Repossession and sale of hypothecated assets treated as taxable sale under broad VAT definitions.

A financier that repossesses and sells hypothecated vehicles and other assets under loan agreements is liable to value added tax where the sale falls within the broad statutory definitions of dealer, sale and turnover under the Tamil Nadu Value Added Tax Act, 2006. The transaction is treated as a taxable disposal carried out under contractual rights, not as a mere agency arrangement for the borrower. Even on the assumption of agency, tax liability still arose because the sale was effected by the financier in exercise of its contractual rights without the borrower's consent. The assessment was upheld and the revision petitions failed.

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Issues: Whether a non-banking finance company repossessing and selling hypothecated vehicles and other assets under loan agreements is a dealer liable to pay value added tax under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The disputes were covered by the earlier decision dealing with an identical transaction pattern. The nature of the assessee's activity showed that repossession and sale were undertaken under the contractual right created by the loan agreement and not as a true agency on behalf of the borrower. The definitions of dealer, sale and turnover under the Tamil Nadu Value Added Tax Act, 2006 were construed broadly, and the statutory explanations were treated as wide enough to include such disposals. Even on the assumption that the assessee acted as an agent, the transaction still attracted tax liability because the sale was effected by the assessee in exercise of its contractual rights without the borrower's consent.

Conclusion: The assessee was liable to pay value added tax on the sale of repossessed hypothecated vehicles and assets, and the challenge to the assessment failed.

Final Conclusion: The revision petitions did not succeed, and the tribunal's view fastening tax liability on the assessee was left undisturbed.

Ratio Decidendi: Where a financier repossesses and sells hypothecated goods under its contractual rights, the transaction is a taxable sale within the wide definitions of dealer, sale and turnover, and the mere absence of ownership or the description of the financier as an agent does not avoid liability.

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