TaxTMI 
TaxTMI 
2012 (11) TMI 1056
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.... 1999 passed in T. A. No. 101 of 1995 of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad. It relates to the assessment year 1992-93 (APGST). The order impugned in the above T.R.Cs. is a common order dated April 6, 1999 passed in T.A. Nos. 100 of 95 and 12 other appeals including T.A. No. 101 of 1995 and 413 of 1996. T.R.C. No. 164 of 2003 is filed by the State of A.P. challenging the order dated June 29, 2002 in T.A. No. 734 of 1997 by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad. This relates to the assessment year 1992-93 (APGST). Heard Sri Suribabu, counsel for the petitioners in T.R.C. No. 229 of 1999 and T.R.C. No. 252 of 1999, Sri M.V.J. Kumar, counsel for the respondent in T.R.C. No. 164 of 2003 and the Special Government Pleader for Commercial Taxes for the State. The question to be considered in these T.R.Cs. is "whether the premium received on surrender of REP licences/exim scrips is 'sale consideration' and whether the transaction of surrender of the REP licences/exim scrips pursuant to circular No. 11/93 dated May 5, 1993 is in the nature of 'sale' within the meaning of section 2(1)(n) of the Andhra Pradesh General Sal....
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....ned REP licences/exim scrips sold them to others for profit. They were also being traded freely in the market and on stock exchanges. When the sales tax authorities of certain States proceeded to subjects such sales to sales tax under their respective enactments, the assessees had immediately protested contending that they do not constitute "goods" within the meaning of the relevant sales tax enactments and therefore, not exigible to tax. The Supreme Court after considering the provisions of the Import and Export Policy 1990-93 relevant to the REP licences/exim scrips, in the above case held as follows (page 119 in 102 STC): "The above provisions do establish that REP licences have their own value. They are bought and sold as such. The original licensee or the purchaser is not bound to import the goods permissible thereunder. He can simply sell it to another and that another to yet another person. In other words, these licences/exim scrips have an inherent value of their own and are traded as such. They are treated and dealt with in the commercial world as merchandise, as goods. An REP licence/exim scrip is neither a chose-in-action nor an actionable claim. It is also not in the....
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....; that the basic requirement of sale, (i.e.), transfer of title of the right to import against REP licences/exim scrips has not taken place but they were cancelled on surrender. They therefore contended that the surrender value of the licences cannot be treated as sale consideration. They also contended that in a transaction of purchase or sale, there will be a transfer of property for valuable consideration either in cash or kind and the transferee or assignee is conferred in the eye of law unquestionable interest and rights in the transferred property but in a transaction of surrender, all these ingredients are lacking; that surrender is by operation of law in which case the essential ingredients of mutual consent, volition and payment of receipt of any valuable consideration is lacking; that upon surrendering, the surrenderor is not lawfully entitled to payment and receipt of any consideration and even if the Government pays any compensation to the holders of the scrips/licences on surrender, it is at best a payment gratis which cannot be equated with sale consideration. They contended that such payment may also be considered to be "solatium" or "incentive" and does not fit into....
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....nt is clear that it wanted to provide some solatium to those exporters who effected exports and who are entitled to the incentives but who could not make use of the incentives though granted by Government. (iii) . . . It is obvious that, after the expiry of the period of validity, these exim scrips and REP licences became valueless and its holders could neither import duty-free or sell it for a value and they were rendered useless depriving the holder of the benefit of incentive. (iv) . . . Thus the premium paid by the Government in such cases cannot be considered as 'price' for the sale of goods. (v) . . . The definition of 'sale' in section 2(n) of Andhra Pradesh General Sales Tax Act provides that sale means every transfer of property in goods whether in pursuance of contract or otherwise by one person to another in the course of trade or business, for cash, or for deferred payment, or for any other valuable consideration. The words 'cash, deferred payment and any other valuable consideration' indicate payment of 'price' for the transfer of property in goods. The words 'transfer of property in goods' in this definition indicates t....
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....ess and valueless. Thus, the element of further sale by Government is absent in this case which is the basis in the case of Vikas Sales Corporation [1996] 102 STC 106 (SC) to hold that exim scrips are goods falling under the Andhra Pradesh General Sales Tax Act as they are sold and purchased in open market in the course of free trade and commerce. These facts also make it clear that the transaction of such surrender is not sale as contemplated by the Andhra Pradesh General Sales Tax Act but the same is only cancelling a facility and incentive where it is not utilized by paying some amount as compensation which is in the form of solatium, in order to ensure that such incentive granted for a particular period is not rendered completely useless when the same could not be utilized. The transfer of property for valuable consideration contemplated under the Andhra Pradesh General Sales Tax Act is intended to cover sale and purchase in open market in the course of trade or business done by persons including Government. The transactions which are not sales in the strict sense of the term are also covered by making deemed provisions in the definition of "tax" in article 366(28) of the Const....