COMMISSIONER OF SALES TAX Vs. PASHUPATI TRADING COMPANY

JUDGEMENT

(1.) THESE five references arise out of the common order passed by the Tribunal between the same parties and against the similar factual background and hence they are disposed of by this common judgment.

(2.) THE following question has been referred for determination by this Court at the instance of the commissioner of Sales Tax under section 23 (1) of the Central Provinces and Berar Sales Tax act, 1947 and section 61 of the Bombay Sales Tax Act, 1959.

(3.) THE respondent, M/s. Pashupati Trading Company, Nagpur ("the dealer") carried on inter alia, business of financing prospective buyers of motor vehicles distributed by M/s. National Garage, nagpur ("the distributor" ). These buyers (whom we will refer as "customers") select a vehicle and settle the price with the distributor. The customers approach the dealer for finance and give a proposal indicating their need. If the proposal is accepted by the dealer, an agreement styled as hire-purchase agreement is entered into and a promissory note is executed by the customer in favour of the dealer. In the agreement the dealer is described as the owner of the vehicle and the customer as the hirer. After this is done, the distributor is informed. The dealer pays the full price of the vehicle to the distributor, who prepares an invoice in the name of the dealer showing the customer as the hirer. The vehicle is delivered to the customer at the instance of the dealer. The main features of the agreement are that the dealer continues to be the owner of the vehicle till the repayment of the whole money is made and the option to purchase given to the customer is exercised by him. If the terms of the agreement are not complied with, the dealer can terminate the contract and take back possession of the vehicle. The agreement casts an obligation to register the vehicle with the R. T. A. in the name of the customer and to mention the hire-purchase agreement. Agreement permits the dealer to insure the vehicle at the cost of the customer.