TMI Blog1998 (4) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... year in question is 1980-81. On verification of the accounts of the assessee, for the purpose of assessment under the Kerala General Sales Tax Act, it was noticed that he had purchased 2,293.480 gms. of gold ornaments from dealers outside the State giving in return equal quantity of gold with labour charges. The assessing authority took the view that the said transaction is inter-State sale assessable under the Central Sales Tax Act. It was therefore proposed to assess the turnover under the said Act. 3.. The assessee filed objections to the said proposal stating that the transaction in question was not a purchase or sale under the Central Sales Tax Act. The assessee contended that the gold supplied to dealers outside the State would not come within the definition of sale under the Kerala General Sales Tax Act or Central Sales Tax Act. According to the assessee, the expression valuable consideration under section 2(xxi) of the Kerala General Sales Tax Act is intended to cover only cheques, promissory notes and other negotiable instruments. Objections raised by the assessee were overruled holding that receipt of gold ornaments and entrustment of gold with labour charges subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cifically dissented from the ruling of the Madras High Court in Vadivel Achari s case [1969] 23 STC 273? The Revenue in T.R.C. No. 77 of 1993 has also raised the following questions of law: 1.. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that no prior contract for the sale has been established an order a movement of the goods purchased from Kerala to outside State as a result of such contract has not been proved? 2.. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that there is no sale and there is only an exchange of goods? 3.. Is the finding and conclusion arrived by the Tribunal justified in law? 6. We have heard counsel for the assessee Smt. Deepsur D. Jayan and also Senior Government Pleader Sri V.V. Ashokan. Counsel for the assessee contended that there is no element of sale in the transaction and it is only an exchange of new articles for the old articles with same weight. According to her sale has been defined under section 2(xxi) of the Kerala General Sales Tax Act as a transfer for cash or for other valuable consideration. Consideration was neither fixed nor contemplated between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... things or acts, the definition is a hard-and-fast definition, and no other meaning can be assigned to the expression that is put down in definition . A definition is an explicit statement of the full connotation of a term: Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court (1990) 3 SCC 682. 8.. The essence of sale also lies in the transfer of property for cash or for deferred payment or for other valuable consideration . The definition of sale contained in the Kerala General Sales Tax Act cannot be construed to include within its ambit those transactions which do not fall within the definition of sale contained in the Sale of Goods Act, and the definition in the Sales Tax Act, must therefore be construed accordingly. Section 4 of the Sale of Goods Act defines sale as a transaction whereby there is transfer of property in goods to the buyer for a price. Section 2(10) of the Sale of Goods Act defines price as money consideration for a sale of goods . Thus in order that a transaction may amount to a sale in accordance with the Sale of Goods Act, the consideration has to be money. 9.. A transaction like the one with which we are concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax Acts the same three expressions are used. It has never been argued or decided that the said expression means other than monetary consideration. This consistent legislative practice cannot be ignored. The expression valuable consideration takes colour from the preceding expression cash or deferred payment . If so, it can only mean some other monetary payment in the nature of cash or deferred payment. In view of the abovementioned principle laid down by the Supreme Court, the expression cash or deferred payment or other valuable consideration used in the definition of sale in section 2(xxi) of the Kerala General Sales Tax Act has to be construed to mean cash or some other monetary payment. 12.. The Allahabad High Court had occasion to consider a similar question in Sales Tax Commissioner v. Ram Kumar Agarwal [1967] 19 STC 400. The question that came up for consideration before the court was whether the giving of bullion by a dealer in exchange for purchase of readymade ornaments manufactured by goldsmith is a sale of bullion within the meaning of the U.P. Sales Tax Act or is a barter or exchange transaction. The court took the view that obtaining new ornaments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uable consideration . That was a case where the assessee, a manufacturer in the State of Assam of petroleum and petroleum products, despatched certain quantities of goods to three companies outside the State. The companies later in turn supplied goods of equivalent value to the agent at different places outside the State. The agent thereafter remitted the monetary value of such goods to the applicant. On the question whether it was a sale within the meaning of section 2(g) of the Central Sales Tax Act, the court followed the principle laid down by the Supreme Court in Devi Dass Gopal Krishnan s case [1967] 20 STC 430, and held that the transaction would not amount to sale under the Central Sales Tax Act, even though the court held that the transfer of property in the goods to the companies so far as the applicant was concerned had taken place for deferred payment and therefore the transaction was sale within the meaning of section 2(g) of the Act. 15.. The Andhra Pradesh High Court recently analysed various decisions on the question in Vijaya Aluminium Industries v. State of Andhra Pradesh [1996] 103 STC 508. That was a case where the assessee converted aluminium scrap coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to understand the basis for the view that, when the sheets and rings were made over to the customer there was a sale involving an element of transfer of property. 18. Following the decision of the Madras High Court in South India Metal Works and Rolling Mills [1960] 11 STC 507, that court in Vishweshwaradass Gokuldass v. Government of Madras [1962] 13 STC 113 held that where the aluminium scrap collected was converted into aluminium circles and supplied in equal weight after collecting labour charges, transaction was not a sale. 19.. The principle that can be deduced from the above decisions is that receipt of gold ornaments in exchange of gold with labour charges would not come within the definition of sale under section 2(xxi) of the Kerala General Sales Tax Act. The words other valuable consideration , which occur in section 2(xxi) of the Act can be interpreted by rules of ejusdem generis, as the payment of cheque, bills of exchange or other negotiable instruments. The words deferred payment or other valuable consideration used in section 2(xxi) of the Kerala General Sales Tax Act merely enlarge the ambit of the consideration beyond cash, but do not carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the words other valuable consideration the court held that it was a sale within the meaning of sale under the Tamil Nadu General Sales Tax Act. Even though reliance on the Supreme Court decision in Devi Dass Gopal Krishnan [1967] 20 STC 430 was placed, the Madras High Court took the view that the Supreme Court noted the goods passed is something akin to cash or deferred payment. 22. We are afraid that we cannot agree with the view taken by the Madras High Court on the scope and ambit of the term sale in the light of the decisions of the Supreme Court in Gannon Dunkerley s case [1958] 9 STC 353 and Devi Dass Gopal Krishnan s case [1967] 20 STC 430. Supreme Court in Gannon Dunkerley Co. s case [1958] 9 STC 353 has categorically held that in order to constitute sale, there must be an agreement between the parties, for the purpose of transferring the title to goods, which of course pre-supposes capacity to contract and that must be supported by money consideration. According to the Supreme Court, if the consideration is not money, but for other valuable consideration, it can then only be not a sale. Same is the view taken by the Supreme Court in Devi Dass Gopal Kr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, it is liable to be taxed under the Central Sales Tax Act. Therefore we are of the view that the assessee is not liable to be taxed under the Central Sales Tax Act, and the Tribunal has correctly held so. Since we have already found that transaction involved in the case would not come within the definition of sale within the meaning of section 2(xxi) of the Kerala General Sales Tax Act, question of applicability of section 2(g) of the Central Sales Tax Act does not arise. 25. We therefore hold that the exchange of old gold with labour charges in return of gold ornaments would not come within the definition of sale under section 2(xxi) of the Kerala General Sales Tax Act. The expression cash or deferred payment or other valuable consideration used in the definition clause has to be considered to mean cash or some other monetary payment. We are therefore of the view that the decision in Radhas Printers case [1993] 90 STC 201 (Ker) does not require reconsideration and has correctly decided on the basis of the various decisions of the Supreme Court. We respectfully disagree with the decisions of the Madras High Court in Vadivel Achari s case [1969] 23 STC 273 and Jayara ..... X X X X Extracts X X X X X X X X Extracts X X X X
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