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TMI Blog1979 (10) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and circumstances of the case, the second proviso to section 7(2)(b) of the Bihar Sales Tax Act, 1959 (Act 19 of 1959), was applicable?" 2. The aforesaid two questions, in substance, mean, whether the transfer of goods on hire-purchase by the dealer would be deemed to have been for the purpose of resale or whether such transfers would be deemed to have been made in violation of the declaration given by the dealer in form IX of the Bihar Sales Tax Rules. It may be stated that under section 7 of the Act, for the purpose of computing the taxable turnover of a registered dealer, certain types of sales are deducted from the gross turnover and only the balance is then determined as the taxable turnover. One of such deductions, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions under the Act which makes the offence of violation of the declaration made in form IX of the Bihar Sales Tax Rules an offence punishable with imprisonment or fine or both. 3. The two questions referred for opinion of this Court have arisen because, according to the Superintendent of Commercial Taxes, the transfer of goods on hire-purchase by the dealer did not amount to resale and, consequently, there was a violation of the declaration given by the dealer while purchasing the goods, thereby attracting the second proviso of sub-section (2)(b) of section 7 of the Act. According to the Deputy Commissioner of Commercial Taxes also, who heard the appeals against the assessments, transfer of goods on hire-purchase did not amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone upon the normal concept of hire-purchase in the business world. 5.. I will now state briefly the facts of the case: The assessee is a registered dealer, dealing mainly in fans, sewing machines and accessories, in the town of Gaya. The periods of assessment are 1960-61 to 1964-65. The assessments for the first three periods, namely, for 1960-61 to 1962-63, were made by recourse to reassessment proceedings. The other two assessments are regular assessments. Admittedly, during the relevant periods, the assessee transferred some of his goods under hire-purchase agreement, which goods he had purchased after giving declarations in form IX of the Sales Tax Rules that he was purchasing them for resale in the State of Bihar. It is not ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Commercial Taxes in respect of the five periods in question. Before the Commercial Taxes Tribunal, a wider question, as to whether the transfer of goods on hire-purchase amounted to sale, was put for its consideration. The Tribunal held that even in a hire-purchase agreement, one of the aspects is that all sales fructify into option to purchase by the intending purchaser. The Tribunal further observed that, by virtue of the explanation, which had been added to section 2(p) of the Act, transfer of goods on hire-purchase shall be deemed to be a sale. The Tribunal, therefore, rejected the contention of the department that the transfer of goods on hire-purchase was not a sale of the goods. It is on these facts that the above-mentioned qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Bihar State Agro-Industries Development Corporation v. State of Bihar[1973] 31 S.T.C. 484; (1973) 1 B.B.C.J. 1. In that case also, the dealer, which was dealing in tractors and agricultural equipments, had entered into hire-purchase transactions in respect of some of the goods which it had purchased after giving a declaration that the said goods were being purchased for the purpose of resale. Such parts of the hirepurchase transactions were assessed in terms of the second proviso to section 7(2)(b) of the Act. The dealer challenged the jurisdiction of the assessing authority to include such transactions in its taxable turnover. In that context, the question as to whether the goods could be deemed to have been utilised for a purpose ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than for resale. In the modern world "hire-purchase" has come to be a method of selling and purchasing goods. The purchaser with his limited finance wants to purchase the goods; the seller wants to sell his goods, but not lose his right over it unless full price has been paid. The converging point between these two is a transaction on hire-purchase. "Hire-purchase" must not be confused with the two expressions that go to make it "hire" and "purchase". If the substance behind the transaction is to pass the right over the property or the goods to the hirer, it cannot but be an attempt at resale of the goods. May be that in certain cases, by the default of the hirer, the agreement breaks up, but even then so far as the dealer is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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