INDIAN FINANCES PRIVATE Vs. SALES TAX OFFICER

JUDGEMENT

(1.) THIS order will also govern the disposal of Misc. Petitions Nos. 278, 279 and 281, all of 1963.

(2.) THESE are four petitions under Article 226 of the Constitution for the issue of writs of certiorari for quashing the notices issued by the Sales Tax Officer jabalpur, under Section 29 of the Madhya Pradesh General Sales Tax Act, 1958 (hereinafter referred to as the Act), to each of the petitioner. The petitioners also pray that appropriate directions be issued to the opponents to restrain them from making any assessment to sales tax against them in respect of transactions of "hire-purchase" entered into by them.

(3.) THE petitioner's case, broadly stated, is that they carry on the business of financing purchase of motor vehicles on 'hire-purchase' system from their offices located at Allahabad, in Uttar Pradesh; that they have no place of business in the state of Madhya Pradesh and never carried on in the past, nor do they carry on now, within the State of Madhya Pradesh any business of buying, selling, supplying or distributing goods to anyone in Madhya Pradesh, directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration, that the transactions of hire-purchase of motor vehicles that have been entered into between them and some persons do not amount to sale of goods according to the meaning of 'sale' in the sale of Goods Act, 1930; that those transactions are merely contracts of hire, the hirer having an option to return goods and an options to purchase, which he may exercise or not according to his desire; that so long as the hirer does not exercise the option of purchase he does not become the owner of the vehicle which remains the property of the petitioners; and that thus the transactions effected by them are not sale transactions. Thus the petitioners contend that they are not 'dealers' as defined in Section 2 (d)of the Act; that the transactions entered into by them with some persons desiring to purchase motor vehicles on hire-purchase system are not 'sale' transactions within the meaning of the definition given in Section 2 (n) of the Act; that explanation-1 to the definition of 'sale' "deeming a transfer of goods on hire-purchase or other instalment system of payment, a sale for the purpose of the Act is ultra vires the State Legislature; that, therefore, no notices under Section 29 of the Act could at all be issued to them; and that in any case a dealer could not be called upon to produce his accounts, registers, documents etc. , before the initiation of any assessment proceedings under the Act.