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TMI Blog1996 (5) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No. 8328, Civil Appeal No. 8329, Civil Appeal No. 8330, Civil Appeal No. 8331, Civil Appeal No. 8332, Civil Appeal No. 8333, Civil Appeal No. 8334, Civil Appeal No. 8335, Civil Appeal No. 8336, Civil Appeal No. 8337, Civil Appeal No. 8338, Civil Appeal No. 8339, Civil Appeal No. 8340, Civil Appeal No. 8341, Civil Appeal No. 8342, Civil Appeal No. 8343, Civil Appeal No. 8344, Civil Appeal No. 8345, Civil Appeal No. 8346, Civil Appeal No. 8347, Civil Appeal No. 8348, Civil Appeal No. 8351, Civil Appeal No. 8352, Civil Appeal No. 8353, Civil Appeal No. 8354, Civil Appeal No. 8355, Civil Appeal No. 8356, Civil Appeal No. 8357, Civil Appeal No. 8358, Civil Appeal No. 8359, Civil Appeal No. 8360, Civil Appeal No. 8361, Civil Appeal No. 8362, Civil Appeal No. 8395, Civil Appeal No. 8396, Civil Appeal No. 8397, Civil Appeal No. 8398, Civil Appeal No. 8399, Civil Appeal No. 8400, Civil Appeal No. 8401, Civil Appeal No. 8402, Civil Appeal No. 8403, Civil Appeal No. 8404, Civil Appeal No. 8405, Civil Appeal No. 8406, Civil Appeal No. 8407, Civil Appeal No. 8408, Civil Appeal No. 8409, Civil Appeal No. 8410, Civil Appeal No. 8411, Civil Appeal No. 8412, Civil Appeal No. 8413, Civil App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8518, Civil Appeal No. 8519, Civil Appeal No. 8520, Civil Appeal No. 8521, Civil Appeal No. 8522, Civil Appeal No. 8523, Civil Appeal No. 8524, Civil Appeal No. 8525, Civil Appeal No. 8526, Civil Appeal No. 8527, Civil Appeal No. 8528, Civil Appeal No. 8529, Civil Appeal No. 8530, Civil Appeal No. 8531, Civil Appeal No. 8532, Civil Appeal No. 8533, Civil Appeal No. 8534, Civil Appeal No. 8535, Civil Appeal No. 8536, Civil Appeal No. 8537, Civil Appeal No. 8538, Civil Appeal No. 8539, Civil Appeal No. 8540, Civil Appeal No. 8541, Civil Appeal No. 8542, Civil Appeal No. 8543, Civil Appeal No. 8544, Civil Appeal No. 8545, Civil Appeal No. 8546, Civil Appeal No. 8547, Civil Appeal No. 8548, Civil Appeal No. 8549, Civil Appeal No. 8550, Civil Appeal No. 8551, Civil Appeal No. 8552, Civil Appeal No. 8553, Civil Appeal No. 8554, Civil Appeal No. 8555, Civil Appeal No. 8556, Civil Appeal No. 8557, Civil Appeal No. 8558, Civil Appeal No. 8559, Civil Appeal No. 8560, Civil Appeal No. 8561, Civil Appeal No. 8562, Civil Appeal No. 8563, Civil Appeal No. 8564, Civil Appeal No. 8565, Civil Appeal No. 8566, Civil Appeal No. 8567, Civil Appeal No. 8568, Civil Appeal No. 8569, Civil Appeal No. 8570 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Writ Petition No. 32, Writ Petition No. 33, Writ Petition No. 91, Writ Petition No. 93, Writ Petition No. 106, Writ Petition No. 118, Writ Petition No. 139, Writ Petition No. 194, Writ Petition No. 195, Writ Petition No. 267, Writ Petition No. 268, Writ Petition No. 279, Writ Petition No. 309, Writ Petition No. 360, Writ Petition No. 449, Writ Petition No. 465, Writ Petition No. 466, Writ Petition No. 469, Writ Petition No. 478, Writ Petition No. 558, Writ Petition No. 572, Writ Petition No. 605, Writ Petition No. 606, Writ Petition No. 688, Writ Petition No. 718 of 1995 decided on May 01, 1996 Other Advocates: R.V. Prasad, Vineet Kumar, Ms. Meenakshi Sakhardane, N.M. Sakhardande, K.M. Vijayan, Shiv Ram, K.V. Mohan, Ms. Neeta Agarwal, L.K. Pandey, S. Nandan Kumar, V.N. Raghupathy, D.N. Misra, Ms. Manjula Kulkarni, Kh. Nobin Singh, M. Veerppa, Mrs. Aruna Mathur, A. Mariarputham, S.C. Birla, Ms. Sheil Sethi, R.L. Ramani, R.J. Chandran, K.K. Mani, A.T.M. Sampth, V. Balaji, P.N. Ramalingam, V.G. Pragasam, R. Nedumaran, T. Harish Kumar, T. Pramod Chepda, V. Krishnamurthy, K.J. John, P. Venugopal, K.V. Vijayakumar, K. Swami, S. Muralidhar, P. Mahale and Rajeev Kumar Singh, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned herein provided for issuance of what is called "replenishment licences" (for short, "REP licences"). The objective behind the licences was to provide to the registered exporters the facility of importing the essential inputs required for the manufacture of the products exported. The essential idea was to encourage exports and for that purpose import licences called REP licences were issued equal to the prescribed percentage of the value of exports. These licences were made freely transferable. It was provided that the transfer of such licences did not require any endorsement or permission from the licensing authority. It was clarified that such would be "governed by the ordinary law". It only required a letter from the transferor recording and evidencing the transfer. On that basis, the transferee became the due and lawful holder of the licence and could either import the goods permitted thereunder or sell it to another in turn. With effect from July 3, 1991, the name of the licence was changed to Exim scrip (Export-import licence). The provisions governing the Exim scrip were broadly the same as those governing the REP licence with certain minor variations, which are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Judge. The Division Bench too relied upon the ratio of Anraj [1986] 61 STC 165 (SC) and dismissed the appeal in the following words: "In the instant case, the transfer of REP licences confers upon the transferee the immediate right to clear goods covered by the licences at the customs barrier. This is not an inchoate or incomplete right. It cannot be held to materialise in future because its exercise is dependent upon the transferee buying goods covered by the licence and bringing them to Indian shores. Nor can REP licences be held to be actionable claims because the customs authorities might not clear the goods and the transferee would have to commence an action against them in a court of law. In our view, the transfer of an REP licence confers upon the transferee a right which is choate and perfected and exercisable immediately he presents to the customs barrier goods of the nature covered thereby. It must, therefore, follow that REP licences are goods within the meaning of the said Act and the premium or price received by the transferor thereof is liable to sales tax thereunder." A Division Bench of the Madras High Court has also taken the same view in P.S. Apparels v. Deput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slatures and the Parliament respectively to levy sales tax on sale or purchase of goods with the difference that if it is an intra-State sale, it is the State Legislature which is competent to levy the tax, whereas in the case of inter-State sale, it is the Parliament alone that can levy tax. Entry 54 in List II, which is the one we are immediately concerned with in these matters, is a legislative head, a head of legislation. Being a legislative head, it must be construed liberally and not narrowly. There appears no reason why entry 54 should not be given its full and due meaning and content. By giving full effect to entry 54 in List II, the field and content of entry 92-A in List I is in no way affected or curtailed. So far as the meaning of the expression "goods" is concerned, these two entries cannot be called competing entries. There is no overlapping between them. The meaning given to the said expression in entry 54 in List II can equally be attributed to the said expression in entry 92-A in List I. This is a consideration which must certainly weigh with the court in approaching the question at issue herein. Clause (12) in article 366 of the Constitution defines the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or under the contract of sale" (emphasis* added). Since the said definition defines "goods" to mean, "every kind of movable property other than actionable claims and money", it would be appropriate to notice the definition of "property" in clause (11). It reads: " 'property' means the general property in goods, and not merely a special property". It is noteworthy that both these definitions seek to spread the net as wide as possible. While the definition of "goods" includes every kind of movable property within its ambit, the definition of "property" says that it includes not merely special property, but general property in goods as well. The General Clauses Act, 1897, defines "movable property" to mean "property of every description except immovable property". The expression "immovable property" is defined to "include land, benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth". The definitions in the Karnataka, Tamil Nadu and Kerala General Clauses Acts are identically worded. In the absence of definition of the expressions in the sales tax enactments, the definitions in the respective General Clauses Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty". The definition of "goods" in the Kerala General Sales Tax Act may now be set out: " 'goods' means all kinds of movable property (other than newspapers, actionable claims, electricity, stocks and shares and securities) and includes live- stock, all materials, and articles (including those to be used in the construction, fitting out, improvement or repair of immovable property or used in the fitting out, improvement or repair of movable property) and all growing crops, grass or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale." Inasmuch as all the aforesaid definitions of the expression "goods" say that it includes all kinds of movable property, it becomes necessary to notice the meaning of the expression "movable property". Inasmuch as the sales tax enactments do not define the said expression, we have to adopt the definition in the respective State's General Clauses Act. But these definitions in the General Clauses Act too are not very helpful. All that they say is that movable property means property of every kind except immovable property. The counsel have accordingly brought to our notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p., 368 S.W. 2d 842, 848; as is an insurance policy and rights incident thereto, including a right to the proceeds, Harris v. Harris, 83 N.M. 441, 493 P. 2d 407, 408." The dictionary further says "property is either: real or immovable; or, personal or movable". It then proceeds to give the meaning of the expression "absolute property", "common property", "intangible property", "movable property", "personal property", "private property" and "public property" among others. The above definition shows the wide meaning attached to the expression. It is said to extend to every species of valuable right and interest. It denotes every thing which is the subject of ownership, corporeal or incorporeal, tangible or intangible, visible or invisible, real or personal. It includes "everything that has an extendable value". It extends to every species of valuable right and interest. To the same effect is the definition in the Dictionary of Commercial Law by A.H. Hudson (published by Butterworths, 1983). It reads: "Property: In commercial law this may carry its ordinary meaning of the subject-matter of ownership, e.g., in bankruptcy referring to the property of the debtor divisible amongst cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute owner has (Co. Litt. 145b.). See Ownership. Special property has two meanings. First, it may mean that the subject- matter is incapable of being in the absolute ownership of any person. Thus a man may have a property in deer in a park, hares or rabbits in a warren, fish in a pond, etc., but it is only a special or qualified property, for if at any time they regain their natural liberty his property instantly ceases, unless they have animus revertendi (2 B1. Comm. 391). See Animals Ferae Naturae........." This definition also shows that the expression signifies "things and rights considered as having a money value". Even incorporeal rights like trade marks, copyrights, patents and rights in personam capable of transfer or transmission, such as debts, are also included in its ambit. The meaning given to "general property" and "special property" are self-explanatory and need no emphasis at our hands. It is worth recalling that movable property means "property of every description except immovable property"-the definition in all the General Clauses Acts. The above material uniformly emphasises the expansive manner in which the expression "property " is understood. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ph 185(1), which deals with "items permissible for import", says, "REP Licences issued against export of products listed in Column 2 of Appendix 17, Part I and as per paragraph 184(4) of this book, will be valid for import of those relevant items of raw materials, components, consumables and packing materials, as are listed in Appendices 3 and 5, Part A and related to the product exported." Paragraph 192 deals with "flexibility in the utilisation of REP licences". It says that the said licences "are also valid for import of any other items of raw materials, components, tools, consumables and packing materials listed in Appendices 3 and 5, Part A " besides some other goods. Paragraph 199 deals with "Transferability of REP Licences". It reads: "199(1). The REP licence will be issued in the name of the registered exporter only and will not be subject to "Actual User Conditions". A licence holder may transfer the licence to another person. The licence holder or such transferee may import the goods permitted therein. (2) The transfer of a REP licence will not require any endorsement or permission from the licensing authority, i.e., it will be governed by the ordinary law. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expression "sale of goods" has to be construed in the sense in which it is used in the Sale of Goods Act, as has been held by this Court in Gannon Dunkerley [1958] 9 STC 353; [1959] 3 SCR 379. They submitted that the definition of "goods" in Sale of Goods Act excludes from its purview actionable claims and that the essence of the lottery being merely a chance for a prize for a price, it does not constitute goods, but a mere actionable claim. It was argued that the lottery ticket is a mere slip of paper or a memorandum evidencing the right of the holder thereof to claim or receive a prize if successful in the draw. The arguments of the assessees were rejected by this Court. The court referred to the definition of "goods" and "sale" in both the aforesaid enactments, the definition of "goods" in article 366(12) and the definition of "tax on the sale or purchase of goods" in article 366(29A). It referred to the meaning of the expression "lottery ticket" in law dictionaries and decided cases; it referred to the definition of "movable property" in the General Clauses Act, 1897, and the definition of the expression "actionable claims" in section 3 of the Transfer of Property Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense they are used in the Sale of Goods Act. We need not quarrel with this proposition. We have not only referred hereinbefore the definition of "goods" and "property" in the Sale of Goods Act but have also pointed out that in material particulars it is similar to the definition of "goods" in Tamil Nadu, Karnataka and Kerala Sales Tax Acts. All of them uniformly say "goods " mean "every kind of movable property" (Sale of Goods Act) and "all kinds of movable property" (Tamil Nadu, Karnataka and Kerala Acts). As a matter of fact, this submission was made but not pursued by any of the counsel for the petitioners. We are also of the opinion that these licences/scrips cannot be treated as actionable claims. " 'Actionable claims' is defined in section 3 of the Transfer of Property Act in the following words: " 'Actionable claim' means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether such debt or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be liable to tax on turnover of purchases at the rate prescribed. The contention of the assessee was that the said levy was not a tax on sale or purchase of goods within the meaning of entry 54 in List II and, therefore, beyond the legislative competence of the State Legislature. Construing the relevant notifications and contracts (called bamboo contracts and timber contracts) this Court held that the bamboo contracts were in the nature of a grant of interest in immovable property and, therefore, beyond the purview of the Act. So far as timber contracts are concerned, the court held that inasmuch as the property in the trees, which were the subject-matter of the contracts, passed to the forest contractor only in the felled trees, i.e., in timber, after all the conditions of the contract had been complied with and after such timber was examined and checked and removed from contract area, they too were not governed by the notifications concerned therein. On the basis of this decision, it was contended by Sri Venugopal that taxable event, if at all, will arise only at the time of transfer of the actual goods imported under and by virtue of the said licences/scrips, but not at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essees of a theatre and the plaintiffs. Under this contract, the plaintiffs were given the exclusive right for a particular period to supply refreshments in the theatre. For that purpose, the plaintiffs were entitled to use the refreshment rooms, bars and wine cellars in the theatre and were also given the exclusive right to advertise and to let spaces for advertisement in certain parts of the theatre. It was held by the Court of Appeal that the said contract did not convey to the plaintiffs an interest in the land which could form the subject-matter of compensation under the Lands Clauses Consolidation Act, 1845. In that connection, Romer, L.J., held that the contract created only a licence in favour of the plaintiffs, but did not create any estate or interest in land in their favour. It was also held that the right given to the plaintiffs to use refreshment rooms and bars, etc., was to enable the plaintiffs to supply refreshments at appropriate times and did not involve absolute parting of possession of those parts of the theatre by the lessees to the plaintiffs. Referring to the earlier decision in Thomas v. Sorrell (1674) Vaugh 351, the learned Judge held, "a dispensation or li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icence. We cannot agree. The grant of licence by the licensing authority to the registered exporter is not a sale. The sale is when the registered exporter or the purchaser sells it to another person for consideration. The last submission urged by Sri Vaidyanathan is that these licences/scrips constitute securities within the meaning of clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956, and therefore, stand excluded from the definition of "goods" contained in Tamil Nadu, Kerala and Karnataka Sales Tax Acts as well as Central Sales Tax Act. The contention is misconceived. It is true that the definition of "goods" in the said sales tax enactments does exclude securities, but the question is whether these licences/scrips are securities. They are not. Before the definition of the expression "securities" in clause (h) of section 2 of the Securities Contracts (Regulation) Act was amended by Act 15 of 1992, the definition reads thus: "(h) 'securities' include- (1) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; (ii) Government securiti ..... 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