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TMI Blog1992 (2) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... framed by the assessing authority and the petitioners instead of challenging the assessment orders in appeal, have filed the writ petitions challenging the constitutional validity of the 46th Amendment of the Constitution of India, which came into force with effect from 2nd February, 1983, coupled with the challenge to the constitutional validity of sub-clause (iv) of section 2(j) and (1) of the Haryana General Sales Tax Act (hereinafter referred to as "the HGST Act, 1973"). We propose to deal with the legality and the constitutional validity of the various provisions of the HGST Act, 1973 and the 46th Amendment of the Constitution before dealing with the facts of each individual case separately. A brief history of the relevant constitutional and statutory provisions having a bearing on the amendment of the Haryana General Sales Tax Act in the year 1984 (by Haryana Act 11 of 1984), has to be set out at this stage to appreciate the contentions of the parties. Prior to the commencement of the Constitution of India, the power to levy sales tax had been conferred on the Provincial Legislatures by entry 48 of List II of the Seventh Schedule to the Government of India Act, 1935. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment was duly ratified by the requisite number of State Legislatures and this amendment came into force with effect from 2nd February, 1983, after having been assented to by the President of India. Forty-sixth Amendment to the Constitution of India, as is clear from the Statement of Objects and Reasons of the Constitution (Forty-sixth Amendment) Act, 1982, was aimed at augmenting the State revenues and to reduce the scope for avoidance of taxes in various ways; it was also aimed at taking away the effect of various judgments of the Supreme Court of India, referred to in the earlier part of this judgment. This was done by amending the Constitution to include in article 366, a definition of "tax on the sale or purchase of goods" by inserting a new clause (29A) in article 366 which deals with definitions provides after its amendment as under: "366. In this Constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say- (1) to (29) ...................... (29A) 'tax on the sale or purchase of goods' includes(a) a tax on the transfer, otherwise than in pursuance of a contract, of property in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its grammatical or cognate expressions means the acquisition of goods for cash or deferred payment or other valuable consideration otherwise than under a mortgage, hypothecation, charge or pledge and includes- (i) transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract entered into on or after the 18th day of April, 1984; (iii) delivery of goods on hire purchase or any system of payment by instalments; (iv) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) supply by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration; and such transfer, delivery or supply of any goods, shall be deemed to be a purchase of those goods by the persons to whom such transfer, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt amendments in the Haryana General Sales Tax Act, 1973. In the case of "sale" there is a transfer of the proprietary rights from the seller to the buyer but according to the amended definition which is inclusive by nature whenever there is transfer of right to use any goods for any purpose is made then that would also amount to "sale". The distinction between a contract of sale as defined in the Sales of Goods Act and "a transfer of the right to use goods" is that in the case of transaction of sale of goods, the proprietary rights of the owner are transferred whereas in the case of transfer of the right to use, the proprietary rights in the goods remain with the owner. The owner of the property has a bundle of rights in it, namely, right to possess, right to use and enjoy, right to usufruct, right to consume, right to destroy, to alienate, to transfer, etc. In law, the owner of the property may create a charge on the property, mortgage it or lease it or sell it. Law in fiction makes it possible that the various rights and interests such as right to possess, right to use and enjoy, right to usufruct, right to consume, right to alienate or transfer may be vested in various persons. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'bailee' defined.-A 'bailment' is the delivery of goods by one person to another for some purpose upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the 'bailor'. The person to whom they are delivered is called the 'bailee'." Thus, in the "bailment" there is a transfer of goods for a particular period and thereafter the goods are to be returned to the person delivering them. Only after the delivery of the goods the "bailee" becomes legally possessed of such goods and becomes entitled to enjoy the use of the goods upon periodical payment or against other valuable consideration to the bailor. "Bailor" gets the consideration whereas the "bailee" gets the right to enjoy the goods and the same is complete only upon the delivery of goods. The transferee begins to exercise the right to use only after acquiring the possession of the goods hired. In order to determine as to whether a person is in possession of the goods or not would depend as to whether he is notionally or in actual control of the same and the same is essentially a quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not the transferee. Another case of Modern Decorators v. Commercial Tax Officer [1990] 77 STC 470 (WBTT) was cited with the permission of the court wherein the applicant was carrying on the business as decorators for over 50 years. The business of the applicant consisted, inter alia, of constructing, erecting and raising pandals, barricades, rostrums, etc., in and upon land, earth, road, building, roof-top, etc., according to and on the basis of orders placed by various customers with the help of bamboos, sal balla, ropes, tarpaulins, decorating cloth and other materials. After the expiry of the specified period, the pandals, barricades, rostrums or pavilions were dismantled by the decorators with their own men and labour and the material was taken back to the godown of the applicant for subsequent use according to the orders. The applicant also let on hire to its customers, chairs and tables, etc. It was held that the applicant did not let out the material to his customers. So far as the erecting of pandals, etc., was concerned, the applicant itself erected the pandals for a consideration and after the specified period dismantled the same and removed the articles to its godown; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There will be no order for costs." In Bank of India v. Commercial Tax Officer [1987] 67 STC 199, a single Bench of the Calcutta High Court did not regard the lease of a bank locker as sale of the bank locker within the extended definition of the expression "sale" primarily because the hiring of the locker was not regarded as mere transfer of the right to use of the locker but rendering various services in addition thereto. The main reasons given for the same were that bank never gave actual possession of the locker to the customer. The bank had built a strong room, installed a steel cabinet with safety lockers with double locking system; one key was given to the customer and the other being retained by the bank. The locker could not be operated until and unless both the keys were used for opening the lockers. Customer was only given admission to the vaults when the bank allowed it. The authorised customer was granted authority to use the locker after recording his presence in the books of the bank beforehand. It was held that the bank had a lien on the goods stored in the locker for the rent payable by the customer. The contention of the department to tax the lease of the locker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is over, the tents are brought back to the business premises of the petitioners by the employees of the petitioners; it was further stated that at no stage, the tents are transferred by the petitioners to the customers. Similarly, the petitioners also supply crockery, utensils and furniture for the purpose of holding function to the customers. Crockery and furniture is also transported by the employees of the petitioners to the premises of the customers; the bearers employed by the petitioners serve food, etc., to the guests and after the function is over, the same are brought back to the petitioners' business premises; it was argued, that at no stage the tents, crockery, utensils, furniture was sold by the petitioners. It was stated that tents, crockery, utensils and furniture used by the petitioners had been purchased after paying the sales tax and, therefore, no sales tax could be charged from the petitioners as the petitioners did not deliver possession of the goods or the right to use to the customers and the consideration charged was only for the services rendered. Another argument raised was that note 2 of clause (1) of section 2 of the HGST Act, 1973, referred to in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty to come to its conclusions on facts as to whether there was a transfer of the right to use any goods which find mention in note 2 of clause (1) of section 2. Whether or not the tents, kanats and other decorating material given by the petitioners to its customers would amount to transfer of the right to use would be dependent upon the facts of each case. If pandal only after having been erected is given to the customers for use then it may not be the transfer of the goods within the meaning of section 2(d) of the HGST Act, 1973, wherein the word "goods" has been defined but all the same where tents, kanats and furniture are given by the petitioners to the customers as such and the customers erect the same and pay hire charges for the tents, kanats, chholdari, crockery, etc., then the same fall within the meaning of "goods" and any transfer of the right to use the same shall be exigible to the sales tax. The transfer of various items such as chairs, tables and crockery, etc., of course, would fall within the meaning of the word "goods" and transfer of the right to use on those goods shall be exigible to tax because the same shall come within the definition of "sale" as amended. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrol of the shuttering during the period it remains in his possession. Possession of the shuttering is transferred by the petitioners to the customers for use during the construction and the same shall fall within the definition of the word "sale" as there is a transfer of the right to use the goods as amended. The consideration received by the petitioners for providing shuttering for use to somebody shall be the amount of sale and shall be included within his "turnover". We further find no substance in the submission of the learned counsel appearing for the petitioners that the petitioners shall not fall within the definition of the word "dealer" as defined in section 2(c) of the HGST Act, 1973. We have no hesitation in holding that the petitioners are "dealers" as they transfer the right to use the goods for consideration and the same would be included in their total "turnover " to make it exigible to sales tax under the Act as per the amended definition. C.W.P. No. 12953 of 1989: In this case, the petitioner has a factory at Faridabad and is engaged in the manufacturing and sale of bone dry purified acetylene gas for which it has got itself registered as a "dealer" under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for the petitioners. We do not find any substance in the same. Admittedly, the petitioner is a "dealer". Section 2(f) of the Haryana General Sales Tax Act, 1973, defines "goods" as under: "'goods', means every kind of movable property other than newspapers, actionable claims, money, stocks and shares or securities but includes growing crops, grass, trees and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale." The case of the petitioner is that it cannot permit its customers to retain the cylinders beyond the specified period as the cylinders are required for refilling by the company and the same cannot be termed as "goods" and what the petitioner charges is detention charges beyond a particular period at the rate of Re. 1 per day per cylinder and the same can be termed as actionable claim which is exempted from the word "goods". We do not find any substance in this submission of the learned counsel appearing for the petitioner. The gas is supplied to the customers with cylinders and the price for right to use the cylinder is included in the total amount which is charged from the customers for supply of ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the effective possession and control of the buses pass to the customers. In view of the above position, we are of the opinion that this is a case of "sale" within the extended meaning of the word inasmuch as there was a transfer of the right to use the vehicle for valuable consideration and the sales tax is exigible. In some of the cases, petitioners have filed writ petitions after the framing of the assessment by the assessing authorities whereas the appeal could have been filed before the first appellate authority. Learned counsel appearing for the petitioners stated that in some of the cases appeals have not been filed because of the challenge put to the constitutional validity of the amending Act. It would be in the interest of justice if those petitioners who did not file the appeals against the assessment orders, are permitted to file the same within a period of one month. Accordingly, it is directed that those petitioners who did not file the appeal earlier may file the appeal within one month from this date. In the light of the observations made above, the writ petitions stand dismissed but there would be no order as to costs. Writ petitions dismissed. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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