Hire-purchase transactions are not sales; sales tax notices failed where no taxable sale or actual collection was shown.

Hire-purchase transactions were not sales because ownership passed only on payment of the final instalment and exercise of the option to purchase. Sales tax could arise only on a taxable sale, and the use of the words "inclusive of sales tax" in bills and books did not by itself prove that tax had actually been collected when the full amounts were debited to purchasers' accounts. On that footing, the machinery under sections 37 and 46 of the Bombay Sales Tax Act, 1959 could not be used to treat the sums as tax collected in breach of the Act, and the show cause notices were held without jurisdiction.

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Issues: Whether show cause notices issued under sections 37 and 46 of the Bombay Sales Tax Act, 1959, alleging collection of sales tax in hire-purchase transactions, were without jurisdiction on the ground that the transactions did not amount to sales and no tax had in fact been collected.

Analysis: The transactions were hire-purchase arrangements under which ownership passed only on payment of the last instalment and exercise of the option to purchase. A hire-purchase agreement is not a sale, and sales tax is attracted only when a taxable sale occurs. The entries in the bill and books, including the expression "inclusive of sales tax", did not establish that tax had been collected by the assessee where the entire amounts were debited to the purchasers' accounts. In the absence of a sale, the machinery of sections 37 and 46 could not be invoked to treat the sums as tax collected in contravention of the Act.

Conclusion: The impugned notices were without jurisdiction and liable to be quashed.

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