TaxTMI 
TaxTMI 
1994 (5) TMI 240
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.... materials required by them in the manufacture of the products exported. Chapter XIV sets out the policy in all its detail, namely, the eligibility criteria, extent of the import replenishment, items permissible for import and the like. It will be seen therefrom that the holder of the REP licence is conferred a very valuable right of effecting direct import of canalised items as appearing in that licence to the extent permitted therein, as also of samples and others, as mentioned in the various clauses. Clauses 225 and 226 deal with utilisation of REP licences. The licence will be issued in the name of the registered exporter only, and will not be subject to actual user conditions. The licence holder may transfer the licence in full or in part in favour of any other person except in certain specified cases. The licence holder or the transferee may import the goods permitted therein. The transfer of the licence does not require any endorsement or permission from the licensing authority. It will be governed by the ordinary law. Accordingly, clearance of the goods covered by a REP licence will be allowed by the customs authorities on production by the transferee of only the document o....
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.... otherwise will not be permissible under the Imports and Exports (Control) Act, 1947. It is not a chose in action and therefore not excluded from the definition of "goods" in the Act. The transfer thereof therefore attracts tax under the Act. 6.. Petitioners on the other hand have taken various contentions. It is stated first that REP licence is not property at all, much less movable property. It is only a permission to do something which otherwise will not be lawful, namely, to transport goods across the customs frontier. In any case, it is a chose in action, and therefore excluded from the purview of definition of "goods". Another contention is that the levy is not a levy of sales tax at all, but of customs duty falling under entry 83 of the Union List. The levy is also stated to encroach upon the power of Parliament to legislate on import and export under entry 41 of the Union List. 7.. The challenge on the ground of legislative competence and of encroachment into the Parliamentary field is taken on the ground that the levy of sales tax on the transfer of REP licence is in substance and in effect a levy of customs duty by imposing an additional burden on the holder of the ....
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....ry description except immovable property. It was accordingly held that lottery tickets would be movable property as opposed to immovable property and would normally qualify to fall within the expression "goods". 11.. The same ratio must apply to REP licence as well. It is not immovable property. It must therefore ordinarily constitute movable property, unless it is held to be not property, but a mere permission, as contended by some of the petitioners. Their contention is that a REP licence is just a privilege or a permission to do something which otherwise would be unlawful. Counsel draws the analogy of a licence related to immovable property in contradistinction to a lease thereof where it has been held that it does not create any interest in the property at all [Chandavarkar Sita Ratna Rao v. Ashalata S. Guram [1986] 4 SCC 447; AIR 1987 SC 117, Puran Singh Sahni v. Sundari Bhagwandas Kripalani [1991] 2 SCC 1801. Definitions of "licence" in Stroud's Judicial Dictionary and Bouvier's Law Dictionary were referred to for support, besides the decisions in Frank Warr & Co. Ltd. v. London County Council [1904] 1 KB 713 at page 721; and Millenium Productions Ltd. v. Winder Garden The....
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....nd therefore the benefit of the licence is more than a mere permission to do something. 14.. I do not therefore find any reason to treat the right over a REP licence as a right without any substance, as mere husk without grain. I am of the view that it constitutes property; if so, it is movable property, and therefore "goods" as defined in the Act, unless it is excluded therefrom as an actionable claim. 15.. The next question that requires to be considered is whether it is an actionable claim. "Actionable claim" is defined in section 3 of the Transfer of Property Act, 1882, as meaning, inter alia, a claim to any beneficial interest in movable property not in possession, either actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether the beneficial interest be existing, accruing, conditional or contingent. In English Law (to which this definition traces its origin), all personal property may be either (i) in possession called chose in possession or (ii) in action, or chose in action. Choses in possession are things of which the owner has the present possession and enjoyment and which he can deliver over to another. But ....
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....nd, therefore, amounts to transfer of goods and to that extent it is no transfer of an actionable claim; to the extent that it involves a transfer of the right to claim a prize depending on a chance it will be an assignment of an actionable claim." I have already held that a REP licence confers a right which is a present right and not one enforceable only by an action to import the goods of the nature permitted. It is a perfected or choate right in possession and not one in action, and therefore not an actionable claim, as was held by a Division Bench of the Karnataka High Court in Bharat Fritz Werner Ltd. v. Commissioner of Commercial Taxes [1992] 86 STC 175 confirming a decision of a learned single Judge reported at page 170 of the same volume. 17.. I therefore hold that REP licence is goods as defined in section 2(xii) of the Act, the sale of which is eligible to tax thereunder. The levy of tax or the proposed levy under the proceedings impugned in these petitions are valid in law and do not call for interference. 18.. In this view of the matter, I am not expressing any opinion on the contentions very seriously urged by Sri T. Karunakaran Nambiar, Special Government Ple....