1994 (5) TMI 240 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Levy of sales tax on the transfer of import replenishment licences (REP licences) and exim scrips.
2. Definition of REP licences as "goods" under the Kerala General Sales Tax Act, 1963.
3. Legislative competence and encroachment on the Parliamentary field.
4. Nature of REP licences as movable property or actionable claims.
5. Maintainability of writ petitions.

Detailed Analysis:

1. Levy of Sales Tax on REP Licences and Exim Scrips:
The petitioners, exporters of goods, challenged the levy or proposed levy of tax under the Kerala General Sales Tax Act, 1963, on amounts received for the transfer of REP licences and exim scrips. The core issue was whether the transfer of these licences constituted a sale of goods, thus attracting sales tax.

2. Definition of REP Licences as "Goods":
The Revenue argued that REP licences are "goods" as defined in section 2(xii) of the Act, which includes all kinds of movable property. The petitioners contended that REP licences are not property but merely permissions to do something otherwise unlawful, and thus should be excluded from the definition of "goods" as actionable claims.

3. Legislative Competence and Encroachment:
Petitioners argued that the levy of sales tax on REP licences encroaches upon the Union List entries 83 (customs duty) and 41 (import and export). The court held that the taxable event is the sale of the REP licence, not the import of goods, and thus there is no encroachment on the Union List.

4. Nature of REP Licences:
The court examined whether REP licences are movable property or actionable claims. It was determined that REP licences confer a valuable right to import goods, which is more than a mere permission. The court concluded that REP licences are movable property and thus "goods" under the Act. The court also held that REP licences are not actionable claims as they confer a present, choate right to import goods.

5. Maintainability of Writ Petitions:
The court noted that petitioners have statutory opportunities to object before assessing or appellate authorities. However, having heard the cases in detail, the court decided to address the substantive issues.

Conclusion:
The court held that REP licences are goods as defined in section 2(xii) of the Act, and their sale is subject to sales tax. The petitions were dismissed, affirming the validity of the tax levy or proposed levy under the impugned proceedings.

The writ petitions were dismissed.