Hire-purchase sale price includes all contractual charges when goods are transferred; contrary tribunal view was set aside.

In a hire-purchase transaction under the Bengal Finance (Sales Tax) Act, 1941 as applicable to Delhi, the entire contractual consideration for transfer of the goods, including hire charges, finance charges and similar amounts, formed the sale price and was taxable when the transfer occurred. The Delhi HC distinguished Union territory sales tax legislation from State legislation and treated the transfer itself as the taxable sale. It also held that the Tribunal's view that tax arose only on exercise of the purchase option was contrary to the statutory scheme and was a jurisdictional error. The Tribunal orders were set aside in writ jurisdiction and the revenue position was restored.

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Issues: (i) Whether, in a hire-purchase transaction governed by the Bengal Finance (Sales Tax) Act, 1941 as applicable to Delhi, the entire amount agreed to be paid, including hire charges or finance charges, forms part of the sale price for sales tax purposes at the time the goods are transferred. (ii) Whether the Sales Tax Tribunal's view that tax was leviable only when the hirer exercised the purchase option was without jurisdiction and liable to be set aside in writ jurisdiction despite the availability of a statutory reference.

Issue (i): Whether, in a hire-purchase transaction governed by the Bengal Finance (Sales Tax) Act, 1941 as applicable to Delhi, the entire amount agreed to be paid, including hire charges or finance charges, forms part of the sale price for sales tax purposes at the time the goods are transferred.

Analysis: The definition of sale under the Act, as amended, was treated as wide enough in the context of Union territory legislation to treat the transfer of goods in a hire-purchase arrangement itself as a sale. The Court distinguished the position under State sales tax legislation, where the passing of property controlled the concept of sale, from parliamentary legislation for Union territories, where the transfer itself could be taxed. On the terms of the hire-purchase agreement, the supposed distinction between price and hire charges was found to disappear once the contract consolidated the total amount payable for the transfer of goods. The Court held that the sale price must be the consideration agreed to be paid for the transfer when the goods are transferred, and that the whole contractual amount, including amounts described as interest, finance charges, or hire charges, formed that consideration.

Conclusion: The entire agreed consideration under the hire-purchase contract, including hire charges and finance charges, forms the sale price and is liable to sales tax on the transfer of goods.

Issue (ii): Whether the Sales Tax Tribunal's view that tax was leviable only when the hirer exercised the purchase option was without jurisdiction and liable to be set aside in writ jurisdiction despite the availability of a statutory reference.

Analysis: The Tribunal's approach was held to be contrary to the statutory scheme governing sales in a Union territory and inconsistent with the constitutional competence under which such tax was imposed. That error was treated as a fundamental jurisdictional defect, not a mere error within jurisdiction. The Court further held that the existence of a statutory alternative remedy did not bar writ relief in the circumstances, because the petitions had already been entertained on merits, the lack of jurisdiction was apparent, and the alternative remedy had effectively become unavailable by lapse of time.

Conclusion: The Tribunal's orders were without jurisdiction and were set aside; the orders of the sales tax authorities were restored.

Final Conclusion: The hire-purchase receipts were held taxable on the full consideration payable for the transfer of goods, and the contrary Tribunal orders were quashed in writ proceedings, with the revenue position sustained overall.

Ratio Decidendi: In a Union territory sales tax regime that treats the transfer of goods in a hire-purchase contract as the taxable sale, the sale price is the entire consideration agreed for that transfer, including hire charges or finance charges, and a tribunal order contrary to that statutory and constitutional scheme is without jurisdiction.

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