Transit sale exemption upheld for hire purchase goods where title documents were endorsed during transit under the CST Act.

A transit sale exemption under section 3(b) of the Central Sales Tax Act was available where goods were supplied under hire purchase arrangements and the documents of title were endorsed while the goods were in transit. The Madras HC noted that the then-applicable definition of "sale" in section 2(g) expressly included transfer of goods on hire purchase, so the statutory focus was on transfer of goods rather than immediate transfer of property. It also distinguished transfer of property from transfer of goods on hire purchase and held that the later amendment to the definition did not affect the assessment year in question. On the undisputed facts, the assessee satisfied section 3(b), and the Tribunal's assessment order was set aside.

---

---

Issues: Whether the assessee was entitled to claim exemption as a transit sale under section 3(b) of the Central Sales Tax Act in respect of goods supplied under hire purchase arrangements, and whether endorsement of documents of title in transit was sufficient notwithstanding the absence of transfer of property in the goods.

Analysis: The definition of "sale" in section 2(g) of the Central Sales Tax Act, as applicable to the assessment year, expressly includes transfer of goods on hire purchase. The Court applied the principle that in a hire purchase transaction the statutory focus is on transfer of goods and not on immediate transfer of property in the goods. It also relied on the settled distinction between transfer of property in goods and transfer of goods on hire purchase, and held that the later amendment to the definition did not detract from the position relevant to the year in question. Since the undisputed facts showed endorsement of title to the goods while they were in transit, the assessee's claim satisfied section 3(b).

Conclusion: The assessee's claim for transit sale was accepted and the assessment order of the Tribunal was set aside.

---