LexINSTALMENT SUPPLY (P.)LTD. AND ANOTHER versus THE UNION OF INDIA AND OTHERS
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The State of Pttnjab v. Nathu Rani Raghubar Dayal ]. May 2. 644 SUPREME COURT REPORTS [ 1902] connected appeals, viz., Civil Appeals Nos. 636 to 641 of 1957. Appeal di81nissed. INSTALMENT SUPPLY (P.)LTD. AND ANOTHER v. THE UNION OF INDIA AND OTHERS (B. P. SINHA, c. J., s. K. DAS, A. K. SARKAR, N. RAJAGoPALA AYYANGAR and J. R. MUDHOLKAR, JJ.) Sales Tax-Hire-purchase agreement-Transaction on such agreemrnt, if liable to tax-Bengal Finance (Sales Tax) Act, 194r, as extended to Delhi State, s. 2(g). Section 2(g) of the Bengal Finance (Sales Tax} Act, i941, as extended to Delhi State, provided as follows,- " 'Sale' means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of a con- tract, but does not include a mortgage, hypothecation, charge er pledge. Explanation 1 .... A transfer of goods on hire-purchase or other instalment system of payment shall, notwithstanding that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale." The hire-purchase agreement entered into by the petitioneic company provided that after all the monthly instalments had been paid, "'the hiring shall come to an encl and the vehicle shall, at the option of the hirer, become his absolute property; but until such payments as aforesaid have been made, the veJii .. cle shall remain the property of the owners. The hirer shall'. also have the option of purchasing the vehicle at any time dur .. ing the currency of this agreement by paying in one lump sum the balance of all the hire hereinbefore mentioned and any other expenses incurred by the owners relating to the transac- tion." The question for determination was whether the agree- ment was a transaction of mere hiring or one of hire-purchase within the meaning of Explanation 1 to s. 2(g) of the Act. 2 S.C.R. SUPREME COURT REPORTS 645 Held, that the language of Explanation 1 to s. 2(g) of the z96z Act was wide enough to include a mere transfer of goods with- out the transfer of the title thereto, if such transfer took place Install>""' Supply in the course of an agreement of hire-purchase or any other (P.) Ltd. instalment system of payment. v. As the-Att did not define the term 'hire-purchase', it had Union °1 India to be construed in its ordinary Common Law sense, i.e., that it partook of the nature of a c.ootract of bailment with an element of sale added to it. · Lee v. Buller, [1893] 2 Q. B. 318 and Helby v. Matthews, [1895] A. C. 471, referred to. The non obstante clause in Explanation 1 to s. 2(g) of the Act did not govern the main clause of the said Explanation and its sole purpose was to emphasise the categorical statement of the law contained therein. Since the agreement in the instant case contained not merely a contract of bailment simpliciter bu\ also an element of sale, the transaction had rightly been sub- jected to sales tax. There could be no force in the contention that the Act in so far as it sought to extend the concept of sale to what in law was not a real _sale, was unconstitutional. Mithan Lal v. State of Delhi, [1959] S.C.R. 445, referred to. Nor was there any substance in the contention that the extended definition of the word 'sale' in the Act infringed Art. 14 of the Constitution. !tis well settled that in matters of taxation there can be no question of res judicata. Society of Medical Officers of Health v. Hope (Valuation Offi- cer), [1960] A. C. 551 and Broken Hill Proprietary Company Ltd. v. Municipal Council of Broken Hilt, [r925] A. C. 94, referren to. Instalment s .. pply Ltd., New Delhi v. State of Delhi, A.LR. 1956 Punj. 1J7, considered. ORIGINAL JURISDICTION: Petition No. 146 of 1958. Petition under Art. 32 of the Constitution of India. for enforcement of Fundamental Rights. Veda Vyasa, S. K. Kapur and Ganpat Rai, for the petitioners. C. K. Daphtary, Solicitor-General of India, R. Gopala- kr-ishnan and D. Gupta, for the respondents. 1961. May 2. The Judgment of the Court was delivered by SINHA, C. J.-The petitioners have moved this Sinha c. J. CourL under Art.. 32 of the Constitution for a. writ 8> 646 SUPREME COURT REPORTS [19ti2] z96z or order i.n the nature of mandamus and/or prohibi- I I - 5 1 tion and/or other suitable writ, order or direction to nsla ment upp y ] h 11 (P.) Ltd. the respondents not to evy,
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