STATE OF ORISSA AND ANR. versus M/S ASIATIC GASES LTD.

Citation: [2007] 6 S.C.R. 1182 · Decided: 16-05-2007 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
STATE OF ORISSA AND ANR. 
~ 
v. 
M/S ASIATIC GASES LTD. 
MAY 16, 2007 
B 
[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] 
Orissa Sales Tar: Act, 1947; Ss. 2 (d) (h) 2 (g) (iv): 
c 
Sale of Medical Chygen and industrial gases by filling in cylinders-
Sale price-Inclusion of charges for over retention of Cylinders-Correctness 
of-Held: Property in the commodity in question, viz., medical oxygen/ 
industrial gases could not pass to customers without containers-Thus, 
container/cylinder with its contents constitute goods--When goods were 
given on loan to customer, right to use the goods comes into existence-Such 
D loan was free from payment of charges for 14 days-Over retention charges 
levied thereafter-Such levy was on transfer of the right to use the goods for 
consideration-Hence, in terms of s. 2(g) (iv) of the Act over retention 
charges includible in the sale price as defined u!s 2(h) of the Act for the 
purpose of /e1y of Sales Tax-Constitution of India, 1950-Article 366 (29-
A)(d). 
E 
Assessee carried on business in manufacture and sale of medical 
oxygen and industrial gases by filling in cylinders. The assessee collected 
certain amount from its customers during the assessment year 1986-87 for 
over-retention of gas cylinders. The question which arose for determination 
F 
before this Court was as to whether the said amount was includible in the 
sale price as defined under Section 2(h) of the Orissa Sales Tax Act. 
Allowing the appeal, the Court 
HELD: I.I. In the present case the commodity in question is medical-
G 
oxygen/industrial gases. The said commodity requires a container and it 
cannot be sold without the containers. The property in goods (oxygen/gas) 
cannot pass to the customers without such containers. Therefore, containers 
constitute an integral part of the commodity in question. 
[Para 4) (1185-B, CJ 
r 
H 
1182 
•( 
; 
ST A TE OF OR!SSA v. AS!A T!C GASES LTD. 
I 183 
1.2. 
The cylinders together with its content namely gas/oxygen A 
constitute 'goods'. Under the contract between the assessee and the customer, 
it was open to the customer to buy the gas cylinder or to borrow it on loan 
from the assessee. For the first 14 days the loan was free from payment of 
any charges. However, thereafter a fixed amount was levied by the assessee 
as a charge for over-retention. According to the impugned judgment the said B 
charge for over-retention was in the nature of penalty imposed on the 
customer in order to dissuade the customer from retaining the cylinders. 
The assessee required empty cylinders to be returned so that the said 
cylinders could be refilled and sold/transferred by way of loan. 
!Para 41 11185-D, E, Fl 
1.3. When the goods (cylinder containing medical oxygen) were given 
on loan to the customer the transfer of the right to use the said goods came 
into existence. It may be that for the first 14 days the said loan is free from 
payment of any charges. However, exemption from payment would not militate 
against the concept of transfer of the right to use the goods. 
c 
!Para 4] (1185-F, G] D 
1.4. The High Court has failed to notice the provisions of Section 2(g)(iv) 
of the Orissa Sales Tax Ad which states that the sale shall mean any transfer 
of property in goods for cash or defer payment or for any other valuable 
consideration and that it shall include transfer of the right to use such goods 
for any purpose, whether or not for specified period for cash, deferred payment E 
or any other valuable consideration. It is important to bear in mind that 
Section 2(g)(iv) was placed on the statute in terms of Article 366(29A)(d) of 
the Constitution. [Para 4] [1185-G, H; 1186-A] 
2. The cylinders in question filled with medical oxygen/industrial gas F 
were loaned to the customers. The loan was free from payment of charges 
for 14 days. The over-retention charges were levied after 14 days. In the 
circumstances the levy was on the transfer of the right to use the goods for 
consideration. [Para 4] 11186-C] 
Aggarwal Brothers v. Stale of Haryana and Anr., 11999] 9 sec 182, G 
relied on. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6482 of2001. 
From the finul Judgment and Order dated 21.09 .2000 of the High Court 
of Orissa at Cuttack in S.J.C. No. 157 of 1996. 
H 
1184 
SUPREME COURT REPORTS 
[2007] 6 S.C.R. 
A 
Altaf Ahmed, A.S.G., Jana Kalyan Das and Avijeet Bhujabal for the 
) 
Appellants. 
Yashbant Das, Sr. Adv., Arvind Tiwary and Subhash Sharma for the 
Respondent. 
B 
The Judg

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