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2015 (10) TMI 854 - MADRAS HIGH COURT

2015 (10) TMI 854 - MADRAS HIGH COURT - [2016] 88 VST 239 (Mad) - Levy of sales tax on banks - Dealer or not - whether a bank, which holds hypothecation of vehicles in their favour, would be a dealer within the definition of the expression under Section 2(15) of the Act, merely because the bank seizes and repossesses the hypothecated vehicle and brings it to sale through public auction - Held that:- Explanation III under Section 2(15) includes even the disposal of goods that are unclaimed. In re .....

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public to recognize or the courts to recognize such sales, registration is made mandatory in these sales. Explanation III covers all types of cases. Therefore, the said contention cannot be accepted. On the distinction sought to be drawn to the decision of the Supreme Court in Federal Bank, it should be pointed out that though the Supreme Court was concerned in that case with the exercise of a statutory right of sale, we do not think that the exercise of a contractual right to bring a hypothecat .....

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-2015 - V. Ramasubramanian And T. Mathivanan, JJ. For the Petitioner : Mr Joseph Markos, SC for Mr C Saravanan For the Respondent : Mr A N R Jayapratap, AGP (T) ORDER (Order of the Court was made by V. Ramasubramanian, J) These revisions are filed by the HDFC Bank Limited, under Section 60(1) of the Tamil Nadu Value Added Tax Act, 2006, questioning the correctness of the orders of the Sales Tax Appellate Tribunal, holding the bank liable to pay sales tax. 2. Heard Mr. Joseph Markos, learned Seni .....

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e not reported in the returns and the necessary tax was not paid, the Assessing Officer resorted to revision of assessment under Section 27(1)(a) of the Act. 4. Aggrieved by the orders of the Assessing Officer, the dealer preferred appeals before the First Appellate Authority respectively in A.P.Nos. 19, 18, 1 and 2 of 2012. The appeals having been dismissed by the First Appellate Authority, the petitioner filed further appeals in T.A.Nos.15 to 18 of 2014 before the Tribunal. These appeals were .....

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ale through public auction. 6. As seen from the order of the Tribunal, the Tribunal took note of the definition of the expressions 'business', 'dealer' and 'sale' respectively under Sections 2(10), 2(15) and 2(33). The Tribunal also took note of Sections 6 and 8 of the Banking Regulation Act and came to the conclusion on the basis of the decision of the Supreme Court in Federal Bank Limited Vs. State of Kerala [2007 (6) VST 736 (SC)] that the bank would come within the me .....

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y transfer forms in TM 29 and TM 30 and bringing the hypothecated vehicles to sale, a bank merely facilitates the sale of the hypothedated vehicles. Further according to the learned Senior Counsel, the sale by the bank of the hypothecated vehicles, was only in the capacity of being an agent of the owner of the vehicle. By itself, the bank is not competent to transfer title in the vehicle to the purchaser. Therefore, the learned Senior Counsel contends that the bank would not come within the defi .....

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support of the distinction that he drew with reference to the decision of the Supreme Court in Federal Bank, the learned Senior Counsel cited the decision of the Calcutta High Court in Tata Motors Finance Limited Vs. Commissioner of Sales Tax [W.P.T.T.No.6 of 2011 dated 8.10.2013]. In the last paragraph of the said decision, the Calcutta High Court agreed with the distinction sought to be made between a pledge and the hypothecation. It is of course true that the Calcutta High Court decided the i .....

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a default and also to bring the vehicle to sale through public auction or by private negotiation without even involving the owner of the vehicle. 12. As a matter of fact, until the Supreme Court came down heavily upon the arbitrary seizure and sale of hypothecated vehicles by the banks in ICICI Bank Limited Vs. Prakash Kaur [2007 (2) SCC 711], the banks were engaging the services of collection agents to seize the vehicles, repossess them and bring them to sale. Thereafter, the banks started mak .....

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to the financial institutions. Hence, to say that the banks sell the hypothecated goods only as agents of the owners, may not be true completely. 14. In any case, Explanation III under Section 2(15) makes even the sale of goods by certain persons, as covered by the Act. Explanation III to Section 2(15) reads as follows : (15) dealer means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, o .....

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ibuting goods on behalf of any principal, or through whom the goods are bought, sold, supplied or distributed; (iv) every local branch of a firm or company situated outside the State; (v) a person engaged in the business of transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (vi) a person engaged in the business of transfer of property in goods (whether as goods or in some other form) involved in the execution of .....

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for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration........ "Explanation III.- Each of the following persons or bodies who dispose of any goods including unclaimed or confiscated or unserviceable or scrap surplus, old or obsolete goods or discarded material or waste products whether by auction or otherwise directly or through an agent for cash or for deferred payment or for any other val .....

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rlines; Central Act 59 of 1988. (vi) Any person holding permit for the transport vehicles granted under the Motor Vehicles Act, 1988 which are used or adopted to be used for hire; (vii) The Tamil Nadu State Road Transport Corporations; Central Act 52 of 1962. (viii) Customs Department of the Government of India administering the Customs Act, 1962; Central Act II of 1934. (ix) Insurance and Financial Corporations or Companies and Banks included in the Second Schedule to the Reserve Bank of India .....

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f confiscated goods (iii) disposal of unserviceable goods (iv) disposal of scrap surplus, old or obsolete goods and (v) disposal of discarded materials or waste products. 16. All the above sales whether by way of auction or otherwise, directly or through an agent, either for cash or for deferred payment or for any other valuable consideration, are covered by Explanation III. In other words, Explanation III to Section 2(15) is so exhaustive. 17. The contention that the bank does not become the ow .....

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