TaxTMI 
TaxTMI 
2006 (5) TMI 182
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.... 1993. The basic facts are not in dispute. One M/s. Swaroop Vegetables Products Industries Ltd. ("the company", for short) owned and possessed a sugar mill known as Sir Shadilal Sugar and General Mills situated at Mansurpur District, Muzaffarnagar, in U. P. A deed of licence was executed by the said company in favour of the appellant herein on September 3, 1987, pursuant whereto and in furtherance whereof, the appellant herein executed a performance guarantee to ensure performance of the said deed of licence dated September 3, 1987. In terms of the said agreement dated September 3, 1987, a performance guarantee was executed by the appellant herein, wherein it was agreed to by and between the parties that a major part of the licence fee would be paid in the shape of molasses. The contention of the appellant all along was and still is that it is in lieu of the consideration for the right to use the said sugar mill, i.e., the licence fee. The appellant was required to handover molasses to the said company for an amount equivalent to the licence fee and such a transaction would not constitute a sale of molasses so as to attract the provisions of the Act. It is not in dispute that....
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....n the ground that the said sum was paid to it by the appellant herein by way of consideration for the right to use the goods. A writ petition was filed by the company questioning the validity of the said order. The Revenue also filed a revision petition, being Sales Tax Revision No. 1866 of 1993, before the High Court against the order dated June 26/28, 1993, in Second Appeal No. 446 of 1992 (87-88) U. P., Second Appeal No. 447 of 1992 (87-88) Centre and Second Appeal No. 283 of 1992. The writ petition filed by the company was allowed by an order dated February 17, 1998, holding that "sugar mill" was not "goods" and hence "licence fee" for its use was not exigible to trade tax. However, revision petition filed by the Revenue herein was allowed by the High Court by reason of the impugned order. The appellant is, thus, before us. Mr. Dushyant Dave, learned Senior Counsel appearing on behalf of the appellant, submitted that an exchange or barter, in view of a large number of decisions of this court, cannot be said to be a sale within the meaning of the relevant provisions of the Act. Reliance in this behalf was placed on Gannon Dunkerley & Co. v. State of Rajasthan [1993] 1 SCC ....
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....ed in the execution of a works contract; (iii) the delivery of goods on hire purchase or any system of payment by instalments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; and (vi) the supply, by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration." The terms "manufacturer" and "dealer " are defined in sections 2(ee) and 2(c) of the said Act, which are as under: "2(ee) 'manufacturer' in relation to any goods means the dealer who makes the first sale of such goods in the State after their manufacture and includes,- (i) a dealer who sells bicycles in completely knocked down form, (ii) a dealer who makes purchases from any other dealer not liable to tax on his sale under the Act othe....
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....spect of such goods, be treated as a dealer; (vii) every person who carries on the business of transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (viii) every person who carries on business of transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;" The question, which arises for our consideration, is whether the transaction involves a transfer of property or a transfer of a right to use any goods or not. The appellant herein, indisputably, carried on the business of manufacture of sugar and molasses. It does not use the molasses itself. The stock of molasses has not been transferred by the appellant. The stock of molasses, indisputably, used to be transferred to a company. The company was the owner of the mill. The premises of the mill had been taken on lease, although, termed as a licence for a period of 10 years. By reason of the purported deed of licence, the appellant has been allowed exclusive use of the sugar mill along with its plant, machinery, fixtures and fittings, etc. The appellant had take....
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..... Clause 1 of the said performance guarantee deed speaks of furnishing of the security of Rs. 50 lakhs to the company as an interest-free deposit. Out of the said sum, a sum of Rs. 6 lakhs was to be adjusted towards payment of the licence fee of Rs. 56 lakhs, as a result whereof, the security amount would be reduced proportionately on completion of each year of licence. Only the unadjusted amount of security, in terms of the said deed, was required to be refunded by the company to the appellant at the time of handing over possession of the mill. Clauses 4 and 5 of the said performance guarantee deed read as under: "4. That licence fee in question will be paid in shape of molasses and the quantity thereof shall depend upon the working of the sugar mill. 5.. That at the end of every licence year, i.e., 30th June the value of molasses will be ascertained on the basis of rates notified by the Government for the relevant year. In case there is any excess or shortage towards the amount of licence fee, the same will be made good by either of the parties as the case may be." The said provisions are required to be read conjointly. For the purpose of supply of molasses, the rates no....
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....onsideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made; " The State of Uttar Pradesh has amended the definition of "sale" in consonance with clause (29A) of article 366 of the Constitution. The definition of "sale", thus, is different from the provisions of the Sale of Goods Act, 1930, as in terms thereof a contract of sale of goods would be deemed to be a contract of sale or transfer of property in the goods to the buyer for a price. However, in terms of section 2(h) of the U. P. Trade Tax Act, 1948, a sale would mean a transfer of property in goods in any way otherwise than by way of a mortgage, hypothecation, charge or pledge for cash or deferred payment or other valuable consider....
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....gh, may remain with the transferor, a transfer of right to use the goods would also be a sale. Even a lease of goods would be a sale. Thus, by reason of the said definition, though an essential ingredient of a sale as defined in the Sale of Goods Act, 1930, may be absent, the transaction may amount to a sale for the purpose of levy of sales tax under the Act. What has not been altered by reason of the said provision is the meaning of the word "goods". In this case, the concept of goods is not in dispute. Molasses is indisputably goods. It can be transferred for a definite price. An adjustment of price in a case of this nature, in our opinion, therefore, would come within the purview of the term "other valuable consideration", inasmuch as both the appellant and the company, were aware that they have to fulfil their respective terms of obligations, i.e., (i) payment of licence fee on monetary terms; and (ii) payment of price of molasses supplied by the appellant to the company, which is again on monetary terms. Parties, therefore, by mutual consent only have agreed to adjust the price of molasses supplied with the amount of licence fee. The rate for supply of molasses was....
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.... deliver messages of the subscriber through a complex system of fibre optics, satellite and cables. This court, it may be noticed, in a recent Constitution Bench judgment in Sunrise Associates v. Government of NCT of Delhi (pronounced on April 28, 2006 See [2006] 145 STC 576 (SC); [2006] 6 RC 488.), has opined that the sale of lottery ticket or a railway ticket may not be a sale of goods. In Tata Consultancy Services v. State of Andhra Pradesh [2005] 1 SCC 308(1), a CD containing software was held to be goods within the meaning of the A. P. General Sales Tax Act, 1957. Devi Dass Gopal Krishnan v. State of Punjab [1967] 3 SCR 557 See [1967] 20 STC 430 (SC). and Commissioner of Income-tax v. Motors and General Stores (P.) Ltd. [1967] 3 SCR 876; AIR 1968 SC 200 See [1967] 66 ITR 692 (SC). were relied upon by Mr. Dave for the proposition that the expression "valuable consideration" takes colour from the preceding expression "cash or deferred payment". The said decision is not an authority for the proposition that cash or deferred payment cannot be by way of adjustment. If the parties intended to adjust their own dues, having regard to different transactions in terms wher....