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TMI Blog1969 (1) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ways was not in accordance with law?" 2.. The facts stated are that the assessee who is a contractor supplied to the Engineering Department of the Railways under a contract bricks, chips, rubble, flooring material, balast etc. The assessee did not submit any return and a notice in Form No. XVI was issued to him. After enquiry, his taxable turnover was determined at Rs. 81,000 and a tax of Rs. 4,000 was assessed. A penalty of Rs. 440 was also imposed for the default in submission of returns. During the assessment proceedings the assessee raised the contention that he should not be assessed at the normal rate of five per cent. but at the concessional rate of two per cent. under the Notification No. 878-613/V/ST dated 31st March, 1963. This n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to get the benefit of the notification was negatived on the ground that as Railways are engaged in a commercial activity and carry on business, sales made by the assessee fell within the exception contained in the notification. On an application made by the assessee, the question of law which we have already set out has been referred to us for our answer. 3.. The argument of the learned counsel for the assessee is that Railways are not engaged in a commercial activity and do not carry on business and at any rate the Engineering Department of the Railways is not one engaged in a commercial activity and does not carry on any business and, therefore, the sales made to the Engineering Department did not fall within the exception contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a large scale between different countries or districts": (Reader's Digest Dictionary, Vol. 1, p. 186). But in this sense commerce includes not only "the purchase, sale and exchange of commodities, but also the instrumentalities and agencies by which it is promoted and the means and appliances by which it is carried on, and the transportation of persons as well as goods both by land and sea": (Black's Law Dictionary, p. 336). And, in industrial legislation an activity is commercial when it is "systematically and habitually undertaken for production or distribution of goods or for rendering material services to the community or any part of the community with the help of employees in the manner of a trade or business": Dr. D.M. Surti v. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ict MagistrateA.I.R. 1952 All. 520, p. 525. The Railways constitute a unit or branch of the Governmental activity under the charge of a Minister and this forms a department of the Government. Branches of this department, such as the Engineering Department of the Railways, do not constitute a separate unit or branch of the Government and cannot be properly regarded as a department of the Government of India in the sense the word department is used in the notification. For purposes of the notification, even when a sale is made to a branch of the Railways department, the sale will be taken to be a sale made to the Railways department, as the branches of the department have no separate existence. In our opinion, the sales by the assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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