TaxTMI 
TaxTMI 
2001 (11) TMI 1002
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....are purchased locally in Kerala as well as from outside State. The assessing officer held that the assessee is a purchaser and reseller of these items and therefore the assessee's sales are subject to sales tax in Kerala except in respect of second sales which are transactions of purchases and sales in Kerala. The assessee's sales are by way of delivery of possession on execution of hire-purchase agreement with customers. The assessee will retain the title of goods, though delivery is given to the customer, and title passes on to the customer only on payment of the last instalment. In the event of breach of the agreement, the assessee will take over possession of the goods and is free to sell the same. In respect of items purchased in Keral....
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....y, equipments, etc., from outside the State and delivery of the same to customers who are located in Kerala for their use in Kerala. It is for the customer to identify the item to be purchased and get quotation from the supplier. Pro forma invoice is obtained by the customer which would be forwarded to the assessee for approval and arranging for finance under the hire-purchase agreement. Once the terms of the financing, such as the extent of the finance, rate of interest, the period of hire purchase, etc., are settled between the assessee and the customer, the hire-purchase agreement is executed between the assessee, the financier, and the customer in Kerala. The assessee will place purchase order with outside State party with direction to ....
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.... given by the supplier outside Kerala directly to the customer in Kerala, and the sales are therefore "outside State sales" as contemplated under section 4 of the Central Sales Tax Act, 1956. Therefore, the contention of counsel for the assessee is that these transactions are not local sales assessable in Kerala. The learned Government Pleader on the other hand contended that hire-purchase agreements are entered into between the assessee and the customers in Kerala and the goods are delivered pursuant to the hire-purchase agreement by the assessee to the customers in Kerala after purchase from suppliers outside Kerala. Therefore, according to the Government Pleader, the transactions are squarely falling under "sales " under explanation (....
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....n Kerala under the hire-purchase agreement. However, there is only one delivery by the outside supplier to the customers in Kerala, even though there are two transactions, one is the purchase by the assessee, and the other is the delivery to the customers in Kerala, under the hire-purchase agreements. Since the assessee is the purchaser of the goods and the assessee issued purchase orders to the supplier outside Kerala to deliver the goods to the customer the receipt of goods by the customer is on behalf of the assessee. In fact, the outside supplier has no privity of contract with the customer in Kerala and delivery to the customer is made by outside supplier only under instructions from the assessee in Kerala. Therefore, there are two tra....
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....xplanation (3) to section 2(xxi) of the Act. 5.. The assessee's counsel has brought to our notice various decisions of the Supreme Court explaining the scope of "inter-State sale" falling under section 3(a) of the Central Sales Tax Act. He has also relied upon the decisions of the Supreme Court in Builders Association of India v. Union of India [1989] 73 STC 370 and Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204 and contended that sales are outside State sales under section 4 of the Central Sales Tax Act or inter-State sales from outside Kerala. We find that the above decisions have application only in respect of first of the two transactions, that is purchases of goods by the assessee from the outside State suppliers. Th....