Is this whole universe nothing but God ? - Swami Dayanand answers

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As "this universe was non-existent" means that it was non-existent as universe in their gross physical and visible form. But it existed in essence or in elementary form as the eternal prakriti. It was not nothing, God and the soul also were existent. Your quotations which begins with "Sarvam khualu" is nothing but a pot-pouri, for, you have taken parts of two verses from two different Upanishads and put them together and formed them into one sentence. "Sarva Khalu", etc., is tiken form the Chhaandogya Upanishad ( chapt III: 14, 1) and Nehanaanaaa, from the Katha Upnishad (chapt. II:4,11).
Just as the limbs of the body are of use only so long as they form part of it, but become useless as soon as they are separated or cut off form it, similarly you can get sense out of words or sentences when in their proper places in conjunction with what has gone before and what follows them, but they become meaningless as soon as they are dislocated from their proper places and joined to others.
Now mark carefully the true meaning of the above quotation. "Worship, thou, O soul, that Great Being Who is the Creator, the Support, and the Life of the Universe. It is by His power that the whole universe come into being and is sustained, and it is in Him that it exists, Worship Him alone and no other. He is an Indivisible, Immutable, Conscious Being. There is no admixture of different things in Him, though all things with their distinct individual existence have their being in Him and are sustained by Him."