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TMI Blog1982 (7) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... s only a financing arrangement and therefore when the Government, pursuant to the hire-purchase agreement, purported to transfer the machinery ultimately to the plaintiff it was not selling the machinery and therefore any sales tax which the plaintiff was compelled to pay to the Government would not be a proper levy. For that reason the plaintiff has obtained a decree for recovery of a sum of Rs. 9,670 and interest thereon which he had to pay as sales tax at the instance of the officers of the defendant. 2.. The plaintiff started a business of manufacture and sale of plastic products. The plaintiff's firm applied to the joint Director of Industries and Commerce for a loan of Rs. 1,00,000 for purchase of an injection moulding machine at an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akes on hire has only the right to hold subject to the obligation thereunder with an option to purchase on payment of the hire monies in accordance with the terms of the hire-purchase agreement. Parties to such a hire-purchase agreement may not intend to transfer the ownership until money due to the seller is fully paid. There may be instances where though an agreement purports to be a hire-purchase agreement with the usual terms embodied in such instrument, in fact and in truth parties may not intend the document to operate as anything more than an arrangement by way of security for the financing obligations undertaken by one party to the other to supply him with funds for purchase. The financing companies which are interested only in gett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire them under a hire-purchase agreement is not estopped from proving that the real bargain was a loan on the security of the goods. If there is a bona fide and completed sale of goods, evidenced by documents, anterior to and independent of a subsequent and distinct hiring to the vendor, the transaction may not be regarded as a loan transaction, even though the reason for which it was entered into was to raise money. If the real transaction is a loan of money secured by a right of seizure of the goods, the property ostensibly passes under the documents embodying the transaction, but subject to the terms of the hiring agreement, which become part of the buyer's title, and confer a licence to seize." The possible distinction between a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood only as a financing agreement in favour of the Government which advanced the loan to the plaintiff for purchase of machinery for the purpose of his business. The Government's interest is only to see that the amount advanced is not lost but is secured in the best way possible. That is done by hire-purchase agreement. If a hire-purchase agreement could be read as a financing agreement the circumstances of the case positively indicate only a loan arrangement. The terms of the arrangement are consistent with a loan arrangement as held by the Supreme Court in the decision adverted to. 5.. The learned counsel for the State referred to clause 6 of the agreement, exhibit B 1, in support of his case that the plaintiff had undertaken to pay sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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