BHOGILAL LAXMICHAND Vs. STATE OF GUJARAT

JUDGEMENT

(1.) THE assessees at whose instance this reference is made are a firm holding a registration certificate. During the relevant period, i.e., Samvat Year 2017 (from 31st October, 1960, to 8th November, 1961), the assessees entered into certain transactions with four persons to finance purchases of certain motor vehicles from Messrs Prem Nath Motors (P.) Ltd. of New Delhi. In the case of three out of these four transactions, the hirers paid all the instalments under their respective agreements with the assessees and as provided in those agreements exercised thereunder the option to purchase the vehicles. THE Sales Tax Officer assessed these three transactions, but not the fourth transaction, as sales of motor vehicles, and both the Assistant Commissioner and the Sales Tax Tribunal in appeals filed against the assessment confirmed the order of assessment.

(2.) THE contentions urged by the assessees before the Tribunal were (1) that these transactions were merely financing agreements though the agreements were in the form of hire-purchase agreements; (2) that therefore, they did not fall within the definition of "sale" as defined by section 2(28) of the Bombay Sales Tax Act, 1959, and (3) that even if these transactions were sales, the business of the assessees being in piece-goods they were causal sales and therefore the assessees could not be said to be dealers in motor vehicles. All the three contentions were rejected by the Tribunal and this reference challenges the correctness of that decision.

(3.) MR. Mody who appears for the assessees contended that the transaction entered into by the parties was a purely financing transaction though the form adopted by the parties was a hire-purchase agreement and therefore the transaction could not amount to a sale and was wrongly assessed to tax. The first question that we have to determine, therefore, is whether the transaction in question is a financing transaction or whether it is a hire-purchase agreement as contended by the revenue.