VIKAS SALES CORPORATION AND ANR. ETC. ETC. versus COMMISSIONER OF COMMERCIAL TAXES AND ANR. ETC. ETC.

Citation: [1996] SUPP. 2 S.C.R. 204 · Decided: 01-05-1996 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Dismissed

Judgment (excerpt)

A 
VIKAS SALES CORPORATION AND ANR. ETC. ETC. 
B 
v. 
COMMISSIONER OF COMMERCIAL TAXES 
AND ANR. ETC. ETC. 
MAY 1, 1996 
(AM. AHMADI C.J., B.P. JEEVAN REDDY 
AND SUHAS C. SEN JJ.J 
Impon and Exports (Control) Act, 1947, Jmpons (Control) Order 
C 
1955-lssuance of "replenishment licences" (R.E.P. Licences}, Exim Scrips 
for impo1t of goods-Licences made freely transferabl,,_Sold for profits by 
holders-Sale subject to sales tax. 
Kamataka Sales Tax Act, 1957-Section 5( 1), 2(m)-Sales tax imposed 
on sale of R.E.P. Licences/Exim Scrips-Unclassified goods-Validiry of tax-
D Held, valid. 
Definition of 'goods'-Nature and character of R.E.P. Licences--
Whether fall within definition-Held, yes. 
Constitution of India-Entry 54 List JI, and Entry 92-A List I-Seventh 
E Schedul,,_Scope of the two entries-lnterpretatiolt-Meaning of goods--
Whether competing entries-Held no. 
Anicle 366 clause ( 12), clause (29 A)--Definition of 'goods' -Tax on 
the sale or purchase of goods--Expansive meaning to be given. 
F 
Doctrine of pith and substanc,,_Applicability of 
Sale of Goods Act, 193()-Section 2 clause (7), clause (11)--Definition 
of goods-Moveable property-Wide interpretation-Giving of-Actionable 
claims and money discussed. 
G 
The General Clauses Act, 1897--Definition of "moveable properly" 
discussed. 
The Central Sales Tax Act, 1956-Section 2(d)--Definition of goods 
discussed. 
H 
The Tamil Nadu Sales Tax Act, 195'}-Section 2(j)-Definition of 
204 
VIKAS SALES CORPN. v. COMMR. OF COMMERCIAL TAXES 
205 
goods discussed-Securities Contracts (Regulation) Act, 1956-Section 
2(h )-Definition of "securities" in the context of whether it covers R.E.P. 
Licences/Scrips-Discussed. 
Words and Phrases-
1'goods" and prope1tyH nzeaning of-In the context 
of the question whether R.E.P. Licences fall within the definition of goods 
under the va1ious sales tax legislations. 
Under the imports (Control)Order, 1955, the Central Government is-
sued "replenishment licences" (R.E.P. Licences)/Exim Scrips for import of 
essential inputs required for manufacture of the products exported. These 
licences were made freely transferable without requiring any endorsement or 
permission from the licensing authority. A letter from the transferor recording 
and evidencing the transfer, entitled the transferee to become the la,,ful holder 
of the licence and to import goods. These licences were being sold to others for 
profit and were being traded freely in the market and on stock exchanges. 
A 
B 
c 
The sales tax authorities of certain States proceeded to subject such D 
sales to sales tax under their respective enactments. The assessees chal-
lenged the imposition of tax contending that the R.E.P. licences did not 
constitute "goods" within the meaning of the relevant sales tax enactments 
and therefore their sale could not be taxed. The Karnataka High Court 
held that the import licence falls within the definition of "goods" under the 
Sales Tax Act and the price received by the transferor is liable to sales tax. E 
The Madras High Court took the same view. A number of appeals were 
preferred against the decisions. Also writ petitions were directly filed by 
some assessees before this Court. 
The main contention before this Court was that the import licences 
are not goods or property; and that they represent merely a permission to 
import goods which can be revoked at any time by the licensing authority 
and were therefore, in the nature of shares and securities which have been 
specifically exclude.d from the definition of "goods" in the relevant enact-
ments. 
Dismissing the appeals and writ petitions, this Court 
HELD : 1. The definition of goods in the sales tax enactments does 
exclude securities, but the R.E.P. Licences/Scrips are not securities. The 
contention that the licences/scrips constitute securities within the meaning 
F 
G. 
of Clause (h) of Section 2 of the securities Contracts (Regulation) Act, H 
206 
SUPREME COURT REPORTS [ 1996) SUPP. 2 S.C.R. 
A 
1956 and therefore stand excluded from the definition of "goods" contained 
in Tamil Nadu, Kerala and Karnataka Sales Tax Acts as well as Central 
Sales Tax Act is misconceived. The definition of "goods" in these Sales Tax 
enactments does exclude securities but these licences/scrips do not fall 
within the definition of securities under the Securities Contracts (Regula-
B 
c 
tion) Act, 1956 for the relevant period which includes shares, scrips, 
stocks, bonds, debenture stock or oth

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