Transferable import licences as goods for sales tax, with penalty exposure limited by bona fide dispute and assessment year timing.

Transferable REP licences and exim scrips were treated as goods because they embodied valuable, marketable rights in a document with corporeal existence; their transfer, sale or assignment for consideration was therefore exigible to sales tax. The levy was not displaced by the import policy under which the licences were issued, since the taxable event was the sale of the document for value, not the import transaction itself. Penalty under the State sales tax law depended on the statutory scheme and the assessee's bona fides, and was confined to assessment years from 1992-93 onwards, subject to the facts of each case.

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Issues: (i) Whether REP licences and exim scrips are "goods" and therefore liable to sales tax on transfer, sale or assignment for consideration; (ii) whether penalty under the State sales tax law could be levied on such transactions and, if so, from which assessment years.

Issue (i): Whether REP licences and exim scrips are "goods" and therefore liable to sales tax on transfer, sale or assignment for consideration.

Analysis: The transferable import entitlement embodied in the licence was held to be a valuable right crystallised in a document having corporeal existence, capable of being bought and sold. Applying the wide meaning of "goods" and the distinction between movable property and actionable claims, the Court treated the licences as articles of merchandise and rejected the contention that they were merely intangible rights, securities, or actionable claims. The Court also held that the sales tax levy was not defeated by the import policy under which the licences were issued, because the taxable event was the sale of the document for consideration and not the import transaction itself.

Conclusion: REP licences and exim scrips are goods and their transfer, sale or assignment for value is exigible to sales tax.

Issue (ii): Whether penalty under the State sales tax law could be levied on such transactions and, if so, from which assessment years.

Analysis: The Court held that penalty provisions apply where the assessment is made on the basis of accepted books of account and the return is found to be incorrect or incomplete, but the assessing authority must still examine the bona fides of the assessee. On the facts, the Court limited penal exposure because the issue had been bona fide contested and the department had not previously treated such transactions as taxable. The Court further held that penalty could be invoked only from the point at which the department had publicly made known its view, namely assessment years 1992-93 onwards.

Conclusion: Penalty could be considered only from assessment years 1992-93 onwards, subject to individual facts and the statutory scheme.

Final Conclusion: The levy of sales tax on the transfer of REP licences and exim scrips was upheld, with the assessee's challenge substantially rejected, while the question of penalty was confined to later assessment years and left to be decided on the facts of each case.

Ratio Decidendi: A transferable import licence embodying a valuable right in a document with corporeal existence is "goods" for sales tax purposes, and penalty for incorrect or incomplete returns depends on the statutory setting and the bona fides of the assessee.

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