LexCOMMERCIAL TAX OFFICER & ORS. versus STATE BANK OF INDIA & ANR.
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A B c D E F G H [2016) 5 S.C.R. 704 COMMERCIAL TAX OFFICER & ORS. v. STATE BANK OF INDIA & ANR. (Civil Appeal No. 1798 of2005) NOVEMBER 08, 2016 [DIPAK MISRA AND SHIVA KJRTI SINGH, JJ.) Bengal Finance (Sales Tax) Act, 1941 - ss. 4(6) (iii), 5(6a) - Purchase tax - Levy of- Acceptance of Exim Scrips (Export Import Licence) by State Bank of India (SB!) and its branches, on payment of premium of 20% of the face value of the scrips in compliance with the direction of RBI - Levy of purchase tax - Held: SB! not liable to levy of purchase tax for replenishment licences or Exim scrips taken as a participant in the process of cancellation - Replenishmell/ licences or Exim scrips are goods and when they are transferred or assigned by the holder/owner to a third person for consideration, they would attract sale tax - When SB! took the said instruments as an agent of the RBI, it did not hold or purchase any goods - It merely acted as per the directions of the RBI. as its agent and as a participant in the process, to ensure that the replenishment licences or Exim scrips ll'ere 110 longer transferred - Intent and purpose was not to purchase good~ in the f<1r111 of replenishment licences or Exim scrips, but to nullify them. Dismissing the appeal, the Court HELD: 1.1 The facts of the case at hand has its distinctive features and, therefore, the view of the High Court that the SBI was not liable to levy of purchase tax under the Act, is concurred with. [Para 35J(730-C) t.2 The replenishment licences or Exim scrips would be "goods" and when they arc transferred or assigned by the holder/ owner to a third person for consideration, they would attract sale tax. However, the position would be different when replenishment licences or Exim scrips are returned to the grantor or the sovereign authority for cancellation or extinction. In this process, as and when the goods are presented, the replenishment licence or Exim scrip is cancelled and ceases to be a marketable 704 COMMERCIAL TAX OFFICER v. STATE BANK OF INDIA instrument. It becomes a scrap of paper without any innate market value. The SBI, when it took the said instruments as an agent of the RBI did not hold or purchase any goods. It was merely acting as per the directions of the RBI, as its agent and as a participant in the process of cancellation, to ensure that the replenishment licences or Exim scrips were no longer transferred. The intent and purpose was not to purchase goods in the form of replenishment licences or Exim scrips, but to nullify them. The said purpose and objective is the admitted position. The object was to mop up and remove the replenishment licences or Exim scrips from the market. (Para 33)[729-D-G] 1.3 The initial issue or grant of scrips is not treated as transfer of title or ownership in the goods. Therefore, as a natural corollary, it must follow when the RBI acquires and seeks the return of replenishment licences or Exim scrips with the intention to cancel and destroy them, the replenishment licences or Exim scrips would not be treated as marketable commodity purchased by the grantor. Further, the SBI b an agent of the RBI, the principal. The Exim scrips or replenishment licences were not "goods" which were purchased by them. The intent and purpose was not to purchase the replenishment licences because the scheme was to extinguish the right granted by issue of replenishment licences. The "ownership" in the goods was never transferred or assigned to the SBl.[Para 34)[729-G-H; 730-A-B] Sunrise Associates v. Govt. of NCT of Delhi and others (2006) 5 SCC 603 : 2006 (1) Suppl. SCR 421 - relied on. Vikas Sales C01poration and another v. Commissioner of Commercial Taxes and another (1996) 4 SCC 433 : 1996 (2) Suppl. SCR 204;Co111111issioner of Sales Tax v. Billion Plastics Pvt. Ltd. (1995) 98 STC 184; State of Tamil Nadu" Burma Shell Co. Ltd. 31 S.T.C. 426 (S.C.); District Controller of Stores v. A.C. Taxation Officer 37 S.T.C. 423 (S.C.); State of Ta111il Nadu v. Binny Ltd., Madras 49 S.T.C. 17 (S.C.); Board of Revenue v. A.M Ansari 38 S.T.C. 577 (S.C.); State of G11jara1 v. Raipur Manufacturing Co. Ltd. AIR 1967 SC 1066:1967 SCR 618; Stale of Andhra Pradesh v. H Abdul Bakhi and 705 A B c D E F G H 706 SUPREME COURT REPORTS [2016] 5 S.C.R. A Bros. AIR 1965 SC 531 : 1964 SCR 664; Hindustan Steel Ltd v. State of Orissa AIR 1970 SC 253 : 1970 (1) SCR 753; Board of Revenue
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