2001 (7) TMI 1250 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of Notifications dated March 31, 2001, issued u/s 4(1), 7(2), 5, and 71 of the Delhi Sales Tax Act, 1975.
2. Whether DEPB constitutes "goods" and if its transfer amounts to a sale of goods.
3. Applicability of the Supreme Court decision in Vikas Sales Corporation v. Commissioner of Commercial Taxes.
4. Whether DEPB is an actionable claim or money and thus excluded from the definition of "goods."

Summary:

Issue 1: Legality of Notifications
The petition challenges three notifications dated March 31, 2001, issued by the Lt. Governor of NCT of Delhi. The first notification amended the Second Schedule to include entry No. 67 ("REP, DEPB and other tradable licences"). The second notification, under section 5 of the Act, taxed turnover of these items at the first point. The third notification, u/s 71 of the Act, added entry No. 10 to the Schedule appended to sub-clause (1A) of clause XXXIV of rule 11 of the Delhi Sales Tax Rules, 1975.

Issue 2: DEPB as "Goods"
The petitioner argued that the transfer of credit lying in DEPB is not a sale of goods, as DEPB is not "goods" but an actionable claim or money. The court examined the definition of "goods" in the Delhi Sales Tax Act, which excludes actionable claims, stocks, shares, securities, or money. The court compared this with definitions in other state acts and the Central Sales Tax Act.

Issue 3: Applicability of Vikas Sales Corporation Case
The respondent cited the Supreme Court decision in Vikas Sales Corporation v. Commissioner of Commercial Taxes, which dealt with REP licences. The petitioner contended that DEPB is not a licence and thus the decision does not apply. The court noted that DEPB, like REP licences, is freely tradable and has a value of its own, making it goods.

Issue 4: DEPB as Actionable Claim or Money
The court referred to the definition of "actionable claim" in the Transfer of Property Act and noted that DEPB does not fit this definition. DEPB represents merchandise and is treated as such in the commercial world. It is neither a chose in action nor an actionable claim but is considered property and thus goods.

Conclusion:
The court found no substance in the petitioner's argument that DEPB cannot be subject to sales tax. The challenge to the notifications failed. The court dismissed the writ petition, noting that issues regarding the legality of tax recovery on the sale of an old office car and other factual disputes could be adjudicated by the appellate forum.

Writ petition dismissed.