REP licence transfers as goods under sales tax law; taxable as movable property with commercial value.

Transfer of an import replenishment (REP) licence was treated as a transfer of movable property with commercial value, not as an actionable claim. The licence conferred a valuable, freely transferable right to import goods under the import control regime, and did not amount to a claim to a debt or a mere beneficial interest in movable property not in possession. On that reasoning, it fell within the wide definition of "goods" under section 2(m) of the Karnataka Sales Tax Act, 1957, and tax under section 5(1) was attracted even though the licence was not listed in a specific schedule. The circular taxing such transfers was therefore valid.

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Issues: Whether the transfer of an import replenishment licence (REP licence) is an actionable claim or merchandise falling within the definition of goods under the Karnataka Sales Tax Act, 1957, and whether tax under section 5(1) of that Act is attracted.

Analysis: The licence was held to confer a valuable and transferable right to import goods, created under the statutory import control regime and carrying commercial value in the market. It was not a claim to a debt secured by property, nor merely a beneficial interest in movable property not in possession within the meaning of actionable claim. Since the right was freely transferable and itself had commercial value, it was treated as movable property and merchandise. On that basis, it fell within the wide definition of goods in section 2(m), and the levy under section 5(1) was held to be attracted even if the licence was not placed in a specific schedule.

Conclusion: The transfer of REP licence is goods and not an actionable claim, and the impugned circular taxing such transfers was valid.

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