9911796707
TMI Blog1997 (2) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... elling dealer concessional tax of 4 per cent under section 8(1)(b) of the Act, in certain cases, if as per section 8(3)(b) of the Act, the goods sold are goods of the class specified in the certificate of registration of the registered dealer purchasing the goods (inter alia) as being intended for resale , and, as per section 8(4)(a) of the Act read with relevant rules, the said selling dealer furnishes prescribed declaration in C form signed by the purchasing dealer of the said goods. As per section 10(d) of the Act if any person after purchasing any goods for the purpose of resale fails without reasonable excuse , to make use of the goods for such purpose, it is an offence punishable under the said provision. However, section 10-A of the Act provides that if any person purchasing the goods is guilty of an offence under section 10(1)(b) or (c) or (d) [not under section 10(1)(a)] of the Act, penalty could be imposed in lieu of transaction under section 10 of a sum not exceeding 1 times the tax. 3.. Now, coming to the facts, the assessee, Cholamandalam Investment and Finance Co. Ltd., a dealer under the Act, had purchased computers and spares and components to the tune of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition. The other lease arrangement letter, however, says that the entire deal is a lease-cumsale arrangement and that the customer would complete the deal by purchasing the goods, at the end of the period of lease. It also says that the customer however has right to exercise his option to buy much earlier as per the schedule of prices enclosed therein and it also states that the prices have been fixed taking into consideration the lease, rentals, depreciation to the goods and its cost. But the said lease-cum-sale arrangement letter contains the signature of purchasing customer at the foot of the said letter (without any date). (It should be noted here that the abovesaid lease agreements were executed by both the parties). 5.. In view of the above features, the assessing officer in his penalty order found that the original intention of the assessee was not for resale and its intention was only to lease. He further held that without any reasonable excuse the assessee made use of the goods purchased for purposes other than those mentioned in section 8(3)(b) of the Act and the registration certificate, and levied the penalty as per section 10-A, read with section 10(d). 6.. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of clearcut hire purchase transaction, unlike the present case. He also points out that the above referred to lease arrangement letter, unilaterally given by the assessee to this customer, cannot alter the lease agreement entered into between the parties, which was signed by both the parties, while the said letter is only by the assessee addressed to the customer. 9.. We have considered the rival submissions. It is clear to us that the Tribunal has grossly erred in relying on the observations in Bihar State Agro Industries Development Corporation Ltd. v. State of Bihar [1973] 31 STC 484 (Pat) and on that footing alone holding that in the instant case the goods have been only with an intention for resale . The relevant portions of these observations are as follows: Transactions on the basis of hire purchase agreements are so well-known to the commercial world that it does not seem possible to take the view that a registered dealer after having purchased goods for resale utilised them for any purpose other than resale by merely entering into such transactions. It is well-known that such transactions are entered into with the ultimate object of passing the property in the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to the term sale of goods as used in section 3(a) of the Act, which defines inter-State sale, that it includes an agreement to sell. Section 3(a) runs as follows: A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase,- (a) occasions the movement of goods from one State to another. Only in this context, the Supreme Court observed in the said decision as follows: ..............if there is a movement of goods from one State to another, not in pursuance of the sale itself, but in pursuance of an agreement to sell, which later merges into a sale, the movement of goods would be deemed to have been occasioned by the sale itself wherever it takes place.....we can hardly conceive of any case where a sale would take place before the movement of goods. Normally what happens is that there is a contract between the two parties in pursuance of which the goods move and when they are accepted and the price is paid the sale takes place. There would, therefore, hardly be any case where a sale would take place even before the movement of the goods. Thus, in interpreting section 3(a) of the Act in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while dealing with similar term in Explanation III to section 2(1)(n) of the Andhra Pradesh General Sales Tax Act, 1957 in Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer [1968] 21 STC 312 (SC) has observed thus: The real effect of the third Explanation is to impose the tax only when there was a transfer of title to the goods and not where there is a mere contract of agency. The Explanation says in effect that where there is in reality a transfer of property by the principal to the agent and by the agent in his turn to the buyer, there are two transactions of sale. In our opinion, the phrase when the goods are transferred in clauses (1) and (2) of Explanation III on a proper construction means when title to the goods is transferred and so construed it is impossible to say that the Explanation enlarges the scope of the main section. In this connection the use of the abovesaid term transfer in the latter part of section 2(g) could also be contrasted with the relevant expression used in article 366(29A)(c) of the Constitution of India. The said clause was introduced by the Constitution (Forty-sixth Amendment) Act, 1982 and it defines tax on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time it purchased the goods in question, to resell the same, section 10(d) of the Act will not be attracted since section 10(d) has got three ingredients, one of whom is, purchasing for any of the purposes specified in section 8(3)(b). The other two ingredients are, (1) the failure to make use of the goods purchased for purposes specified in section 8(3)(b) and (2) the absence of reasonable excuse for such failure [vide also State of Mysore v. S.S. Umandi [1969] 24 STC 11 (Mys) and A.S. Mohammedkutty and Company v. Sales Tax Officer [1990] 79 STC 24 (Ker)]. In other words, this means, in the context of the present case, purchasing any goods for resale, that is purchasing any goods with the intention to resell. When such an intention to resell is not there at the time of the purchase, section 10(d) will not come into operation. As per the contention of the Revenue throughout and also as per the finding of the first two authorities below, there was no intention on the part of the assessee at the time of the purchase of the goods to resell the same. When such is the case, section 10(d) is not attracted, though section 10(a) may in such a case be invoked on the footing that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
