PRAKASH INDUSTRIES LTD Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) THE petitioners by these writ petitions have sought declaration that Constitution (46th Amendment Act) 1982 to the extent it inserts clause (d) in Article 366 (29a) deeming leasing without involving transfer of property in goods as sale is void, invalid and ultra vires being in conflict with and opposed to Entry 54, List II of Schedule VII. The petitioners have also prayed that sub-clause (vi) of clause (t) of section 2 and section 9-A of M. P. Vanijyik Kar Adhiniyam, 1994 may be declared ultra vires the powers of the State Legislature being beyond the scope of Entry 54 of List II of VIIth Schedule.

(2.) BOTH the writ petitions involve similar question of law and therefore, they are being disposed of by a common order. For convenient disposal of the case, the facts given in W P. No. 4007 of 1995 are taken into consideration. Petitioner No. 1 is a Company registered under the Companies Act, 1956 with registered office situated at 15 K. P. Stone Delhi Road, Hissar, Haryana. Petitioner No. 2 is Director of the Petitioner No. 1 Company and is interested in the well being of the Company. The petitioner Company entered into various lease agreements with TATA Finance Limited whereby the said company leased out various Plants and Machineries. The Company raised debit notes dated 5th July, 1995 charging the tax amounting to Rs. 26,880/- and Rs. 25,792/- under the above provision on the rentals in respect of the lease agreement with the said party. Petitioner Company also entered into similar agreements with Gujarat Lease Financing Ltd. , Ahmedabad and that party had also raised debit notes charging tax for three months amounting to Rs. 50,343. 88 p. and Rs. 14,865. 62 p. Pal Credit and Capital Limited also leased various plant and machinery purchased by them from Encon Furnances (P) Limited by a similar agreement dated 23rd July, 1993. It has also raised debit note in respect of the tax for the period from May 1995 to September, 1995 amounting to Rs. 15,513/ -.

(3.) IT is alleged that the above lessors had purchased the machineries from other manufacturers who had consigned them from their places outside the State to the petitioner company and Central Sales Tax at full rate of 10% was charged to the Companies. These machineries have been erected and installed at the factory of the petitioner Company being embedded or presently fastened to the earth. Hence, the petitioners have challenged the amendment in clause (29a) of Article 366 of the Constitution of India, whereby the word 'sale' has been defined and the same definition of sale has been incorporated by the State in its Act of 1994 under section 2 (t) and section 9a, whereby it has been provided that every dealer who transfers the right to use any goods as the State Government may specify by notification, for any purpose, whether or not for a specified period, to any person for cash, deferred payment or other valuable consideration in the course of his business, shall also be exigible to tax.