LexJAY BHARAT CREDIT AND INVESTMENT CO. LTD. ETC. ETC versus COMMISSIONER OF SALES-TAX AND ANR.
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A JAY BHARAT CREDIT AND INVESTMENT CO. LTD. ETC. ETC. B c D E F G H v. COMMISSIONER OF SALES-TAX AND ANR. AUGUST 9, 2000 [B.N. KIRPAL, S.N. PHUKAN AND RUMA PAL, JJ.] Sales Tax-Bengal Finance (Sales Tax) Act, 1941-As amended w.e.f 1.10.1959-As extended to Union Territory of Delhi-Hire purchase transac- tion-Whether sale price would include hire charges-Held, Yes. Sales Tax-Bengal Financial (Sales Tax) Act, 1941-As applicable to Union Territory of Delhi-Sale of Goods Act, 1950-Sections 2(g), 2(h)- lncidence of Tax in hire purchase transaction-Held, takes place when there is transfer of goods, not when there is transfer of property in goods. Words and Phrases-Sale-Meaning of Appellants were carrying on the business of hire purchase by enter- ing into agreements with hirers for the purpose of enabling the hirers to obtain a vehicle. The normal term of the agreement entered into between a hirer and the appellant contemplated a vehicle being purchased by the appellant and the said vehicle was then taken by the hirer on hire purchase basis. The terms of the agreement provided that on the execution of the hire purchase agreement an initial amount was paid by the hirer by way of premium for granting a lease and thereafter hire charges were required to be paid. The amount which is paid by the hirer included the price of the vehicle and the hire purchase charges. As and when all the instalments were paid, the hirers were given an option to obtain the ownership of the vehicle on the payment of a nominal amount. On exercising of the option and the payment being so made, the vehicle was transferred in the name of the hirer. The Respondents-sales tax authorities held that on the correct inter- pretation of the provisions of the Bengal Finance (Sales Tax) Act, as extended to the Union Territory of Delhi, in force at the relevant time between 1.10.1959 and the coming into force of the Delhi Sales Tax Act in 1975, the hire charge would be regarded as a part of the sale price. The question of law was referred to the High Court wherein the decision of the sales tax authorities was affirmed. 340 JAY BHARAT CREDIT AND INVESTMENT CO. LTD. v. COMMR. OF SALES TAX 341 In appeal to this Court, the appellants contended that with the A amendment in the Bengal Finance (Sales Tax) Act, 1941 with effect from 1st October, 1959, in the case of hire purchase agreements sales tax can be levied not on the full amount paid by the hirer which would include the hire charges, but the sale consideration on which tax can be imposed will only be the price of the vehicle at the time when the hirer exercises the B option to purchase the same; that under the Sale of Goods Act, the defini- tion of the word "sale" would not include or take within its ambit a hire purchase agreement; that Delhi being a Union Territory; Parliament could in exercise of its powers under Entry 97 of List I of the Seventh Schedule of the Constitution regard a hire purchase agreement as a sale and tax can be levied but with the amendment made in 1959 the tax is leviable only on the C sale and the amount paid towards hire charges cannot be included in the sale price and that the Sales Tax Act applicable in Delhi after 1st October, 1959 must be given the same meaning as was given to the Gujarat Sales Tax Act. Dismissing the appeals, the Court HELD : 1. The amendment of the Bengal Finance (Sales Tax) Act on 1st October, 1959 has, in effect, not altered the position from what existed prior to that date and even after the amendment the principle laid down by D this Court in the first case of Instalment Supply Co. would continue to hold E goods. (351-D] Instalment Supply ( P) Ltd. & Anr. v. The Union of India & Ors., (1962] 2 SCR 644; Instalment Supply Ltd. v. The Sales Tax Officer, Ahmedabad-1 & Ors., (1975] 1 SCR 386 and K.L. Johar & Company v. Deputy Commercial Tax Officer, (1965] 2 SCR 112, distinguished. F 2. The definition of the word "sale" in Sec. 2(9) the first part of which is in pari materia with the Sale of Goods Act, was expanded so as to include a transfer of goods on hire purchase or other system of payment by instal- ments. In the latter portion, in order that the tax is levied there is no re- quirement that the property in goods should be transferred. What is re- quired is transfer of goods, unlike the first part of this definition which requires transfer of property in goods. The reason for this is very
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