Security deposit forfeiture was treated as damages, not sale consideration, so no taxable turnover arose under the sales tax law.

Forfeiture of a security deposit was not treated as taxable turnover under the Kerala General Sales Tax Act because the record did not show that the retained amount was sale consideration. Applying the statutory definition of sale, the court noted that there was no material proving a transfer of property in goods for valuable consideration in the relevant assessment year. The surrounding correspondence and conduct indicated a loan-type arrangement, and the later appropriation of the deposit operated as liquidated damages when the materials were not returned. The prior reduction by the Tribunal also supported the view that any price had been fixed earlier, not in the year under assessment.

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Issues: Whether forfeiture of the security deposit in the facts of the case constituted taxable turnover as sale consideration under the Kerala General Sales Tax Act, 1963, or whether the transaction was only a loan arrangement with forfeiture operating as liquidated damages.

Analysis: The applicable definition of sale under section 2(xxi) requires a transfer of property in goods for valuable consideration in the course of trade or business. The record did not disclose any agreement or other material showing that the amounts retained were sale consideration. The surrounding correspondence and conduct indicated that the goods had been supplied against a deposit and that the later appropriation of the deposit arose only upon the failure to return the materials. On the facts, forfeiture of the security deposit was treated as damages arising from the arrangement and not as the price of a completed sale. The earlier reduction made by the Tribunal also supported the conclusion that the price, if any, was fixed in the earlier year and not in the relevant assessment year.

Conclusion: The transaction was a loan transaction and the forfeited security deposit did not form part of taxable turnover; there was no sale in the relevant year.

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