Hire-purchase goods returned: turnover deduction is limited to unpaid instalments actually allowed on return.

Goods sold under a hire-purchase arrangement and later returned to the seller were treated as a sale for turnover purposes, but deduction under rule 5(1)(b) was confined to the amount actually allowed on return. The decisive factor was the extent of the allowance reflected in the accounts, not the original assessment of the full sale price. Where the return of goods terminated liability for the unpaid balance, only those unpaid instalments could be deducted from gross turnover, provided the accounting requirement was satisfied. On the stated facts, the deductible amount was limited to the unpaid instalments and not the entire price previously taxed.

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Issues: Whether, on goods sold under hire-purchase agreements and returned to the seller after default, the assessee was entitled under rule 5(1)(b) of the Turnover and Assessment Rules to deduct from gross turnover only the unpaid instalments of the sale price, and not the full amount earlier assessed.

Analysis: The transaction was treated as a sale assessable to sales tax, though clothed in the form of hire-purchase. The instalments represented the sale price payable by the purchasers, and when the goods were returned under the agreements the liability to pay the balance ceased. Rule 5(1)(b) allowed deduction of amounts allowed to purchasers in respect of goods returned, provided the accounts showed the relevant return and allowance. The decisive factor was not the date of the original sale but the date and extent of the allowance actually made on return of the goods. On the facts, the amount really allowed was the unpaid balance of the purchase money, and the account records showed that liability had been terminated.

Conclusion: The assessee was entitled to deduction under rule 5(1)(b) only of the unpaid instalments amounting to Rs. 21,191-1-6, and not of the entire sale price previously taxed.

Ratio Decidendi: Where goods sold under a hire-purchase arrangement are returned to the seller and the unpaid instalments of the purchase money cease to be payable, the seller may claim deduction under the turnover rule only to the extent of the unpaid instalments actually allowed on return of the goods, subject to the accounting requirement being satisfied.

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