Trial-use telecom equipment with deferred payment can still amount to a taxable sale when goods are delivered for consideration and not returned.

Delivery of telecom equipment on a 24-month trial basis with deferred instalment payments and an option to purchase was treated as a taxable sale under the Punjab Value Added Tax Act, 2005 because the transaction satisfied the statutory definition of sale, including transfer of the right to use goods for consideration. The court held that the parties' private description of the arrangement was not decisive where the agreement, delivery challans and payment structure showed supply for consideration, with return of the goods required only if the offer was not accepted. As the goods were not returned, the demand was upheld.

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Issues: Whether delivery of telecom equipment on a 24-month trial basis with deferred payment and an option to purchase, coupled with non-return of the goods, amounted to a sale exigible to VAT under the Punjab Value Added Tax Act, 2005.

Analysis: The agreement showed that the equipment was supplied for trial use for 24 months, that price was specified in the agreement and delivery challans, that payment was structured in installments after the trial period, and that the goods were to be returned if not accepted. The Court held that the arrangement could not be characterised merely by the private description given by the parties when the transaction otherwise satisfied the statutory definition of sale. The goods were not returned, and the deferred-payment structure brought the transaction within the inclusive definition of sale under Section 2(zf), including transfer of the right to use goods for consideration.

Conclusion: The transaction constituted a sale liable to tax, and the challenge to the demand failed.

Ratio Decidendi: A transaction structured as trial use with deferred payment and a contractual option to purchase is a taxable sale where the goods are delivered for consideration and are not returned in accordance with the agreement.

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