Motor vehicle sale completion turns on lawful delivery in a registrable state, affecting the place of sale and tax liability.

For a new motor vehicle, registration is a post-sale requirement, but the sale is treated as complete only when lawful possession is delivered in a deliverable and registrable state, ordinarily at or near the registration office. Until that stage, the vehicle is treated as unascertained or future goods and becomes ascertained only on appropriation for registration. Applying the constitutional and sales law rules on place of sale, the materials did not conclusively show that the transactions were completed in Kerala or that they were colourable devices to evade tax. The penalty was therefore not sustainable, and the finding in favour of the assessee was maintained.

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Issues: (i) Whether registration of a motor vehicle is a post-sale event and the property in the vehicle passes only when lawful possession is handed over for registration; (ii) whether the sales of the vehicles were completed in Kerala so as to sustain the penalty imposed under the Kerala General Sales Tax Act.

Issue (i): Whether registration of a motor vehicle is a post-sale event and the property in the vehicle passes only when lawful possession is handed over for registration.

Analysis: The statutory scheme of the Motor Vehicles Act, 1988 and the Central Motor Vehicles Rules, 1989 requires the owner to apply for registration and prohibits use of the vehicle in public places until registration is obtained. A dealer cannot lawfully permit the purchaser to use the vehicle before registration. Although registration is technically subsequent to sale, the contract of sale in the case of a new motor vehicle is completed only when possession is lawfully delivered in a deliverable and registrable state, ordinarily at or near the registering authority's office. Until then, the vehicle remains unascertained or future goods and becomes ascertained only upon appropriation for registration.

Conclusion: Yes. Registration is a post-sale event, but lawful transfer of possession and appropriation of the vehicle are closely linked with registration and normally occur immediately before it.

Issue (ii): Whether the sales of the vehicles were completed in Kerala so as to sustain the penalty imposed under the Kerala General Sales Tax Act.

Analysis: Applying Article 286(2) of the Constitution of India, Section 4(2) of the Central Sales Tax Act, 1956, and the Sale of Goods Act, 1930, the vehicle is treated as appropriated to the contract where it is lawfully delivered in a deliverable state. On the facts, the materials raised suspicion but did not conclusively establish that the sales were concluded in Kozhikode or that the transactions were mere colourable devices to evade tax. The concurrent factual findings below were not shown to be perverse, and the reasoning that the vehicles were appropriated and registered at Mahe was accepted.

Conclusion: No. The penalty could not be sustained, and the finding in favour of the assessee was affirmed.

Final Conclusion: The appeal failed, and the order of the High Court setting aside the penalty was maintained.

Ratio Decidendi: In the case of a new motor vehicle, sale is completed when the vehicle is lawfully delivered to the purchaser in a deliverable and registrable state, ordinarily at or near the registration office, and until then the vehicle remains unascertained for the purpose of determining the place of sale.

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