TaxTMI 
TaxTMI 
1997 (2) TMI 526
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....relevant provisions of law involved in this case. The Act grants to the selling dealer concessional tax of 4 per cent under section 8(1)(b) of the Act, in certain cases, if as per section 8(3)(b) of the Act, the goods sold are goods of the class specified in the certificate of registration of the registered dealer purchasing the goods (inter alia) as being "intended for resale", and, as per section 8(4)(a) of the Act read with relevant rules, the said selling dealer furnishes prescribed declaration in "C" form signed by the purchasing dealer of the said goods. As per section 10(d) of the Act if any person after purchasing any goods for the purpose of resale "fails without reasonable excuse", to make use of the goods for such purpose, it is an offence punishable under the said provision. However, section 10-A of the Act provides that if any person purchasing the goods is guilty of an offence under section 10(1)(b) or (c) or (d) [not under section 10(1)(a)] of the Act, penalty could be imposed in lieu of transaction under section 10 of a sum "not exceeding 1½ times" the tax. 3.. Now, coming to the facts, the assessee, Cholamandalam Investment and Finance Co. Ltd., a dealer un....
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....of the lease period, the goods should be returned to the assessee in working condition. The other lease arrangement letter, however, says that the entire deal is a lease-cumsale arrangement and that the customer would complete the deal by purchasing the goods, at the end of the period of lease. It also says that the customer however has right to exercise his "option" to buy much earlier as per the schedule of prices enclosed therein and it also states that the prices have been fixed taking into consideration the lease, rentals, depreciation to the goods and its cost. But the said lease-cum-sale arrangement letter contains the signature of purchasing customer at the foot of the said letter (without any date). (It should be noted here that the abovesaid lease agreements were executed by both the parties). 5.. In view of the above features, the assessing officer in his penalty order found that the original intention of the assessee was not for resale and its intention was only to lease. He further held that without any reasonable excuse the assessee made use of the goods purchased for purposes other than those mentioned in section 8(3)(b) of the Act and the registration certificate, ....
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....t Corporation Ltd. v. State of Bihar [1973] 31 STC 484, which is a case of clearcut hire purchase transaction, unlike the present case. He also points out that the above referred to lease arrangement letter, unilaterally given by the assessee to this customer, cannot alter the lease agreement entered into between the parties, which was signed by both the parties, while the said letter is only by the assessee addressed to the customer. 9.. We have considered the rival submissions. It is clear to us that the Tribunal has grossly erred in relying on the observations in Bihar State Agro Industries Development Corporation Ltd. v. State of Bihar [1973] 31 STC 484 (Pat) and on that footing alone holding that "in the instant case the goods have been only with an intention for resale". The relevant portions of these observations are as follows: "Transactions on the basis of hire purchase agreements are so well-known to the commercial world that it does not seem possible to take the view that a registered dealer after having purchased goods for resale utilised them for any purpose other than resale by merely entering into such transactions. It is well-known that such transactions are enter....
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....d v. State of Orissa [1976] 37 STC 207 the Supreme Court observed in relation to the term "sale of goods" as used in section 3(a) of the Act, which defines inter-State sale, that it includes an agreement to sell. Section 3(a) runs as follows: "A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase,- (a) occasions the movement of goods from one State to another." Only in this context, the Supreme Court observed in the said decision as follows: "..............if there is a movement of goods from one State to another, not in pursuance of the sale itself, but in pursuance of an agreement to sell, which later merges into a sale, the movement of goods would be deemed to have been occasioned by the sale itself wherever it takes place.....we can hardly conceive of any case where a sale would take place before the movement of goods. Normally what happens is that there is a contract between the two parties in pursuance of which the goods move and when they are accepted and the price is paid the sale takes place. There would, therefore, hardly be any case where a sale would take place even before the movement of the ....
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.... term 'sale' is also significant. The Supreme Court also, while dealing with similar term in Explanation III to section 2(1)(n) of the Andhra Pradesh General Sales Tax Act, 1957 in Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer [1968] 21 STC 312 (SC) has observed thus: "The real effect of the third Explanation is to impose the tax only when there was a transfer of title to the goods and not where there is a mere contract of agency. The Explanation says in effect that where there is in reality a transfer of property by the principal to the agent and by the agent in his turn to the buyer, there are two transactions of sale. In our opinion, the phrase 'when the goods are transferred' in clauses (1) and (2) of Explanation III on a proper construction means 'when title to the goods is transferred' and so construed it is impossible to say that the Explanation enlarges the scope of the main section." In this connection the use of the abovesaid term "transfer" in the latter part of section 2(g) could also be contrasted with the relevant expression used in article 366(29A)(c) of the Constitution of India. The said clause was introduced by the Constitution (Fort....