Hire-purchase treated as sale for sales tax purposes, so resale use of vehicles did not trigger the proviso.

Hire-purchase transactions were treated as sales under section 2(g) of the Bengal Finance (Sales Tax) Act, 1941, because a transfer of goods on hire-purchase is included within the statutory definition of transfer in property. On that basis, the dealer's vehicles acquired under hire-purchase were regarded as purchased for resale from the time the agreements were entered into. The registration certificate was therefore not misused, and the second proviso to section 5(2)(a)(ii), as extended to Delhi, was not attracted. The issue was answered in favour of the dealer.

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Issues: Whether the utilisation of vehicles on hire-purchase basis before their actual sales attracted the second proviso to section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi.

Analysis: Under section 2(g) of the Bengal Finance (Sales Tax) Act, 1941, a transfer in property includes a transfer of goods on hire-purchase, and such a transaction is treated as a sale for the purposes of the Act. On that basis, the dealer's hire-purchase transactions amounted to sales when the agreements were entered into. The purchases were therefore made for resale and the registration certificate was not misutilised, so the second proviso to section 5(2)(a)(ii) was not attracted.

Conclusion: The question was answered in the affirmative and in favour of the dealer.

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