LexINSTALMENT SUPPLY LTD. versus THE SALES TAX OFFICER, AHMEDABAD-I & ORS.
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INSTALMENT SUPPLY LTD. v. THE SALES TAX OFFICER, AHMEDABAD-I & ORS.· May 1, 1974 lA. N. RAY, C.J., K. K. MATHEW, A. ALAGIRISWAMI, P. K. GoswAM! A AND R. S. SARKAR!A, JJ.] B Gujarat Sales Tax Act--S. 2(28) whe~her sUlle cquM tax goods inside the .S1ate, but agreen1ent entered into outside the State. Constitution of /1idia, 1950-Art. 32-When a petition ~vi!l lie. The petitioner, a limited company with its registered office in New Delhi, .carries on business of financing purchase of motor vehicles. The intending buyer of a motor vehicle enters into a hire purchase agreement with 1he petitioner company. Under the terms of the agreement the hirer makes an init_ial deposit by way of premium as consideration for granting the lease of the vehicle, which deposit becemes the absolute property of the company. fhe hirer undertakes to pay instalments and when all the instalments are paid the vehicle becomes the property of the hirer at his option, on payment of rupee one to the company. Till the completion of the instalments the vehic1e remains the prQperty of the company as owners but the hirer is res- ponsible for any damage or destmction or loss of lhe vehicle. Until the option is exercised the hirer is at liberty to return the vebicJe and to put an end to the hiring agreement. The cOntract of hire purchase was entered into in Delhi, instalments were paid in Delhi, the option was exercised in Delhi but the goods were inside the State of Gujarat which taxed the sale. Section 2 ( 28) of the Gujarat Sales Tax Act which defines sale enacts ''sa1e means the sale of goods made within the State for cash or de!"erred payment or other valuable consideratiOn and includes any supply by a society or club or an association to its members on payment of a price or of fees or subscription but does not include a mortgagel hypothecation, charge or pledge ..... "" The explanation to the definition states ';For the purposes of lhis clause the sale within the State includes a sale determined to be inside the State in accordance with the principles formulated in sub·section (2) of section 4 of the Central Sales Tax Act, 1956.'' Sub-<Section (2) of Section 4 of the Central Sales Tax Act, 1956 enacts "A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State (a) in the case of specific or ascertained goods at the time the contract of sale is made ..... '' On the question whether (I) the State of Gujarat could tax the sales and (2) whether a petition under J\rtic1e 32 lies in this case; Dismissing the petitions, HELD :-(a) fn the present case the sale itself took place only when the Hirer exercised his option to purchase and that was when the goods were inside the State of Gujarat and, therefore, the State of Gujarat was entitled to levy tax on that transaction of sale. [392H·393A] There can be no objection to the incorporation in s. 2(28) of the Gujarat Act of the definition of -sale imide the State contained in s. 4(2) of the Central Sales Tax Act. The Gujarat legislation cou1d as well have incor- porated the very words of s. 4(2) of the Central Sales Tax Act in the ex- planation to s. 2(28) and in either case it makes no difference. (392E] (b) There can be no objection to the State of Gujarat taxing what accord- ing to the Central State Tax Act is a sa1e inside the State o.f Gujar~t. . There can be no objection to a State making . a sale of goods which ~re 1n~1de . the State at the time the sale takes place liable to sales tax u.nder .1ts legis_lat1on. The fact that the contract of hire purchase was entered into 1~ De~ht tba! the instalments were paid in Delhi and the option itself was exerc1~d 10 Delhi .does not make any difference to this result. All that it means is that the c D E F G H, • ~· • ' • A ll c INSTALMENT SUPPLY LTD. v. S.T.O. (Alagiriswami, J.) 3 87 agreement of sale was concluded in Delhi whereas the sale itself was com- pleted by the property in the goods passing in Gujarat State and the sale,. therefore, took place in Gujarat State. [392F-G] ( c) There can be no objection the State of Gujarat levying a tax in res- pect of the same good~ even though those goods may have been subject to tax earlier by the Delhi State. There is no rule that any goods can be sub- jected to tax only once. Even in respect of the same goods sales tax can be levied as ofren as there are sales. l392G-H] f11staln1cnt Supply (P
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