TMI Blog1988 (3) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... se any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made;". The above clause came into force on 2nd February, 1983. The Seventh Schedule to the Constitution consists of Lists I, II and III setting out the subject-matter of laws which the Parliament and the Legislature of the States have the power to make. List II is the State List and it contains the matters upon which the State has the exclusive power to make la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------------------------------------------------- S. No. Particulars Date of coming in to force ----------------------------------------------------------------------------- 1. Clause (29-A) of article 366. 2-2-83 2. Explanation IV to section 2(n) through Act 18 of 1985. 2-2-83 3. Clause (iii-b) inserted by Act 18 of 1985 in section 2(e) defining the expression "dealer". 13-9-85 4. Section 5-E levying tax on the amount realised in respect of right to use goods inserted by Act 18 of 1985. 1-7-85 ----------------------------------------------------------------------------- 3.. In view of the power conferred on the State Governments to levy tax on the transfer of the right to use any goods for any purpose and following the amendments made to the Andhra Pradesh General Sales Tax Act referred to above, the sales tax authorities felt that banks which provide safety-lockers for the use of customers are liable to pay tax on the charges realised. In that view, notices were issued to various banks by the Commissioner of Commercial Taxes to show cause why sales tax should not be levied at 5 per cent on the charges realised by hiring lockers which, in law, amounted to transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady referred to the aforesaid notification in para 4 supra under which exemption was granted from all taxes payable to the banks in the State of Andhra Pradesh. This notification continued to be in force till it was rescinded by G.O. Ms. No. 794 dated 19th August, 1987. We find considerable force in the contention of the learned counsel for the petitioners that in any case, no tax can be levied till the date of publication of G.O. Ms. No. 794 dated 19th August, 1987 rescinding the earlier notification dated 10th June, 1957. The notices issued by the department to the bankers proceeded to state that tax is leviable from the year 1983-84, obviously for the reason that the Forty-sixth Amendment to the Constitution inserting clause (29-A) in article 366 of the Constitution of India, came into force on 2nd February, 1983. We must, however, point out that the insertion of clause (29-A) in article 366 of the Constitution did not automatically confer power on the State Government to levy tax. Consequential steps have to be taken by effecting necessary amendments to the Sales Tax Act at the State level. Those amendments were made by Act 18 of 1985 whereunder explanation IV was added to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to levy tax prior to the date of publication of G.O. Ms. No. 794 dated 19th August, 1987. We accordingly declare the law and quash the impugned notices in all the cases. 7.. Learned counsel for all the petitioners made a request that the larger issue whether the petitioners-banks are liable to pay tax at all may be considered as extensive arguments were advanced and the sales tax authorities are bound to initiate action once again for levy of tax subsequent to the period of publication of G.O. Ms. No. 794. It is pointed out that the question would have to be reagitated once again by filing writ petitions and if the larger issue is settled one way or the others multiplicity of proceedings will be avoided. Having heard the arguments in some detail we feel that it is desirable to decide the larger issue concerning the liability of the banks to pay sales tax on the charges realised by the banks for hiring safe deposit lockers. 8.. The main thrust of the argument of Sri Ananta Babu who led the arguments is that the impugned provision does not authorise the levy of tax on banks for hiring safe deposit lockers to constituents. Attention is invited to the relevant provision. Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any part of it, nor permit to be used to any purpose other than for the deposit of documents, jewellery or other valuables nor shall the hirer use the locker for the deposit of any property of an explosive or destructive nature." There are provisions relating to the payment of the hire and the bank's lien on all the moneys to sell the property by the safe deposit department of the bank if the rental is not paid. The agreement can be terminated by giving seven days' time by either side. If no such termination is made, the bank will consider the renewal in favour of the hirer for a further period. Clause 9 of the agreement provides that all repairs required to be done to the locker or keys shall be done exclusively by workmen appointed by the bank. Clause 11 provides that for reasons of grave or urgent necessity the bank reserves the right of closing the safe deposit department for such period as it may consider necessary. The bank also reserves the right of making changes in the working hours. Clause 12 cautions the hirers to keep the keys of the lockers in a place of safety and not to divulge the number of their lockers and their passwords and not to deliver their keys for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the description of moveable property. According to the General Clauses Act, immoveable property shall include land, benefits arising out of the land, and things attached to the earth. The Transfer of Property Act defines the phrase "attached to earth", but gives no definition of immoveable property beyond excluding standing timber, growing crops. The phrase "attached to the earth" is defined in the Transfer of Property Act as imbedded in the earth, as in the case of walls or buildings or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. The definition of immoveable property in the General Clauses Act is held to apply even to the Transfer of Property Act. It is all the more applicable to the Sales Tax Act which levies tax on transactions relating to goods constituting moveable property. There is considerable force in the contention of the learned counsel for the petitioners that lockers imbedded in the earth cannot be regarded as moveable property and cannot, therefore, answer the description of "goods" for the purpose of the Sales Tax Act. Learned Government Pleader was on his feet quickly to contradict the petitioners that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gauge. The class of customers who go to banks for depositing their valuables in lockers do certainly have steel almirahs in their houses or even otherwise can afford to purchase one such almirah with safe deposit locker. But then why do these persons prefer to go to a bank and deposit their valuables in the lockers located there without keeping the articles in their houses under constant watch by them? The answer is obvious. It is because the safe deposit lockers hired by banks are located in impregnable strong rooms and prowlers cannot gain access into these strong rooms of the banks. The wide feeling is that valuables deposited in bank lockers are safer than at home because of the high security arrangements at the bank and the provision of strong rooms. It cannot, therefore, be gainsaid that persons pay the hire charges for the lockers not only for the right to use the lockers but also for a host of other services referred to above closely associated with the maintenance of lockers by the banks. In that sense the hire charges collected by the banks from the constituents represent a consolidated charge levied by the bank for a variety of services and facilities provided, of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is merely a licensee having access to go into the strong room and operate the locker. Learned counsel also pointed out that the hirer does not even have the facility to open the locker on his own, because the locker cannot be opened unless the master key available with the bank is also simultaneously operated. Learned counsel, therefore, submitted that the bank does nothing having the effect of putting the lockers in the possession of the bailee. On the other hand, the conditions in the contract unmistakably indicate that the exclusive possession and custody of the locker are kept with the bank itself always and not even liberty is given to the hirer to open the locker whenever he likes. The lockers can be operated only during the prescribed hours and a hirer cannot operate the locker with his own key, unless the master key remaining with the banks is also simultaneously used. On these facts, the learned counsel contended that there is neither delivery of the lockers nor has anything been done by the bank having the effect of putting the lockers in the possession of the bailee. The facts indicate the contrary. Learned counsel invited our attention to Chitty on Contracts, 24th Edit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial amendments in the Act. It is not necessary to multiply instances of this type as there are plenty. In making the aforesaid amendments, in our opinion, the law envisaged the levy of tax in respect of sums paid for securing the right to use the goods, of which possession or delivery has been taken by him. It does not apply to cases where the person concerned is merely a licensee without possession of the goods. 15.. Our attention has been invited to a decision of the Calcutta High Court in Bank of India v. Commercial Tax Officer, Calcutta [1987] 67 STC 199 wherein the same question was considered by a learned single judge of the Calcutta High Court. The learned Judge held that tax is not leviable in respect of lockers hired by banks to customers. Although we tread the ground through a route slightly different from what the learned judge did we reached the same destination; we are in respectful agreement with the views expressed by the learned single judge. 16.. For all the aforesaid reasons, we hold that no power is conferred on the sales tax authorities to levy sales tax in respect of hire charges collected by banks for providing safe deposit lockers under section 5-E of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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