Surrender of REP licences for cancellation is not a sale; premium paid is compensatory, not taxable turnover.

REP licences and exim scrips issued under a discontinued trade policy, when surrendered only for cancellation, do not amount to goods sold in the course of trade or business. The premium paid on such surrender is compensatory in nature, reflecting the holder's inability to use the incentive, and not sale consideration for a transfer in the open market. As a result, the surrender transaction does not generate turnover taxable under the Andhra Pradesh General Sales Tax Act, 1957.

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Issues: Whether the premium received on surrender of REP licences/exim scrips pursuant to the circular was sale consideration and whether the surrender transaction amounted to a sale, giving rise to turnover under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The licences and exim scrips had been issued under a trade policy that was discontinued, and after the date of discontinuance the unutilized scrips could only be surrendered for cancellation. On surrender, they were not being bought for resale or used in the course of trade or business, and the Government itself was only cancelling the scrips rather than purchasing them for commercial dealing. The premium paid under the circular was therefore not price for a transfer in the open market but a compensatory amount or solatium for the exporters' inability to use the incentive.

Conclusion: The surrender of REP licences/exim scrips was not a sale, the premium paid was not sale consideration, and the amount did not constitute turnover taxable under the Act.

Ratio Decidendi: Where a government incentive instrument has ceased to be tradeable and is surrendered only for cancellation, any premium paid on such surrender is compensatory and not consideration for a sale in the course of trade or business.

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