1999 (1) TMI 507 - HC - VAT and Sales Tax

Summary

Issues involved:
Validity of assessment orders under Punjab General Sales Tax Act, 1948 for the years 1984-85 to 1988-89 based on whether the acceptance of a refundable deposit constitutes a sale.

Analysis:

Issue 1: Validity of Assessment Orders
The Indian Oil Corporation, the assessee, challenged five assessment orders under the Punjab General Sales Tax Act, 1948 for the years 1984-85 to 1988-89. The key question was whether accepting a refundable deposit by the Corporation for cylinders used for supplying liquefied petroleum gas constitutes a sale. The Assessing Authority considered the security deposit as the sale consideration, leading to the challenge by the assessee through writ petitions.

Issue 2: Transfer of Property in Goods
The definition of "sale" under the Punjab General Sales Tax Act, 1948 involves the transfer of property in goods for valuable consideration. The crucial issue was whether the property in the goods, specifically cylinders and regulators, passes to the consumer upon the Corporation accepting a deposit. Clauses in the consumer agreement clearly stated that the cylinders and regulators remain the property of the Corporation, with continuous control and repair restrictions, indicating no transfer of ownership to the consumer.

Issue 3: Ownership of Cylinders
The Corporation's practice of accepting deposits lower than the purchase price of cylinders, along with maintaining the assets on its books and providing for depreciation, supported the argument that the Corporation retained ownership of the cylinders. Consumers were restricted from transferring or selling the cylinders, reinforcing the Corporation's ownership claim despite accepting deposits.

Issue 4: Legal Basis of Assessment Orders
The respondents argued that post-amendment definitions deemed the transfer of the right to use goods as a sale. However, the assessment orders for the relevant years were not based on deemed sales but on the transfer of property for valuable consideration. The Court found the assessment orders invalid as they incorrectly assumed a transfer of ownership, without considering the amended provision or legal requirements.

Conclusion
The Court set aside the impugned assessment orders, emphasizing that the Assessing Authority could pass fresh orders if legally permissible. The judgment highlighted the lack of transfer of property to consumers despite deposit acceptance, ultimately ruling in favor of the assessee. No other points were raised, and the petitions were allowed with no order as to costs.