1998 (9) TMI 532 - SC - VAT and Sales Tax

Deemed sale - Held that - Appeal dismissed. Where there is a transfer of a right to use goods for consideration, the requirement of the provision of the said Act is satisfied and there is deemed to be a sale. In the instant case, the assessees owned shuttering. They transferred the shuttering for consideration to builders and building contractors for use in the construction of buildings. There can, therefore, be no doubt that the requirements of a deemed sale within the meaning of the abovementioned provision of the said Act are satisfied.

Summary

Issues:
1. Whether the hire charges for shuttering materials constitute a sale under the Haryana General Sales Tax Act, 1973.
2. Whether the transfer of the right to use goods for consideration falls within the definition of sale under the said Act.
3. Interpretation and application of the provisions of the said Act regarding the definition of sale.

Analysis:

Issue 1:
The assessees hired shuttering materials to builders and contractors for use in construction, leading to notices for sales tax payment. The High Court upheld the assessment orders, considering the hire charges as sales under the Act. The assessees challenged this, arguing the provision was unconstitutional. However, the High Court found that the transfer of shuttering material to customers for use constituted a sale, falling within the definition of "sale" under the Act.

Issue 2:
The assessees contended that the transfer of the right to use goods for consideration should involve a legal transfer of goods, akin to a lease, to qualify as a sale under the Act. However, the Act defines sale to include the transfer of the right to use goods for consideration, deeming it a sale. The Court clarified that a legal transfer of goods or a lease-like transaction is not necessary for a deemed sale under the Act.

Issue 3:
The language used in the Act aligns with the definition of sale under Article 366(29A)(d) of the Constitution. The Court emphasized that a transfer of the right to use goods for consideration satisfies the Act's requirement for a deemed sale. In this case, the assessees transferred shuttering materials to builders for use in construction, meeting the criteria for a deemed sale under the Act.

In conclusion, the Supreme Court dismissed the appeals, upholding the High Court's decision that the hire charges for shuttering materials constituted sales under the Haryana General Sales Tax Act, 1973. The Court clarified that the transfer of the right to use goods for consideration falls within the definition of sale under the Act, emphasizing the fulfillment of statutory requirements for a deemed sale.