TMI Blog1997 (7) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed part of the turnover of the respondent, in view of explanation (3B) to clause (xxi) of section 2 of the Kerala General Sales Tax Act, 1963 as amended by the Kerala Finance Act, 1984 with effect from April 1, 1984. The assessing authority accordingly included the said sum of Rs. 11,280 as taxable turnover of the respondent and completed the assessment under section 19 of the Act. Similarly, for the assessment year 1987-88, the assessment originally completed as per proceedings dated July 20, 1986 was reopened under section 19 of the Act and for the reasons stated hereinabove, the assessing authority included a sum of Rs. 22,560 representing the rent received by the respondent for using his hydraulic press by various customers as taxable turnover and completed the assessment under section 19 of the Act. The appeals filed by the assessee against the said assessment orders were dismissed by the first appellate authority. On second appeal, the Sales Tax Appellate Tribunal allowed the said appeals, whereby the addition of Rs. 11,280 in the assessment for the year 1984-85 and Rs. 22,560 in the assessment for the year 1987-88 were deleted. Aggrieved by the common order of the Kerala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are agreed to be severed before sale or under the contract of sale. Section 2(xxi) defines sale , the relevant portion reads as follows: (xxi) sale with all its grammatical variations and cognate expressions means every transfer whether in pursuance of a contract or not of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge. Explanation (3B) reads as follows: A transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration shall be deemed to be a sale. Section 2(xxv) defines taxable turnover , as follows: (xxv) taxable turnover means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover of purchase or sale in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into territory of India. Section 2(xxvii) defines turnover as follows: (xxv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 1984-85 and 1987-88 admittedly represent the rent received by the respondent for using his hydraulic press by various customers. The Sales Tax Appellate Tribunal narrated the facts of the present case in paragraph 2 of the appellate order as follows: 2. The appellant is having a hydraulic press as a part and parcel of the plant and machinery embedded to his factory. He is manufacturing his own goods. But when the factory is not having full work, the plant and machinery including the hydraulic press are kept idle, when there are customers to approach the appellant to let out the service of the hydraulic press for facilitating them to process the raw materials rubber, the appellant allows the customers to use the facility of the hydraulic press within his factory. For this facility the customers make a payment to the appellant, in the form of a service charge. After adverting to the provisions of Explanation (3B) of section 2(xxi), the Tribunal observed as follows: 4. The true nature of transaction in the present case is the hiring of the hydraulic press to various customers on machine-hour basis. The essential condition for the fictional sale as envisaged in Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of goods has already been extracted earlier in this judgment. Only movable property is comprehended within the definition of goods . The exceptions are only in the case of materials used in works contract 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. Thus it is evident that only movable property can be the subject-matter of sale exigible to tax under the Act. As already stated, the hydraulic press, the use of which was allowed to various customers was part and parcel of the plant and machinery installed by the respondent in his premises. There is no agreement or understanding between the parties that before the grant of permission to use the hydraulic press by various customers it is to be severed from the earth. In such circumstances, it cannot be held that the hydraulic press is movable property falling within the definition of goods and therefore the rent received for the use of the hydraulic press by various customers cannot be subjected to tax under the Act. On this short ground alone, it should have been held that the rent received by the respondent for allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also the Forty-sixth Amendment of the Constitution, whereby a new clause, namely, clause (29A) was introduced in article 366 giving an extended meaning to the words tax on the sale or purchase of goods and the consequent amendments to the definition of dealer occurring in section 2(viii) and sale occurring in section 2(xxi) of the Kerala General Sales Tax Act, 1963 by the Kerala Finance Act, 1984 which came into effect on April 1, 1984. This Court observed that by the changed definitions of dealer and sale given in the Act it is proposed to levy tax on the transfer of right to use any goods and if the petitioner by lending the video cassettes to the members of the library effects a transfer of right to use that goods is liable to be assessed to tax. With reference to the provisions of explanation (3B) of section 2(xxi) of the Act, this Court in O.P. No. 10167 of 1988* observed as follows: The members of the petitioner s library are given video cassettes on payment of Rs. 10 and the member can retain the cassettes for a period of 2 days and if he keeps these cassettes for more than two days he has to pay additional fee. The member has got exclusive control over th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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