the name called “Security Printing and Minting Corporation of India Limited.” Office memorandum has been issued by the Ministry of Finance dated 10.2.2006 by which Govt. of Inida has decided to transfer the existing functions of these nine units in respect of production of security grade paper, coins and printing of currency notes, stamps and non-judicial stamp papers to the SPMCIL w.e.f 13.01.2006. According to the petitioner Bank Note Press, Dewas was established by the Govt. of India at Dewas in the year 1973 for printing of currency notes of various denominations. After corporatization its units became part of SPMCIL. Before its corporatization there was no issue regarding levy of Sales Tax, Entry Tax and Central Sales Tax because petitioner was exempted from all the taxes imposed by the State of Madhya Pradesh by virtue of Article 285 of the Constitution of India. After 10.02.2006 a demand has been raised by the respondent/Department for payment of taxes. The petitioner voluntarily got registered as “Dealer” under the provisions of the M.P VAT Act, 2002 and a certificate of registration to that effect has been issued by the Department. It is contended by the petitioner that despite registration the activities of the petitioner cannot be treated as a business, therefore, they are not subject to the liability of any taxes like Sales Tax, Entry Tax, VAT and CST.

4. The Commercial Tax Department started issuing notices to the petitioner demanding entry tax on the value of the goods entered by the petitioner and CST on the sale and disposal of scrap material. Being aggrieved by the demand notice petitioner approached this Court by filing Writ Petition No.1231/07 (SPMCIL & another v. State of M.P & others). The Single Bench of this court vide order dated 21.02.2007 issued show cause notice and granted stay restraining the respondents from taking coercive action against the petitioner. The said writ petition was finally disposed of vide order dated 9.4.2007 by directing Principal Secretary, Commercial Tax Department to consider and decide the representation filed by the petitioner and the interim order was directed to be continued till the decision by the Principal Secretary. Vide order dated 1.5.2007/9.5.2007 the Principal Secretary has rejected the representation of the petitioner upholding the demand raised by the Department. After rejection of the representation the Commercial Tax Department started proceeding for assessment of the tax and demand orders were issued. Petitioner again approached this court by way of W.P.No.2772/07 challenging the legality and validity of the demand notice. Vide order dated 31.5.2007 the Single Bench of this Court has granted interim protection. Later on the writ petition was admitted and directed the parties to consider the issue in a joint meeting between the Principal Secretary, Commercial Tax Department and the senior functionaries of the Ministry of Finance, Govt. of India. According to the petitioner the meeting was held but the issue could not be settled amicably. The Govt. of M.P maintained its view that the petitioner is a dealer engaged in the business of printing of notes and is liable to pay the taxes applicable in the State of Madhya Pradesh. During the pendency of that petition the final order of assessment was passed which has been challenged in the present writ petition by the petitioner. Instead of filing appeal under section 46 of the VAT Act, 2002 petitioner has filed these writ petitions raising the questions of law as mentioned above. In these writ petitions notices were issued and initially no stay was granted but later when the department started pressing demand stay was granted. Petitioner has challenged the order of assessment passed under section 27(6) of the Commercial Tax Act by the respondent on the ground that despite there is no change in the function and activities of the Bank Note Press. Petitioner is a Govt. of India undertaking and performing the sovereign function of the Govt. of India. The petitioner cannot be said to be a dealer engaged in any business activities. The sale and supply of currency is out of the definition of goods under the VAT Act, 2002. Petitioner neither comes under the category of dealer and the activities are not under the definition of business. Respondents have failed to appreciate the definitions and the provisions of the Act have wrongly brought the petitioner within the purview of the VAT Act, hence the same is liable to be set aside and the petitioner cannot be relegated to the appellate authority or the appellate Tribunal under the Act as the provisions of the Act do not apply to them.

5. That after notice respondent filed detailed return in all the writ petitions raising the preliminary issue that the present writ petitions are not maintainable as the petitioner has not exhausted the remedy of appeal available under the Act of 2002. Respondent has placed reliance over the Memorandum and Articles of Association of SPMCIL in which the main object of the company is mentioned as business of designing of currency and bank notes, printing press for making and printing of currency and bank notes. Petitioner has filed an application for registration and got registered as dealer. The petitioner after becoming the part of the Corporation has come within the purview of M.P. Commercial Tax Act, 1994, Entry Tax Act, 1976 and VAT Act, 2002. The nature of work brings the petitioner within the definition of dealer and business. Petitioner has been levied taxes on the sale of boxes, M.S strips, hence the petitioner is liable to pay taxes under the provisions of VAT Act, 2002. Respondent has levied tax on the sale of scrap papers and M.S strips covered under the purview of entry No.62 of Schedule 2 of VAT Act, 2002. It is further contended that petitioner cannot get the protection of Article 285 of the Constitution of India as the Article applies to direct taxes but the VAT is an indirect tax which has been settled by the Apex Court in various cases, hence prayed for dismissal of the writ petition.

6. Shri P.M.Choudhary, learned counsel for the petitioner vehemently argued that function of the petitioner remained the same despite its corporatization after 31.01.2006. The petitioner being government company performing the same sovereign function of the Govt. of India. The government has retained prime function regarding policy formulation, design, security feature of currency and coin, administration, control and issue relating to counterfeiting etc. He further argued that the definition of dealer under section 2 (i) of the VAT Act, 2002 means any person who carries the business of buying, selling, supplying or distribution of goods directly or otherwise must carry the business of buying or selling or supplying goods. Petitioner company is not engaged in any business activity as defined under section 2 (c) and currency cannot be termed as goods, therefore, none of these three definitions bring the petitioner within the purview of the Act, therefore, petitioner is not liable to pay taxes to the respondent/department. In support of his contention petitioner has placed heavy reliance on the following judgments.

7. Per contra, Shri Sunil Jain, learned Senior Counsel and Additional Advocate General on behalf of the respondent/State argued that petitioner instead of filing writ petition ought to have preferred appeal before the appellate authority, therefore, writ petitions are liable to be dismissed on this ground alone. He further submits that as per the Memorandum of Association the main business of the petitioner is printing of currency notes which comes under the definition of goods and the petitioner comes under the category of dealer under section 2 (i) of the VAT Act, 2002, therefore, the authority has not committed any error while assessing the Taxes. He has further argued that currency notes printed by the petitioner are not currency notes until they are notified by the Reserve Bank of India under section 22 of the R.B.I Act and before that the petitioner is indulged in printing and selling of goods to the R.B.I, therefore, in all respect is dealer and after notification dated 10.02.2006 the petitioner is not liable to get exemption as enjoyed prior to 10.02.2006. He has further submitted that the petitioners are not entitled for the protection under Article 285 of the Constitution of India as the same is applicable to direct taxes only whereas VAT and Entry Taxes are indirect taxes for which Govt. of M.P is exclusively entitled to recover the same. He has placed reliance over the definition of direct taxes as referred in Black’s Law Dictionary, Eighth Edition that a tax that is imposed on property, as distinguished from a tax on a right or privilege. A direct tax is presumed to be borne by the person upon whom it is assessed, and no “passed on” to some other person. In support of his contention he has placed reliance over the judgment of the Supreme Court in the case of Karya Palak Engineer, CPWD, Bikaner v. Rajasthan Taxation Board, Ajmer and others reported in (2004) 7 SCC 195 where the Supreme Court has held that exemption on Union property under Article 285 of the Constitution of India from State taxes does not apply to levy of indirect taxes and the judgment of this Court in the case of Union of India and another v. State of M.P and others reported in 2004 SCC OnLine MP 607 and the judgment passed by the High Court of Patna in the case of Customs Department v. State of Biharreported in 2016 SCC OnLine Pat 2021 and prayed for dismissal of the writ petitions.

8. We have heard learned counsel for the parties at length.

9. SPMCIL was formed after of nine units including four Mints, four presses and one security paper mill which were earlier functioning under the Ministry of Finance. The company was incorporated on 13.01.2006 under the Companies Act, 1956 and has become a wholly owned Schedule A company of Govt. of India is engaged in the manufacture of security paper, coins, currency and bank notes, stamps, non-judicial stamp papers etc. So far as the currency notes printing is concerned, Currency Note Press, Nashik and Bank Note Press, Dewas are engaged in the production of bank notes for India as well as for foreign countries using state of the art technology. More than 40% of currency notes circulated in India are printed by these two units. These units are equipped with designing, engraving, complete Pre-printing and Offset facilities, Intaglio Printing machines, Numbering & Finishing machines etc. These units have captive railway treasury wagons/carriages for transporting the treasury consignments. These units have history of export of bank notes to countries like East Africa, Iraq, Nepal, Sri Lanka, Myanmar, Bhutan etc. Apart from bank currency, Bank Note Press Dewas also produces different types of security ink for various security organizations. Its annual installed capacity of inks is about 240 MT. Bank Note Press manufactures Quickset Intaglio Inks departmentally for use on Super Orlof Intaglio printing machines.

10. As per the term of “Corporatization” it is an act of reorganizing the structure of government owned entity into a legal entity with the corporate structure as found in the publicly traded companies. These companies tend to have a board of directors, management and share holders. It is about changing structure of a government or semi-government body so that it operates on business lines with a mandate to trade profitably and an obligation to account to the government for its financial performance. Prior to 2006 when these units were run by the Ministry of Finance, Govt. of India were not subjected to any liability of payment of Entry Tax by the Commercial Tax Department of M.P. One of the units i.e. Security Paper Mill, Hoshangabad approached this Court challenging the demand notice. Division Bench of Court in the case of Union of India and another v. State of M.P and others (supra) has considered the scope of Article 285 of the Constitution of India and the nature of activities of the unit and held that the security paper mill is not engaged in any business activity of selling papers of currency notes to any individual, the same are being used by other government presses for printing of currency notes of various denominations. There is no element of sale involved in the activities of the Union as papers of currency notes so manufactured are passed on to its other presses, not sold to public after printing of notes and have got no commercial value. Petitioner is discharging the sovereign function of the Union, therefore, entitled for protection under Article 285 of the Constitution of India and set aside the demand issued by the Commercial Tax Department pertaining to Entry Tax of raw material brought within the area of its premises. Shri Choudhary placed heavy reliance over this decision of the Division Bench with the submission that nature of working activities and functioning of printing of currency notes have not been changed and the same still remains the sovereign function of the Union, hence entitled for impunity from levy of taxes by virtue of Article 285 of the Constitution of India. Although there is Corporatization, change of administration and structure but still the decisions are taken by the Union government, therefore, the impugned demands are liable to be set aside. We are required to consider the effect of this judgment passed in the case of Union of India v. State of M.P (supra) after the year 2006 when the SPMCIL has been incorporated and registered under the Companies Act and we are also required to reconsider the definition of “business”, “dealer,” “goods” and “sale” again after corporatization of Bank Note Press in the changed circumstances. For ready reference definitions of “dealer”, “business”, “goods” and “sale” as per the Madhya Pradesh VAT Act, 2002 are reproduced below:

2(d)”Business” includes,—

2(i)”Dealer” means any person, who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes—

Explanation I – Every person who acts as an agent of a non- resident dealer, that is as an agent on behalf of a dealer residing outside the State and buys, sells,

supplies or distributes goods in the State or acts on behalf of such dealer as—

Explanation II – The Central or a State Government or any of their departments or offices which, whether or not in the course of business, buy, sell, supply or distribute goods, directly or otherwise, for cash or for deferred payment, or for commission, remuneration or for other valuable consideration, shall be deemed to be a dealer for the purpose of this Act.

Explanation III – Any non-trading, commercial or financial establishment including a bank, an insurance company, a transport company and the like which whether or not in the course of business buys, sells, supplies or distributes goods, directly or otherwise, for cash or for deferred payment, commission, remuneration or for other valuable consideration, shall be deemed to be a dealer for the purposes of this Act:

2(m)”Goods” means all kinds of movable property including computer software but excluding actionable claims, newspapers, stocks, shares, securities or Government stamps and includes all materials, articles and commodities, whether or not to be used in the construction, fitting out, improvement or repair of movable or immovable property, and also includes all growing crops, grass, trees, plants and things attached to, or forming part of the land which are agreed to be severed before the sale or under the contract of sale;

2(u)”Sale” with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes—

Explanation – (a) Notwithstanding anything contained in the Sale of Goods Act, 1930 (III of 1930), where a sale or purchase of goods takes place in pursuance of a contract of sale, such sale or purchase shall be deemed for the purposes of this Act to have taken place in the State of Madhya Pradesh irrespective of the place where the contract of sale or purchase might have been made, if the goods are within the State—

(b) Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places;

(c) Notwithstanding anything to the contrary contained in this Act or any other law for the time being in force, two independent sales or purchases shall, for the purposes of this Act, be deemed to have taken place,

(d) Notwithstanding anything to the contrary contained in this Act or any other law for the time being in force, two independent sale or purchase shall, for the purposes of this Act, be deemed to have taken place, when the goods specified in Schedule II are transferred from a unit of a dealer to another unit of the same dealer for sale or for consumption or use in / for manufacture of goods specified in Schedule II in such unit and the dealer holds separate registration certificate for each of such units.

11. That the Bank Note Press after procuring the raw material prints the currency notes and sell the same to the Reserve Bank of India and receives the sale consideration. This fact is not disputed by the petitioner as well as by the respondents. The sale as defined under section 2(u) and according to which a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration. The second consideration is about goods and whether currency note is a good. Goods are defined under section 2(m) and according to which all kinds of movable property excluding stocks, shares, securities or government stamps including all material articles which are agreed to be served before the sale or under the contract of sale. Any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise whether for cash or for deferred payment would be a dealer as defined under section 2(i). By virtue of Explanation II the Central or a State Government or any of their departments or offices which whether or not in the course of business, buy, sell, supply or distribute goods, directly or otherwise, for cash or for deferred payment, commission, remuneration or for other valuable consideration shall be deemed to be a dealer for the purpose of this Act. If dealer deals in a good for the purpose of sale and manufacture constitute a business which is defined under section 2(d) and according to which any trade commerce, manufacture or any adventure or concern in the nature of trade, commerce or manufacture is carried on with a motive to make gain or profit or such trade would be a business. Any transaction of sale or purchase of goods in connection with or incidental or ancillary to the trade, commerce, manufacture like unserviceable goods, discarded goods, scrap, waste material would also be a business. Now we are required to examine in conjoint reading of these four definitions whether petitioner would be liable to pay the Entry Tax after 2006. As per the Memorandum of Association under the Companies Act, 1956 the main object of the company is to carry on the business of designing of currency notes and printing press for printing of currency notes for the RBI. The relevant part of the Memorandum of Association of SPMCIL is reproduced below:

12. From the aforesaid Memorandum of Association of SPMCIL it is manifest that the main object of the company is to do the business of designing and printing of currency notes. When the company is engaged in the business as defined under section 2(d) of the VAT Act, 2002 then it acts as a “dealer” also as per section 2(i) of the Act because it is buying, selling and supplying of currency directly or otherwise and as the definition of the goods all kinds of movable property are goods. Though the word currency is not mentioned in the definition of ‘goods’ but the currency printed by the petitioner becomes a currency by virtue of section 22 of the RBI Act and becomes property of the Govt. of India, hence all the three ingredients are involved to bring the petitioner within the purview of Entry Tax.

13. Under section 3 of the RBI Act the Reserve Bank of India called as a bank is constituted for the purpose of taking over the management of currency from the Central Govt. and of carrying on business of banking in accordance with the provisions of the Act. Under section 22 bank means Reserve Bank of India shall have sole right to issue bank notes in India and may for the period which shall be fixed by the Central Govt. Under section 23 issue of bank notes shall be conducted by the Reserve Bank of India and finally under section 26 every bank note shall be legal tender at any place in payment or on account for the amount expressed therein and shall be guaranteed by the Central Government. In view of the above notification unless bank notes are issued by the Reserve Bank of India under Chapter 3 they do not become bank notes or currency of India. Sections 22, 23 & 26 are reproduced below:

22. Right to issue bank notes-(1)The Bank shall have the sole right to issue bank notes in (India), and may, for a period which shall be fixed by the Central Government on the recommendation of the Central Board, issue currency notes of the Government of India supplied to it by the Central Government, and the provisions of this Act applicable to bank notes shall, unless a contrary intention appears, apply to all currency notes of the Government of India issued either by the Central Government or by the Bank in like manner as if such currency notes were bank notes, and reference in this Act to bank notes shall be construed accordingly.

(2) On and from the date on which this Chapter comes into force the Central Government shall not issue any currency notes.

23.Issue Department.–(1) The issue of bank notes shall be conducted by the Bank in an Issue Department which shall be separated and kept wholly distinct from the Banking Department, and the assets of the Issue Department shall not be subject to any liability other than the liabilities of the Issue Department as hereinafter defined in section 34. (2) The Issue Department shall not issue bank notes to the Banking Department or to any other person except in exchange for other bank notes or for such coin, bullion or securities as are permitted by this Act to form part of the Reserve.

26. Legal tender character of notes.–(1) Subject to the provisions of sub section (2), every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein, and shall be guaranteed by the Central Government. (2) On recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender (save at such office or agency of the Bank and to such extent as may be specified in the notification).

14. Petitioner is only engaged in printing and selling of bank notes to the Reserve Bank of India, therefore, there is a sale transaction between petitioner and the Reserve Bank of India and after sale the said goods become Bank Note or currency and before such transaction it is merely goods under the definition of VAT Act, 2002.

15. Now we shall consider the judgments of the Supreme Court of India over which Shri Choudhary has placed reliance (i) State of Haryana v. Government of India Photolitho Press (supra). In this case the judgment traveled up to Supreme Court after the decision taken by the Sales Tax Tribunal. The Tribunal after evaluating the evidence and material on record came to the conclusion that government supplies stationary material to various departments free of cost and such activity is not commercial and the Central Government is not carrying on any business, hence it does not come under the definition of trade. In the case in hand there is no such finding recorded by the Tribunal and there is a direct sale between petitioner and the RBI and the petitioner receives sale consideration from the RBI.

(ii) That in the case of State of Andhra Pradesh v. A.P Housing Board (supra) and State of Tamil Nadu and another v. Board of Trustees of the Port of Madres (supra) the Housing Board and the Port Trust were not treated as a dealer for sale of unused application forms, iron scrap etc. because the Housing Board is undertaking work of framing and execution of housing schemes and not acting as a dealer. But in the present case Bank Note Press is held to be engaged in the activity of printing and selling which is said to be the main business of the petitioner, therefore, facts of that case are distinguishable.

(iii) Likewise in the case of Commissioner of Sales Tax v. Sai Publication Fund (supra) reliance has been placed that object of the Trust was to spread message of Sai Baba and its main activity does not amount to business, therefore, the incidental activities or distribution of literature cannot be termed as business but in the present case the main activity of Bank Note Press is held to be a business, therefore, the selling of other articles like ink, machines, scraps are also termed as business, hence petitioner cannot get the benefit of the aforesaid judgment.

(iv) Heavy reliance has been placed by the petitioner over the seven judges judgment of the Supreme Court in the case of Vishnu Agencies (Pvt.) Ltd. v. Commercial Tax officer and Dhanyalakshmi Rice Mills v. Commercial Tax Officer (supra) on the point of sale of goods and involvement of volition in the definition of sale but in this case petitioner is engaged in sale of goods which are available to the consumers at fair prices. Some times they are required to provide as essential commodity like cement, cotton, coal or iron. They are required to supply the commodity to the dealers and in such a situation it was argued that the dealer who is asked to supply limited quantity to a particular permit holder has no option but to supply the limited quantity at the controlled price. The question was whether such transaction amounts to sale in the language of law and the Apex Court has answered that such a transaction also comes within the meaning of sale under section 2(g) of the Bengal Finance (Sales Tax) Act and Andhra Pradesh General Sales Tax Act, hence this judgment of the Supreme Court nowhere helps the petitioner.

(v) In the case of Bhor Industries (supra) according to the petitioner the jute mattings and PVC tapes which are not marketable are not treated as goods. The Apex Court has considered the definition of goods under the provisions of Central Excise where certain articles within the schedule are not dutiable, therefore, they were not treated as goods. The concept of Sales Tax is entirely different with Excise.

(vi) That in the case of Collector of Central Excise, Baroda v. Ambalal Sarabhai Enterprises (P) Ltd. (supra) the issue was captive consumption and the condition precedent for levy of duty is goods must be marketed and marketable. Again this case of Central Excise where the definition of goods was considered not under the provisions of Sales Tax and the evidence came on record that the goods being highly unstable where not capable of being marketed.

(vii) In the case of Vikas Sales Corporation and another v. Commissioner of Commercial Taxes and another (supra) the import licenses called REP licenses or Exim Scrips were not treated as goods for the purpose of Tamil Nadu General Sales Tax Act. These licenses and scrips were not considered as goods in the context of movable property because therein definition of ‘goods’ means all kinds of movable property. Since these licenses were not treated as property, therefore, they were not treated as goods, therefore, the facts of the case are distinguishable from the present case.

(viii) In the case of BSNL v. Union of India and others (supra) sim cards were not treated as goods because goods do not include electromagnetic waves or radio frequencies. Issuance of sim cards was termed as a service. Para-121 of the said judgment is reproduced below:

121. It is, therefore, unnecessary to deal with the question of delivery of possession which is related only to situs and not to subject-matter of taxation which is a transfer of right to use goods. In the present case, as no goods element are involved, the transaction is purely one of service. There is no transfer of right to use the goods at all.

(ix) In the case of Sunrise Associates (supra) the Supreme Court has considered lottery tickets as not a good because lottery ticket has no value in itself and it is a mere piece of paper. It represents a chance or a right to win a prize, hence excluded from the definition of goods. On purchasing of the lottery ticket the purchaser has a right to win the prize, therefore, it is actionable claim. There is no such element in the matter of currency, hence cannot be compared with lottery.

(x) At the end of the argument Shri Choudhary has placed heavy reliance over the latest judgment of the Supreme Court in the case of Sodexo SVC India Private Ltd. v. State of Maharashtra and others (supra) where Sodesh Meal Vouchers were not treated as goods. In this case appellant/company was engaged in the business of providing pre-printed meal vouchers to its customers who transfers the same to other employees who is called users and they use them from affiliates. The issue came for consideration whether these vouchers can be treated as goods for the purpose of levy of octroi or local body tax. The Sodex was licensed to do this activity by the RBI under the provisions of Payment and Settlement Systems Act, 2007 which provides for regulation and supervision of payment system in India as designated by the RBI. The vouchers are not sold to its customers and they are printed for particular customers which are used by the said customers for distribution to its employees and these vouchers are not transferable at all and these transactions are regulated by the RBI guidelines and it was found that it is a facility to the employees by the employer, therefore, the Supreme Court has held that these vouchers are not goods but in the present case the printed material are sold to the RBI by the petitioner which is a company registered under the Companies Act.

16. In all above cases issue traveled up to the Supreme Court after adjudication by the appellate authority or Tax Tribunal but here petitioner approached this Court against the assessment order. Hence, we examine the issue on the basis of the material brought on record by the petitioner as well as respondents. That it might be a situation prior to 2006 when Govt. of India was directly engaged in the printing of currency and supplied to the RBI as there was no sale between them but after corporatization and formation of company now the company is engaged in the business of purchasing of material, printing and selling of material and machines. Petitioner company sells the entire Indian currency to the RBI and foreign currency of other respective countries. They are also engaged in the sale of ink, machines etc. Petitioner is exclusively working as a company and engaged in business and all the elements of sale exist in the said process. The company turn over is available in the form of 10th Annual Report 2014-15 in the official website of SPMCIL. In the office address of C.M.D9-SPMCIL it is mentioned with proud that company has produced 8358 million pieces of bank notes which 4.24% higher than the last year production of 8018 million pieces. The company has also produced 7929 million pieces of coins. Security Paper Mill, Hoshangabad has produced 3266 MT. Of security papers. The sale turn over of the company has increased to 4408.38 crores in 2014-15. The financial results of the company for the financial year 2013-14 & 2014-15 are reproduced below:

(Rs.in crores)

(from the official website of SPMCIL)

17. The Bank Note Press, Dewas has produced 2582 pieces of bank notes in the year 2014-15 and sold to RBI. That the petitioner has also manufactured 524.88 MT. Inks during this financial year. The company is maintaining books of accounts under sub section (1) of section 148 of the Companies Act and the company is regularly depositing sales tax, VAT, Service Tax, Customs Duty and other statutory dues of all nine units. The details are mentioned in this report also which is reproduced for ready reference as under:

(from the official website of SPMCIL)

18. Except the present petitioner I.e BNP, Dewas all other units are paying VAT, CST and Entry Tax despite being government company. That the petitioner has also been subjected to payment of tax on sale of scrap, paper ink, discarted packing material, machinery, spares. Shri Choudhary argued that since the petitioner is not engaged in the business of buying and selling, therefore, the sale of unserviceable material, scrap etc. would not be a transaction in connection with or incidental or ancillary to such trade or business hence is also not sale. As per the definition of business sale of the unserviceable goods, discarded goods, scrap or waste material, sale or purchase of goods also comes under the category of business. This issue came up for consideration before the Supreme Court in the case of the District Controller of Stores, Northern Railway, Jodhpur v. The Assistant Commercial Taxation Officer and another reported in [1976] 1 SCC 660. In this case the Apex Court has considered the definition of ‘business’ under the Rajasthan Sales Tax Act, 1954 which is para-materia to the definition of business in VAT Act, 2002 and held that sale of unserviceable materials and scrap iron etc. would be a business within clause (i) of the definition of the word business. The judgment of the Supreme Court in the aforesaid case is reproduced below:

19. In view of the aforesaid discussion the contention of Shri Choudhary regarding applicability of protection under Article 285 of the Constitution of India is also liable to be rejected and the petitioner would not be entitled for the benefit as held by the Apex Court in the case of Karya Palak Engineer, CPWD, Bikaner v. Rajasthan Taxation Board, Ajmer and othersreported in [2004] 7 SCC 195. Para-16 of the said judgment reads as under:

16. From the above judgment of this Court, it is clear that the Union is not exempted from the levy of indirect tax under Article 285 of the Constitution. The above discussion also shows that reliance placed on the judgment of this Court in the case of New Delhi Municipal Council by one of the learned counsel for the appellant is wholly misconceived and is opposed to his contention with reference to Article 285 of the Constitution.

20. In view of the aforesaid discussion, we do not find any merit in all the writ petitions, hence no interference in the assessment orders made by the Department is made out. Accordingly, all writ petitions are dismissed. No order as to cost.