TMI Blog2010 (2) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... es the provision of section 2(n) which, pointed out above, is not permissible. W.P. dismissed. - W.P. (C) No. 16142 of 2006 - - - Dated:- 5-2-2010 - SIKRI A.K. AND SIDDHARTH MRIDUL , JJ. The judgment of the court was delivered by A.K. SIKRI J. The petitioner is carrying on the business of leasing of machinery and vehicles all over the country. It leases goods required by the lessee for specified period, namely, 24, 36 and 48 months against lease rentals payable each month of the tenure of the lease. Admittedly such a transaction was not exigible to sales tax under the Delhi Sales Tax Act as it was not treated as sale of goods as understood in the Sale of Goods Act. The traditional concept of sales tax has undergone a drastic change by amending article 366 of the Constitution and inserting clause (29A) therein. The scope for the levy of sales tax has been expanded thereby inasmuch as clause (29A) provides that sale and purchase of goods would include, besides other transactions, the transfer of the right to use goods. Clause (29A) reads as under: (29A) 'tax on the sale or purchase of goods' includes (a) a tax on the transfer, otherwise than in pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) which has been enforced on April 1, 2005. Section 106 of the DVAT Act makes this repealing provisions. Sub-section (2) of section 106, however, provides that the repeal shall not affect the previous operation of the Act, or any right, title, entitlement, obligation or liability, already acquired, accrued or incurred, thereunder. It is clear from the aforesaid that the Act 2002 remained in operation from September 15, 2004 to April 30, 2005. All lease transaction agreement entered into during this period would be liable for the tax under this Act. The petitioner herein had, however, entered into various lease agreements prior to September 15, 2004. The duration of these agreements was 24/36/ 48 months. Obviously, therefore, such agreements, though entered prior to September 15, 2004 continue to exist even after September, 2004 and instalments by the lessees were paid after September, 2004 as well, which were received by the petitioner as the lessor under those agreement. The question that has arisen is as to whether the petitioner would be liable to pay tax under the Act 2002 in respect of the amount towards the instalments received after September 15, 2004 though the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reproduce these provisions also at this stage: 2(f) 'goods' includes all materials, articles, commodities and all other kinds of movable property, but does not include newspapers, actionable claims, stocks, shares, securities or money. . . . 2(s) 'turnover of sales' means the aggregate of the amounts of sale price received or receivable during a year by a dealer in respect of the transfer of the right to use any goods. Mr. Chawla, the learned counsel appearing for the petitioner pointed out that section 2(n) provides that sale means any transfer of the right to use goods for any purposes for cash or for deferred payment. But, section 3 is the charging section and it provides, firstly, that tax shall be leviable on the turnover of sale in respect of the transfer of the right to use goods agreed to before the appointed day but the right to use goods is exercised on or after the appointed day. The provisions of section 3 are directly in violation of the provision of section 2(n), inasmuch as the sale under the enactment means transfer of the right to use the goods for a price. If there is a transfer of the right to use goods, i.e., if the right has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking place of the sale. As and when the sale and the taxable event takes place the same is liable to tax. The subsequent instalments received spread over in number of months have no relevancy and are immaterial to determine either the sale or the taxable event. It is only a consideration received in deferred instalments. The receiving of the consideration in lumpsum on the same day or deferred or by instalments does not shift the point of sale or the taxable event. The sale is one in the lease transaction and can only be taxed once as and when the sale is effected. It is absurd that each instalment received month after month is by itself an independent sale. Section 3(b) is in excess of powers conferred by entry 54 and therefore, is without authority and is unconstitutional. He argued that though section 2(n) was in line with clause (d) of article 366(29A), section 3(b) was in excess of the powers conferred by roping in subsequent payments of instalments to tax by treating them as independent sales. The learned counsel also relied upon the judgment of the Supreme Court in 20th Century Finance Corpn. Ltd. v. State of Maharashtra [2000] 119 STC 182 wherein it has been held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the date of entering into agreement. Mr. Prag P. Tripathi, learned Additional Solicitor-General appeared on behalf of the respondents refuted the aforesaid submissions of the learned counsel for the petitioner. He challenged the very foundation of the case laid by the petitioner and submitted that one provision of the Act cannot be treated as ultra vires the other provisions of the same Act. On merits, his arguments was that by the 46th Amendment to the Constitution and insertion of clause (29A) of article 366 thereof, the very scope of taxation was enlarged by the Parliament. The said amendment was not limited to the scope of sale but conceptually redefined the realm of taxation . It was by this amendment, that the deeming provision was introduced, treating certain transactions as amenable to sales tax which transactions in traditional sense were not treated as sale . The leasing transactions were to be taken into consideration in the light of this spirit behind the aforesaid amendment, was the submission of the learned Additional SolicitorGeneral. Examining in this backdrop, rentals paid were not to be treated as deferred payment but it amounted to sale every month w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or is reasonably believed by the lessor to be situated for the time being, and detach and dismantle the same and the lessor shall not be responsible for any damage which may be caused by any such detachment or removal of the equipment. (b) Without prejudice to and in addition to the lessor's rights provided hereinabove, the lessor shall also be entitled to recover from the lessee and the lessee shall be bound to pay to the lessor the following amounts, viz: . . . He also sought to draw sustenance from the judgment of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95; [2006] 146 STC 91 wherein this aspect of the matter is highlighted by the Supreme Court in the following words (at page 133 of 3 VST): 98. To constitute a transaction for the transfer of the right to use the goods the transaction must have the following attributes: (a) There must be goods available for delivery; (b) There must be a consensus ad idem as to the identity of the goods; (c) The transferee should have a legal right to use the goods consequently all legal consequences of such use including any permissions or licences required therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353 (SC); AIR 1958 SC 560 does not permit a composite contract of both goods and services (viz., a works contract) to be taxed as sale of goods and does not permit serving of the contract for the value of goods to be culled out from the same, the need was felt to amend the Constitution to widen the definition of sale form that as was traditionally understood and which meant an agreement to transfer title, payment of consideration, and, transfer of title in the goods. Three proposals were mooted by the Law Commission in its report of 1974 to give the power to the State to tax goods included in works contracts, hire purchase transaction and transfer of controlled commodities by virtue of statutory orders. The Law Commission noted that there can be three actions, one of amending entry 54 of the State List, second of adding a fresh entry in the State List or thirdly of inserting in article 366 a wider definition of sale so as to include works contract. The Law Commission preferred the last alternative and, therefore, the Constitution came to be amended by the Forty-sixth Amendment Act, 1982 to add sub-article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a plea cannot be accepted. Mr. Tripathi, learned Additional Solicitor-General is right in his submission that one provision of an enactment cannot be ultra vires to another provision of the same enactment. The expression ultra vires consists of two words: ultra and vires . Ultra means beyond and vires means powers. Thus the expression ultra vires means an act done outside the scope of the conferred power. This doctrine cannot be applied to adjudicate upon the effects of inter-play of two different provisions of the same statute as both of them draw their legal sanctity from a very single transaction of the passing of that statute by the Legislature. One must borne in mind that to plead doctrine of ultra vires there must be pre-existence of the broad contours of the conferred authority in pursuant to which or otherwise, some act has been done, which was beyond the spectrum of the conferred power. In other words, essence lies in the time interval and an Act can be held ultra vires to a pre-existing higher legal authority. The submission that section 3(b) of the Delhi Sales Tax on Right to Use Goods Act, 2002 is ultra vires to section 2(n) of the same Act indirectly mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be determined with reference to the area and extent of their application either generally or specially in particular situations. The principle is expressed in the maxims generalia specialibus non derogant, and generalibus specialia derogant. 3.. The meaning of some words in a statute may be enlarged or restricted in order to harmonize them with the legislative intent of the entire statute. It is the spirit of the statute which should govern over the literal meaning. 4.. It should not be lightly assumed that parliament had given with one hand what it took away with the other . The provisions of one section of a statute cannot be sued to defeat those of another unless it is impossible to effect reconciliation between them . 5.. The courts have to take help from the preamble, objects, the scheme of the Act, its historical background, the purpose of enacting the provision, the mischief, if any which existed, which is sought to be eliminated (see Joginder Kumar Singla v. Government of N.C.T. of Delhi AIR 2005 Delhi 258). In the present case, section 2(n) defines sale means any transfer of the right to use any goods for any purpose. No doubt, it would be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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