Sale styled as security for a loan is not taxable as sales tax where no real transfer of property occurs.

A transaction styled as a sale was treated as a secured loan where the petitioners advanced money, took sale and hire-purchase documents, and retained no real transfer of property by way of sale. Because the registration certificate was not transferred and the undisputed facts showed the arrangement was only a device to secure repayment, the transaction was not exigible to sales tax. On that basis, the assessment and penalty under the sales tax law had no legal foundation and were quashed, with the orders of the authorities below set aside.

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Issues: Whether the transactions entered into by the petitioners were sales exigible to tax or merely financial arrangements by way of loan secured on motor vehicles, and whether the assessment and penalty levied under the sales tax law were sustainable.

Analysis: The petitioners had advanced money to customers and, as security for repayment, obtained a sale note, a hire-purchase agreement, a promissory note, and an endorsement in the registration certificate. The registration certificate was not transferred into the petitioners' names, and the undisputed facts showed that the apparent form of sale was only a device to secure repayment of the loan. On those facts, the transaction did not amount to a sale and therefore could not attract sales tax. Once the basic transaction was not taxable, both the assessment and the penalty lacked legal foundation.

Conclusion: The transactions were not sales but financial agreements; the assessment and penalty were unsustainable and the petitioners succeeded.

Final Conclusion: The tax demand and penalty were quashed, and the orders of the authorities below were set aside.

Ratio Decidendi: A transaction styled as a sale will not be treated as a sale for sales tax purposes where, on the undisputed facts, it is in substance only a loan secured by hire-purchase documentation and no real transfer of property as a sale takes place.

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