Financing as security, not sale, where a car financer merely advanced the balance and took vehicles as collateral.

A financier who merely advanced the unpaid balance of the purchase price of motor cars and took the vehicles as security was not carrying on a sale or hire-purchase transaction under the Bengal Finance (Sales Tax) Act, 1941. The actual sale was made by the manufacturer to the purchasers, while the financier occupied the position of a mortgagee and the purchasers retained the equity of redemption. Because the statutory definition of "sale" excluded mortgage, hypothecation, charge and pledge, the financing arrangement could not be treated as a taxable sale, and the financier was not liable to sales tax as a dealer on that basis.

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Issues: Whether the financier's transactions with purchasers of motor cars constituted a "sale" or hire-purchase transaction so as to make the financier a dealer liable to sales tax under the Bengal Finance (Sales Tax) Act, 1941.

Analysis: The arrangement showed that the actual sale of the motor cars was made by the car manufacturer to the purchasers. The petitioners only advanced the unpaid balance of the price and took the car as security for repayment. The form used by the parties did not alter the intrinsic character of the transaction. On the facts, the purchaser retained the equity of redemption and the petitioners occupied the position of mortgagee. Since the statutory definition of "sale" excluded mortgage, hypothecation, charge or pledge, the transaction between the petitioners and the purchasers could not be treated as a sale within section 2(g) of the Act.

Conclusion: The petitioners were not dealers in respect of these financial transactions and were not liable to sales tax on that basis; the transaction was not a sale under the Act.

Final Conclusion: The revision succeeded because the financing arrangement was held to be a security transaction and not a taxable sale.

Ratio Decidendi: A transaction in which a financier merely advances the balance of the purchase money and takes the vehicle as security is a mortgage-like arrangement and not a sale for purposes of sales tax where the statutory definition excludes mortgage and similar security interests.

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