Hire-purchase delivery in Kerala treated as a deemed sale, distinct from the outside-State purchase transaction.

Goods purchased from outside Kerala and delivered to customers in the State under hire-purchase agreements were treated as a deemed sale in Kerala for sales tax purposes. The hire-purchase delivery occurred in Kerala, the customer received the goods on the financier's behalf, and there was no privity between the outside supplier and the customer; accordingly, the outside supplier's delivery did not create a separate inter-State sale. The inter-State purchase by the assessee from the outside supplier was distinct from the later deemed sale under the hire-purchase arrangement, and the assessee was liable to tax in Kerala.

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Issues: Whether goods purchased from outside the State and delivered to customers in Kerala under hire-purchase agreements constituted a taxable sale in Kerala under the Kerala General Sales Tax Act, and whether the transaction could be treated as an inter-State sale or outside-State sale under the Central Sales Tax Act.

Analysis: The transaction involved a financier purchasing goods from outside Kerala, retaining title until the last instalment, and arranging delivery to customers in Kerala under hire-purchase agreements. The Court held that the delivery contemplated by the hire-purchase arrangement took place in Kerala and that the customer received the goods only under the assessee's direction and on the assessee's behalf. There was no privity of contract between the outside supplier and the customer, and the outside supplier's delivery to the customer did not constitute a separate inter-State sale between them. The Court further held that the inter-State purchase by the assessee from the outside supplier was a separate transaction from the later deemed sale under the hire-purchase agreement. The concept of sale under explanation (3) to section 2(xxi) of the Kerala General Sales Tax Act, 1963 was treated as corresponding to article 366(29A)(c) of the Constitution of India, making the hire-purchase delivery a deemed sale taxable in Kerala.

Conclusion: The hire-purchase delivery to customers in Kerala was a deemed sale taxable in Kerala, and the assessee was liable to pay tax; the plea that the transaction was an outside-State or inter-State sale was rejected.

Ratio Decidendi: Where goods are purchased from outside the State but delivered in Kerala to customers under a hire-purchase agreement, the delivery under the agreement constitutes a deemed sale in Kerala, distinct from the inter-State purchase from the outside supplier.

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