TaxTMI 
TaxTMI 
1961 (1) TMI 62
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.... C.W. 277 of 1960 and C.W. 289 of 1960, under Article 226 of the Constitution challenging the validity of these notices on the ground that their business was not covered by the definition of "sale" given in section 2(h) of this Act. As the points raised in both these petitions are same, it will be convenient to decide them by this judgment. Both these firms carry on the business of hire-purchase of motor trucks at Ambala. The terms on which this hire-purchase is carried on by the petitioning firms are given in their respective petitions. These terms appear to be of similar nature. The petitioners' case is that they are not dealers within section 2(d) of the Sales Tax Act inasmuch as they do not sell or purchase any goods in the State of ....
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.... to all principles to hold that damages for breach of contract are liable to be assessed to sales tax on the ground that they are in the same position as sale price. The power conferred under Entry 48 to impose a tax on the sale of goods can therefore be exercised only when there is a sale under which there is a transfer of property in the goods, and not when there is a mere agreement to sell. The State Legislature cannot, by enlarging the definition of 'sale' as including forward contracts, arrogate to itself a power which is not conferred upon it by the Constitution Act........... A similar view has been taken by the Supreme Court in The State of Madras v. Messrs Gannon Dunkerley & Co. [1958] 9 S.T.C. 353; A.I.R. 1958 S.C. 560. , where....
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....sion in its ordinary legal sense means that the owner of the thing delivers it to another person with the intention of passing his rights therein to the latter. It appears to me that in the context of the present statute, this expression has substantially the same meaning as "passing of property". Therefore this explanation relates only to those transactions in which property in the goods has passed whether the transaction is called or considered as a "hire-purchase contract or other instalment system of payment". In this explanation, the hire-purchase agreement is dealt with in so far as it relates to the system of payment on the assumption that the agreement transfers and passes property in the goods, which are the subject-matter of the a....
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....hin the purview of sales tax then it is invalid. In support of this argument, the learned counsel referred me to Helby v. Matthews and Others' and Alexander Knox McEntire and John Arthur Maconchy v. Crossely Brothers Limited[1895] A.C. 457. I am unable to accept the contention that agreements called the hirepurchase agreements never provide for transfer of property in the goods. The nature of these agreements is described at page 510 of Volume 19 of Halsbury's Laws of England (Simonds Edition) in these words: "At common law the term 'hire-purchase' properly applies only to contracts of hire conferring an option to purchase, but it is often used to describe contracts which are in reality agreements to purchase chattels by instalments, subjec....
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....e contracts as described by the petitioners is not accepted as correct by the respondents. It is urged on behalf of the respondents that it is for the assessing authority to examine and scrutinise the nature of the petitioners' business and to construe the terms of the agreements entered into by the petitioners during the relevant period in accordance with the procedure laid down in the Sales Tax Act and it is not for this Court to do so in the present proceedings. There is substance in this contention of the repondents. As observed in Indian Iron and Steel Company Limited v. The Officer on Special Duty (Central Circle), Punjab[1959] 10 S.T.C. 150.: "It has been repeatedly held that a writ should not be.......... employed to secure the adju....