{"id":11568,"date":"1996-05-01T00:00:00","date_gmt":"1996-04-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/vikas-sales-corporation-and-anr-vs-commissioner-of-commercial-taxes-on-1-may-1996"},"modified":"2016-08-07T15:12:08","modified_gmt":"2016-08-07T09:42:08","slug":"vikas-sales-corporation-and-anr-vs-commissioner-of-commercial-taxes-on-1-may-1996","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/vikas-sales-corporation-and-anr-vs-commissioner-of-commercial-taxes-on-1-may-1996","title":{"rendered":"Vikas Sales Corporation And Anr. … vs Commissioner Of Commercial Taxes … on 1 May, 1996"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Vikas Sales Corporation And Anr. … vs Commissioner Of Commercial Taxes … on 1 May, 1996<\/div>\n
Bench: A.M. Ahmadi C.J, B.P. Jeevan Reddy, Suhas C. Sen<\/div>\n
           CASE NO.:\nAppeal (civil)  7771-75 of 1996\n\nPETITIONER:\nVIKAS SALES CORPORATION AND ANR. ETC. ETC.\n\nRESPONDENT:\nCOMMISSIONER OF COMMERCIAL TAXES AND ANR. ETC.  ETC.\n\nDATE OF JUDGMENT: 01\/05\/1996\n\nBENCH:\nA.M. AHMADI C.J & B.P. JEEVAN REDDY & SUHAS C. SEN\n\nJUDGMENT:\n<\/pre>\n
JUDGMENT<\/p>\n
1996 (2) SUPP. SCR 204<\/p>\n
The Judgment of the Court was delivered by<\/p>\n
B:P. JEEWN REDDY, J. Leave granted in Special leave Petitions,<\/p>\n
This batch of appeals and writ petitions raise the question – whether the
\ntransfer of an Irnoprt License called R.E.P. Licence\/Exim Scrip by the
\nholder thereof to another person constitutes: a sale of goods within the
\nmeaning of and for the purposes of the Sales Tax enactments of Tamil Nadu,
\nKarnataka and Kerala. If it does, it is exigible to sales tax. Otherwise
\nnot The Karnataka and Madras High Courts have taken the view that R.E.P.
\nLicences\/Exim Scrips constitute goods and, therefore, on their transfer.
\nsales tax is leviable. Their judgment, appears to be influenced mainly by
\nthe decision. of this Court in H .Anaj Etc. v .Government of Tamil nadu
\nEtc, [ 985] Suppl. (3) S.E.R, 342:\n<\/p>\n
2, With a view to conserve precious foreign, exchange and’ to channelise
\nthe Nation’s; economy on desired lines, the Central Legislature enacted the
\nImports and Exports (Control) Act in 194. Section 3 em-powers the Central
\nGovernment to make provisions by order published in the official gazette
\nfor prohibiting, restricting or otherwise controlling the import into and
\nexport of the goods. from the country. The expression licence” is defined
\nin clause: (i) of Section 2 to mean a licence granted, including a customs
\nclearance permit issued; under any control order, Pursuant to Section 3:
\nand Section 4(a) of the said Act, the Central Government issued the Imports
\n(Control) Order, 1955. Clause (3)(i) of the Order provides that “save as
\notherwise provided in this Order, no person shall import any goods of the
\ndescription specified in Schedule I except under and in accordance with a
\nlicence of a customs clearance permit granted by the Central Government or
\nby any Officer specified in Schedule II. The Order contains elaborate
\nprovisions. governing the grant and cancellation of licences and Conditions
\nsubject to Which the licences have to be operated.\n<\/p>\n
3. The Central Government has been issuing, from time to time, what is
\nSailed the Import and Export Policy; published in the form of a brochure.
\nThe Import Policy in vogue during the years concerned herein provided for
\nissuance Of what is called replenishment licences” (for short “R.E..P.
\nLicences”). The objective behind the licences was to provide to the
\nregistered exporters the facility of importing the essential inputs
\nrequired for the manufacture of the products exported. The essential idea
\nwas to encourage exports and for that purpose import licences called R.E.P.
\nLicences were issued equal to the prescribed percentage of the value of
\nexports. These licences were made freely transferable. It was provided that
\nthe transfer such licences did not require any endorsement or permission
\nfrom the licencing authority. It was clarified that such would be:
\n“governed by the ordinary law”. It only required a letter from the
\ntransferor recording. and evidencing the transfer. On that basis, the
\ntransferee; became the due and lawful holder of the licence: and could
\neither import the goods per-mitted thereunder or sell it to another in
\nturn.\n<\/p>\n
4. With effect from July 3, 1991, the name of the licence was .changed to
\nExim Scrip (Export -Import Licence): The provisions governing the Exim
\nScrip were broadly the same as those governing the R.E.P. Licence with
\ncertain minor variations, which are not relevant for our purposes.\n<\/p>\n
5.  Several registered exporters who obtained R.E.P. licence\/Exim Scrips’
\nsold them to others for profit. In fact, these licences\/Exim Scrips were
\nbeing traded freely in the market and on stock exchanges. The sales tax
\nauthorities of certain States proceeded to subject such sales to sales tax
\nunder their respective enactments. The assessees immediately protested
\ncontending that these licences\/Exim Scrips do not constitute ”goods”
\nwithin the meaning of the relevant .sales tax enactments. and, therefore,
\nnot’ exigible to tax. The matter came up for consideration in the first
\ninstance before a learned Single- Judge of the Karnataka High Court in
\nBharat  Fritz Werner Ltd. v. Commissioner of Commercial Taxes ,(1992) 86
\nS;T.C. 170. It. was a writ petition challenging the validity of a circular
\nissued by the Commissioner of Commercial Taxes, Karnataka, stating that
\nwhenever an Import licence is transferred, it attracts tax Under Section
\n5(1) of the Karnataka Sales. Tax Act, 1957 as unclassified goods at the
\nrate of seven percent and directing the: assessing authorities and other
\nconcerned authorities to levy tax accordingly. The learned Judge considered
\nthe definition of “goods’ in. Section 2(m) of the: Karnataka: Act and held
\nFollowing Anraj that having: regard to the nature and character of the said
\nlicences .and their free. transferability, they .constitute goods, the sale
\nwhereof is subject sales tax. The learned judge rejected the. argument.
\nthat the said licences :are in the nature .of actionable claims. He held
\nthe import licence not merely enables a person: the: right of indulging in
\na business of importing goods but it also. excludes competition. There
\nfore, it cannot be said. that it is only a beneficial interest’ in respect
\nof a movable property not in possession of the person but is itself a
\nValuable right which. according to the petitioners themselves. is freely
\ntransferable The import, licence therefore must be treated as merchandise
\nfor the purposes of the Act and clearly falls within the definition of
\n‘goods'”. The learned: Judge further held that the right under this licence
\nis infact , more concrete and. substantial than the right under a lottery
\nticket considered in Anraj. On appeal, a Division Bench of the Karnataka,
\nHigh Court affirmed the judgment of the learned Single Judge. The Division
\nBench too felted upon the ratio of Anraj and dismissed the appeal in the
\nfollowing words :\n<\/p>\n
“In, the instant .case, the transfer of R.E.P. Licences confer upon the.
\ntransferee the immediate right to clear. goods covered by the licences at
\nthe Customs barrier. This is .not an inchoate of incomplete right it cannot
\nbe held to materialise in future because its exercise is dependent upon the
\ntransferee buying goods covered by. the licence and bringing them to Indian
\nshores. Nor can R.E.P. licences be held to be actionable claims .because
\nthe Customs authorities might not clear the goods and the: transferee would
\nhave to commence an action against them: in a Court of Law. In our view.
\nthe transfer of an R.E.P. licence confers upon the transferee. a right
\nwhich is choate and perfected and exercisable immediately he presents 16
\nthe. Customs barrier goods of the nature covered thereby.\n<\/p>\n
It must, therefore, follow that R.EP. licences are goods within the meaning
\nof the said Act and the premium or price received by the transferor thereof
\nis liable to sales tax thereunder.”<\/p>\n
7. A Division Bench of the Madras High Court has also taken the same view
\nin P.S. Apparels v. Deputy Commercial Tax Officer, T. Nagar, disposed of on
\nApril 4, 1994. Under the said judgment, a large number of writ petitions
\nwere disposed of.\n<\/p>\n
8. Number of appeals have been preferred by the assessees against the
\ndecisions of Karnataka and Madras High Courts, while a number of other
\nassessees. have approached directly by way of petitions under Article 32 of
\nthe Constitution of India, raising identical questions.\n<\/p>\n
9 The main contention of the learned counsel for appellants\/petitioners,
\nS\/Sri K.K, Venugopal, Joseph Vellapally, vaidyananthan and KM Mohan, is
\nthat these licences\/scrips are not goods; they are not property; they
\nrepresent merely a permission to import goods, Which permission can be
\nrevoked at any time the licencing authority; they are really in the nature
\nof shares securities which have been expressly excluded from the definition
\nof “goods” in the relevant enactments. The expression ‘”goods” has been
\nunderstood by this Court in State of Madras v. Gannon Dunker1ey & Co.
\n(Madras) Ltd.,<\/a> [1959] S.C.R..379 in the sense it is defined in the sale of
\nGoods Act and the said definition cannot and does not comprehend the
\nlicences of the nature concerned .herein. The meanings assigned to the
\nexpression “licence” and “goods” in Various law dictionaries have been
\nbrought to our notice, besides several decisions, Indian and English, by
\nthe learned Counsel. on the basis of the said material, it; is argued that
\nproperty is a bundle of rights but every strand in that bundle docs not by
\nitself constitute property. on the other hand, Sri A.k. Ganguly and Sri
\nChandrasekharan, learned Additional Solicitor General, supported the
\nreasoning and conclusion arrived at by Karnataka and Madras High Courts and
\ncommended it for our acceptance.\n<\/p>\n
11. Entry 54 in List-II of the Seventh Schedule to the Constitution of
\nIndia empowers the Sate Legislatures to make laws with respect to “taxes on
\nthe sale or purchase of goods other than newspapers subject to the
\nprovisions of Entry 92-Axs List-I” Entry 92-A of: List-I speaks of “taxes
\non the sale or purchase of goods other than newspapers, were such: sale or
\npurchase lakes place in the course of inter-State trade or commerce”.\n<\/p>\n
The Karnataka Tamil Nadu and Kerala Sales Tax Acts are referrable to Entry
\n54, While Central Sales Tax Act. 1956 is referrable  to Entry 92A, These
\nentries empower the Stat  Legislatures and the Parliament respectively to
\nlevy Sales tax on sale or purchase of goods with the difference! that if it
\nis a intra-state sale, it is the Slate Legislature which is competent to
\nlevy the .tax, whereas in the. case of inter- state sale. It .is the
\nParliament :alone, that can levy tax. Entry 54 in List-II which. is- the
\none we are immediately-concerned with in these matters. is a. legislative
\nhead, a head of legislation Being a legislative: head, it must be construed
\nliberally and: not: narrowly. There appears, no. reason why Entry 54 Should
\nnot be given, its full and due: meaning and content. By giving full effect
\nto. Entry 54. in List-Il, the filed and Content of: Entry 92-A in List 1 is
\nin no way affected or curtailed. So far as the meaning of the expression
\n.”goods is concerned. these two entries .cannot be called competing
\nentries. There is no overlap-in between them. The meaning given to the said
\nexpression in Entry 54 in List-II. can equally be attributed to the said
\nexpression in Entry 92A in List-I. This is- a consideration witch must
\nCertainly weigh with the Court in approaching the question. at issue
\nherein.\n<\/p>\n
12.Clause (12) in Article 366 of the Constitution defines the expression
\n“goods” in the following words: “goods’ includes all materials com modities
\nand articles ; Clause [29) in .Article 366, as-amended by the forty sixth
\nAmendment Act. defines the expression ‘tax on the Sale or purchase. of
\ngoods” in. the following words:\n<\/p>\n
(29A).’Tax the sale or purchase of goods” includes –\n<\/p>\n
(a) a tax on the transfer Otherwise than in pursuance of contract. of
\nproperty in any goods Jar cash, deferred payment or other Valuable
\nconsideration<\/p>\n
(b) a tax on the transfer of property in goods (whether as, goods or in
\nsome other form) involved in. the execution of a works: contract:\n<\/p>\n
(c) a tax-on the delivery of goods on hire-purchase or any system of
\npayment by instatements:\n<\/p>\n
(d) a tax on the transfer of the right to use- any goods for .any purpose
\n(whether or not for a specified: period) for Cash, deferred payment or
\nother valuable consideration;\n<\/p>\n
(e) a tax on the supply of goods by any unincorporated association<\/p>\n
or body of persons to a. member thereof for cash, deferred payment. or
\nother valuable  consideration;\n<\/p>\n
(f) a, tax on the supply by way of or as part of any service or in any
\nother manner what. So ever of goods; being food or any, other article for
\nhuman consumption Or any drink (Whether or not intoxicating), where such
\nsupply or service, is for cash, deferred payment or other valuable
\nconsideration: and such transfer; delivery or supply of any goods shall be
\ndeemed to be a sale- of those goods by the person making the transfer,
\ndelivery or supply arid purchase of those goods by the person to whom such
\ntransfer. delivery or supply is made,”\n<\/p>\n
The definition in clause (29A) was inserted. by the forty sixth Amendment.
\nAct with a view to give an. expansive meaning to the words “tax on the
\nsale, or purchase of goods”, Clauses (c) and (d) in this definition are
\nrelevant to the. present controversy. Clause (d) provides that even: where
\na right to. use any goods is transferable for cash, deferred payment .or
\nether valuable consideration, it will be a. sale or purchase of goods for
\nthe purpose of the Constitution:\n<\/p>\n
13. Clause (7) in Section 2 of the. Sale of Goods Act, 1930 defines the
\nexpression “goods” thus “goods’ means every kind of movable property other
\nthan .actionable claims and money; :and includes .stock and shares, growing
\ncrops. grass, and things, attached to or forming part of the land which are
\nagreed to be severed before sale or under the contract of: sale” (Emphasis
\nadded). Since the Said definition defines the “goods” to ‘mean, ”every
\nkind of movable property other than  actionable claims and money”, it would
\nbe appropriate to notice the definition of “property” in Clause(11). it
\nreads : “‘property’ means the general property in goods, and not merely a
\nspecial property”. It is noteworthy that both these definitions. seek: to
\nspread the net as wide as possible. While the definition of goods includes
\nevery kind of movable properly Within its ambit ,the definition of property
\nsays that it includes not merely  special property. but .general property
\nin. goods as well.\n<\/p>\n
The ‘General Clauses Act, 1897 defines “movable property’ to; mean
\n“property of every description except immovable. properly”. The expression
\n“Immovable property” is defined to “include land Benefits .to arise out of
\nland and things attached to the earth or permanently fastened to anything
\nattached to the earth”. The definitions in Karnataka, Tamil nadu and Kerala
\nGeneral Clauses Acts are identically, worded. In the: absence of definition
\nof the expression in the sale Tax enactments, the definition in the
\nrespective General Clauses Acts become applicable None of these .Act,, it
\nmay be mentioned, defines the expression ”property”:\n<\/p>\n
14. The Central. Sales  Tax Act, 1956 defines the expression, “goods” in
\nClause (d) of Section 2 in the following Words:\n<\/p>\n
“‘.Goods’  includes all materials; articles commodities and all other kinds
\nof movable property, but does not include newspapers, actionable claims,
\nstocks, shares .and .securities:’<\/p>\n
What is relevant to note En that this definition is not only inclusive in
\nnature, but takes in all kinds Of movable property. It excludes from its
\nambit-Certain items; which but for such exclusion, may Well have fallen
\nwithin the ambit of the said definition.\n<\/p>\n
15. The Tamil Nadu Sales Tax Act, 1959 defines the expression “goods” in
\nClause (j); of Section 2 in the following terms :\n<\/p>\n
“goods’ means all kinds of movable. property (other than newspapers,
\nactionable claims, stocks and shares and securities) and includes all
\nmaterials, commodities, and articles including the goods;(as goods or in
\nsome other form) involved in the execution of a Works contract or those
\ngoods to. be used in the fitting out, improvement or repair of movable
\nproperty and all growing crops, grass or things attached to or farming part
\nof the land which are Agreed to thee severed before sale or under the
\ncontract of sale.”\n<\/p>\n
This definition too includes all kinds of movable property within the
\ndefinition of goods -while excluding certain specified items, viz ,
\nnewspapers, actionable claims, Stocks, shares and securities. The Act does
\nnot define the expression ”movable property” which means that the
\ndefinition in the General Clauses Act has to be adopted for the purposes of
\nthe Tamil Nadu General Sales Tax Act 16. The definition of “goods” -in the
\nKarnataka Sales Tax Act, 1957 is no different ,.it reads :\n<\/p>\n
‘”goods’ means all kinds, of movable, property (other than newspapers,
\nactionable claims, Stocks and shares and securities) and includes live
\nStock, all materials, commodities. and articles including goods, as goods
\nor in some other form involved in the execution of a works contract or,
\nthose goods to be used in the fitting out improvement. or repair of movable
\nproperty and all growing crops, grass things attached to ,or forming part
\nof the land which are: agreed to be severed before: Sale of under the
\ncontract or sale,”\n<\/p>\n
This Act too does not define the expression “movable  property.\n<\/p>\n
17. The definition of “goods” in the Kerala General Sales Tax Act may now
\nbe set out :\n<\/p>\n
“goods’ means all kinds of movable property (other than newspapers,
\nactionable: claims, electricity, stocks and shares and securities) and
\nincludes live-stock all materials, commodities and articles (including
\nthose to be used in the construction, fitting out. improvement or repair of
\nimmovable property or used in the fitting out improvement or repair of
\nmovable property) and all growing crops, grass or things attached to of
\nmovable property) and all growing are agreed to be severed before sale or
\nunder the contract of sale”\n<\/p>\n
18. Inasmuch as all the aforesaid definitions of the expression “goods” say
\nthat it includes all kinds of movable property, it becomes necessary to
\nnotice the meaning of the expression “movable property” Inasmuch as the
\nSales Tax enactments do not define the said expression; we have to adopt
\nthe definition in the respective State’ General Clauses Act. But these
\ndefinitions in the General clauses Act too are not very helpful All that
\nthey say is that movable property means property of every kind except
\nimmovable property. The counsel have accordingly brought to our notice the
\nseveral meanings: or property and movable property in various legal
\ndictionaries.\n<\/p>\n
19. In Black’s Lave Dictionary (6th Edition, 1990), the; expression
\n“property” has been given the following meanings :’<\/p>\n
“Property  That which  peculiar or proper to any person; that which belongs
\nexclusively to one. In the strict legal sense.: .an aggregate of  lights
\nwhich are guaranteed and protected by the government. Fulton Light, Heat &
\npower co. v. state, 65 Misc. Rep. :263,121N.Y.S. 536 The term is said to
\nextend to every species of  valuable right and interest. More specifically,
\nownership; the unrestricted and exclusive right to a thing; the right to
\ndispose of a thing in every legal way, to possess it, to use it, and to
\nexclude every one else from interfering with it. That dominion or
\nindefinite right of use or disposition which one may lawfully exercise over
\nparticular things or subjects. The exclusive right of possessing, enjoying,
\nand disposing of a thing. The highest right of man can have to anything;
\nbeing used to refer to that right which one has to lands or tenements,
\ngoods or chattels, which no way depends on another man’s courtesy.\n<\/p>\n
The word is also commonly used to denote everything which is the subject of
\nownership, corporeal or incorporeal, tangible or intangible, visible or
\ninvisible real or personal everything that has an exchangeable value or
\nwhich goes to  make up wealth or estate. It extends to every species of
\nvaluable right  and interest and includes real and personal property,
\neasements, franchises. and incorporeal  here ditaments , and includes every
\ninvasion of one’s property rights by actionable wrong. Labberton  v.
\nGeneral cas . co. of America, 53 wash. 2d 180 332 p.2d. 250 252, 254
\nproperty embraces everything which is or may be the subject of ownership,
\nwhether a legal ownership, or whether beneficial, or a private ownership.
\nDavis v. Davis. Tax civ. App. 495 s.w.2d 607. 611. Term includes not only
\nownership and possession but also the right of use and enjoyment of lawful
\npurposes. Hoffmann v. Kinealy, Mo,389s. w. 2d 745, 75 property, within
\nconstitutional protection, denotes group of rights inhering in citizen’s
\nrelation to physical thing, as right to possess, use and dispose of it.
\nCereghino v. State by and Through state Highway Commission, 230 Or., 439
\n370 p.2d 694.697. goodwill is property, Howell v. Bowden, Tex civ App., 368
\nS,W. 2d 842,848; an is an insurance policy and rights incident thereto,
\nincluding a right  to the proceeds, Harris v. Harris, 83 N.M 443,493 The
\nDictionary further says “property is either  real or immovable; or personal
\nor movable”. It then proceeds: to give the meaning of the expression
\n“absolute property”, “common property” “intangible property”, movable
\nproperty”, “personal property” “private property” arid “public property”
\namong others. The above definition shows the wide; meaning. attached to the
\nexpression. It is said to extend to every species of valuable right and
\ninterest. It denotes every thing which is the subject of ownership,
\ncorporeal or incorporeal tangible or intangible, visible or invisible, real
\nor personal it includes “everything that has an extendable value”. It
\nextends to every species of valuable right and interest.\n<\/p>\n
To the same effect is the definition in the dictionary of commercial Law by
\nA.H. Hudson (published by Butterworths; 1983). It reads<\/p>\n
”Property. In commercial law this may carry its ordinary meaning of the
\nsubject matter of ownership, e.g. in bankruptcy referring to the property
\nof the debtor divisible amongst creditors. But elsewhere as in sale of
\ngoods it may be used as a synonym for ownership and lesser rights in,
\ngoods. The Sale of Goods  Act, 1979 s.2 (1) makes transfer of property
\ncentral to sale. Section 61(1) provides that ‘property’ means the general
\nproperty in goods, and not merely a special property; ‘General Property’ is
\ntantamount to ownership bailees who have possession and not ownership and
\nothers with limited interests are said to have a ‘special property’ as
\ntheir interest,”\n<\/p>\n
20. Jowitt’s Dictionary of English Law (Sweet & Maxwell Limited, 1977)
\nVolume-I also sets out the meaning of the expression “property” as well as
\nthe meaning of the expression: “general property” and “special property” We
\nmay set them out<\/p>\n
“property (Norm. Fr. Proprete ; Lat, proprietas: proprius, one’s own), the
\nhighest right a man can have to anything, being that right which one has to
\nlands or tenements, goods or chattels which does not depend on another’s
\ncourtesy.\n<\/p>\n
In its largest sense property signifies; things and right considered as
\nhaving a money Value, especially with reference to transfer or succession,
\nand to their capacity of being. injured Property includes not  only
\nownership estates and interest in corporeal things, but also rights such as
\ntrade marks, copyrights, patents, and rights in personam  capable of
\ntransfer or transmission such as debts.\n<\/p>\n
Property is of two kinds, real property (q.v.) and personal<\/p>\n
Property in reality is acquired by entry; conveyance, or devise; and in
\npersonality, by many ways, but most usually by gift, bequest, or sale.
\nUnder the Law of Property Act, 1925, S. 205, “property” includes any thing
\nin action and any interest in real or personal property. There must be a
\ndefinite interest; a mere expectancy as distinguished from a conditional
\ninterest is not a subject of property.\n<\/p>\n
‘Property’ also signifies a beneficial right in or to a thing. Sometimes
\nthe term is used as equivalent to ownership; as where we speak of the right
\nof property as opposed to the right of possession (q.v.), or where we speak
\nof the property in the goods of a deceased person being vested in his
\nexecutor The terms was chiefly used in this sense with reference to
\nchattels (Finch, Law<\/p>\n
Property in this sense is divided into general and special or qualified,<\/p>\n
General property is that which every absolute owner has (Co. Litt 145b.),
\nSe OWNERSHIP<\/p>\n
Special property has two meanings. First, it may mean that the subject-
\nmatter is incapable of being in the absolute ownership of any person, Thus
\na man may have a property is deer in a park, hares or rabbits in a warren,
\nfish in a pond, etc.; but it is only a special or qualified property, for
\nif at any time they regain their natural liberty his property instantly
\nceases, unless they have animus revertndi (2 Bl. Comm 391). See ANIMALS
\nFERAE NATURAE.”\n<\/p>\n
This definition also shows that  the expression signifies “things and
\nrights considered as having a money value”, Even incorporeal rights like
\ntrade marks copyright ,patents and rights in personam capable of transfer
\nor transmission . such as debts, are also included in its ambit. The
\nmeaning<\/p>\n
given to “general property” and “special property” are self-explanatory and
\nneed no emphasis at out hands. it is worth recalling that movable property
\nmeans “property of every description except immovable property  the
\ndefinition in all the General Clauses Acts.\n<\/p>\n
21.The above material uniformly emphasises the expansive manner in which
\nthe expression property” is understood. Learned counsel for the
\npetitioners brought to our, notice the meanings of the term property” set
\nout in Chapter-13, “The Law of Property”, in Salmond’s Jorisprudence (12th
\nEdition, 1966) In this chapter, several meanings attributed to “property”
\nare discussed in extenso ; to all of which it may not be necessary to
\nrefer, Suffice to say that property is defined to include material things
\nand immaterial things (jura in re propria) and leases; servitudes and
\nsecurities etc ( jura in -re aliena). The material things are said to
\ncomprise land and chattels while immaterial things include patents,
\ncopyrights and trade marks, which along with leases, servitudes and
\nsecurities are described as incorporeal property The expression “movable
\nproperty” is stated to include (Page 421) corporeal as well as incorporeal
\nproperty, Debts, contracts and other chose-in-action are said to be
\nchattels, no less than furniture or stock-in-trade, Similarly, patents,
\ncopyrights and other rights in rem which are not rights over Iand are also
\nincluded within the meaning of movable property; We are unable to see
\nanything in the said Chapter-13, Which militates against the meanings
\nascribed to the said expression in the judicial dictionaries referred have
\nabove., Indeed, they are Consistent With each other.\n<\/p>\n
22; Learned counsel-for the petitioners have brought to our notice the
\nseveral meanings of the expression “licence” in various law dictionaries.
\nBut, as those very dictionaries make it clear the expression has several
\nmeanings.- and one has to choose the appropriate one depending upon the
\ncontext. We do not think it necessary to refer to the material cited by the
\nlearned counsel for the reason that the character, nature and content of
\nthe licences in question should be ascertained with reference to the law
\ngoverning them and not with reference to the general meaning of the
\nexpression “licence”, We have already referred to the provisions of the
\n“Export and Import Policy” governing these licences, We may now refer to a
\nfew more paragraphs from the “Import ;and Export Policy 1990-93, relevant
\nto the R.E.P. Licences\/Exim Scrips.\n<\/p>\n
23. Para 184(1), which deals; with ^Extent of Import Replenishment” says’
\n“the extent of replenishment permissible against export products (other
\nthan Gem and Jewellery) enumerated in Column 2 of Appendix 17 Part I of
\nthis book shall be that set out in Column 3”\n<\/p>\n
Para 185(1), Which deals with “Items permissible for Import, says, “REP
\nLicences -issued against export of products listed in Column 2 of Appendix
\n17 Part I and against para 184(4) of this book, will be Valid for import of
\nthose relevant items of raw material components, consumables  and packing
\nMaterials, as are listed in Appendiees 3 and 5 Part-A and related to the
\nproduct exported.”\n<\/p>\n
Para 192 deals with “Flexibility in the utilisation of REP Licence. It says
\nthat the said licences are also valid for import of any other items of raw
\nmaterials, components, tools, consumables and packing materials listed in
\nAppendiees 3 and 5 Part A’ besides some other goods.\n<\/p>\n
Para 199 deals with “transferability of REP licences” It reads;\n<\/p>\n
“199(1). the REP licence will be issued in the name of the registered
\nexporter only and will not be subject to “Actual User Conditions.” “A
\nlicence holder may transfer the licence to another person. The licence
\nholder or such transferee may import the goods permitted there in.\n<\/p>\n
(2) The transfer of a REP licence will not require  any endorsement or
\npermission from the licensing authority, i.e., it will be governed by the
\nordinary law. Accordingly, clearance of the; goods covered by a REP licence
\nissued under this policy will be allowed by the Customs authorities on
\nproduction by the transferee of only the document of transfer of the
\nlicence concerned in his name. When-ever a REP licence is transferred the
\ntransferor should give a formal letter to the transferee, giving full
\nparticulars regarding number, date and address of the transferee, and
\ncomplete description of the items of import for which the licence is
\ntransferred”As mentioned here in before, the relevant feature of Exim Scrip
\nare identical.\n<\/p>\n
24. The Above provisions do establish that R.E P. licences have their own
\nvalue. They are bought and sold as such. The original licence or the
\npurchaser is not bound to import the goods permissible thereunder. He can
\nsimply sell it to another and that another to yet another person. In other
\nwords, these licences\/’Exim Scrips have an inherent value of their own and
\nare traded as such. They are treated and dealt with in the commercial world
\nas merchandise, as goods. A REP Licence\/Exim Scrip is neither a chose-in-
\naction nor an actionable -claim. It is also not in the nature of a title
\ndeed. It has a value of its own. It is by itself a property – and it is for
\nthis reason that it is freely bought and sold in the market For all
\npurposes and 8 intents, it is goods. Unrelated to the goods which can be
\nimported on its basis’ it commands a value and is traded as such. this is
\nbecause, it enables its holder to import goods which he cannot do
\notherwise. (With effect from March l, 1992, of course, the very policy and
\nsystem under Which these licences\/scrips were being issued, has been
\ndiscontinued.)<\/p>\n
25 Since Karnataka and Madras High Courts have placed strong reliance upon
\nthe decision of this Court in Anraj, it Would be appropriate to refer to
\nthe relevant facts and the ratio of the said decision The question in that
\ncase was whether lottery tickets ate “goods” within the meaning of and as
\ndefined in the Tamil Nadu general Sales Tax Act and Bengal Finance (Sales
\nTax) Act, 1941. The contention of the State was that they were goods and,
\ntherefore, attract the sales tax on their sale. According to assessees, the
\nlottery tickets were in the nature of actionable claims but not goods. They
\nquestioned the legislative competence of the State Legislatures to levy
\nsales tax on their sale. They contended that the expression “sale of goods”
\nhas to be construed in the sense in which it is used in the Sale of Goods
\nAct, as has been held by this Court in Gannon Dunkerley. They submitted
\nthat the definition of “goods” in Sale of Goods Act excludes from<\/p>\n
its purview actionable claims and that the essence of the lottery being
\nmerely a chance for a prize for a price, it does not constitute goods but a
\nmere actionable claim. It was argued that the lottery ticket is a mere slip
\nof paper or a memorandum evidencing the right of the holder thereof to
\nclaim or receive a prize if successful in the draw.\n<\/p>\n
25-A. The arguments of the assessees were rejected by this Court. The Court
\nreferred to the definition of “goods” and “sale” in both the aforesaid
\nenactments, the definition of “goods” in Article 366(12) and the definition
\nof “tax on the sale or purchase of goods” in Article 366(29A). It referred
\nto the meaning of the expression “lottery ticket in law dictionaries and
\ndecided cases ;it referred to the definition of ”movable property” in the
\nGeneral Clauses Act, .1897 and the definition of the expression ‘actionable
\nclaims” in Section 3 of the Transfer of Property Act and observed
\n(Tulzapurkar , J., speaking for the Bench comprising himself and Sabyasachi
\nMukherji, J.).\n<\/p>\n
“If incorporeal right like copyright or an intangible  thing like electric
\nenergy can be regarded as goods eligible to sales tax there is no reason
\nwhy the entitlement to  right to a participate in a draw which is
\nbeneficial interest in movable property of incorporeal or intangible
\ncharacter should not be regarded as goods for the purpose ;of levying-sales
\ntax. As stated above lottery tickets which comprise such entitlement do
\nconstitute a stock-in-trade of every dealer and therefore is merchandise
\nwhich can be bought and sold ‘in the market Lottery tickets comprising such
\nentitlement, therefore, would fall within the definition. of goods given in
\nthe Tamil Nadu Act and the Bengal Act.\n<\/p>\n
In the light of the aforesaid discussion my conclusions .are that lottery
\ntickets to the extent that they comprise the entitlement to participate in
\nthe draw are goods properly so-called, squarely falling within the
\ndefinition of that expression as given in the Tamil Nadu Act, 1959 and the
\nBengal Act, 1941, that to that extent they are not actionable claims and
\nthat in every sale there of a transfer of property in the goods is
\ninvolved”‘<\/p>\n
With respect to the nature and content of the lottery: ticket, the learned
\nJudge observed that it confers upon the holder thereof “the right to
\nparticipate (in the draw) and: the right to claim a prize if
\nsuccessful…..In other words lottery tickets not as physical articles but
\nas slips of paper or memoranda evidencing the right to participate in the
\ndraw must in a sense be regarded as the dealer’s merchandise and, there
\nfore goods capable of being bought or sold in the market. They: can also
\nchange from hand to hand as goods.”<\/p>\n
We are of the opinion that .the ratio of the said decision fully supports
\nthe contention of the States here in As rightly pointed out by the
\nKarnataka. High Court the content of R.E.P. Licence\/Exim Scrip is far more
\nsubstantial and real than that of a lottery ticket, If lottery tickets are
\ngoods there is no reason why these licences\/scrips are not goods, We see no
\nsubstance in the argument based upon the decision in Gannon Dunkerley. On
\nthe basis of this decision, it is contended that the expression “goods” and
\n“sale of food” must be Under stood in the sense they are used in the Sale
\nof Goods Act. We need not quarrel with this proposition. We have not only
\nreferred herein before the definition of “goods” and “property” in the Sale
\nof Goods Act but have also pointed out that in material particulars it is
\nsimilar to the definition of “goods” in Tamil Nadu, Karnataka and Kerala
\nSales Tax Acts, All of them uniformly say “goods” mean “every kind of
\nmovable property” (Sale of Goods Act) and “all kinds of movable property”
\n(Tamil Nadu, Karnataka and Kerala Acts). As a matter of fact, this
\nsubmission was made but not pursued by any of the counsel for the
\npetitioners.\n<\/p>\n
26. We are also of the opinion that these licences\/scrips cannot be
\ntreated as actionable claims. “Actionable claims” is defined in Section: 3
\nof the Transfer of Property Act in the following Words<\/p>\n
‘”Actionable claim means a claim to any debt; other than a debt secured by
\nmortgage of immovable property or by hypothecation or pledge of movable
\nproperty, or to any beneficial interest in movable property not in the
\npossession, either actual or construc-tive of the claimant, which the Civil
\nCourts recognise as affording grounds for relief, whether such debt or
\nbeneficial interest be existent accruing, conditional or contingent”\n<\/p>\n
When these licences\/scrips are being bought and sold freely in the market
\nas goods and when then have a value of their, own unrelated to the goods
\nwhich can .be imported thereunder, it is idle to contend that they are in
\nthe nature of actionable claims. Indeed, in Anraj, the main contention of
\nthe petitioners was that a lottery ticket was in the nature of an
\nactionable claim. The said argument was rejected after an elaborate
\ndiscussion of law on the subject, We agree with the said decision and on
\nthat basis hold that the R.E.P. Licences\/Exim Scrips are not in the nature
\nof actionable claims.\n<\/p>\n
Learned counsel for the petitioners submitted that the licence is something
\nless than property, because the licencing authority can always cancel .it,
\nin which event, it becomes a mere scrap of paper. That feature, in our
\nopinion, has no relevance on the question at issue ,Cancellation can be
\neffected by the appropriate authority in accordance with the :procedure
\nprescribed by law and on proof of permissible grounds. We are unable to see
\nhow the said factor detracts from the inherent value of these licences. Far
\nthat matter, many a grant is subject to such a condition That circumstance
\nis in no way affects the content of the grant. The further contention that
\nthe licence\/Scrip merely gives of right to import certain goods, that in
\nCase; the licence is lost, one can always obtain a copy from the authority
\nand, there fore, the licence has-no value of its own is .equally
\nunacceptable We have already pointed out how the commercial world treats
\nthese licences and trades in them. They represent merchandise for all
\npractical purposes.\n<\/p>\n
27. Learned counsel for petitioners have brought to our notice certain
\ndecisions, to which a reference would be in order :\n<\/p>\n
The decision on which strong reliance is placed. by Sri. K.K. Venugopal is
\nIn State of Orissa & ors v. Titaglmr Paper Mills company Limited & anr
\n,[1985] suoppl.S.C.C.280 It was a case  a rising under the orissa Sales Tax
\nAct. under Section, 3-B of the orissa Act, the. State Government was
\nempowered to declare from time to time by notification any goods or class
\nof  goods to be liable to tax on turn-over of purchases Notification were
\nissued under this provision from time to time declaring: that standing
\ntrees and bamboos agreed to be severed shall be liable to tax on turn-over
\nof purchases at the rate prescribed. The contention of the  assessee was
\nthat the said levy was not a tax on sale or purchase of goods within the
\nmeaning of Entry 54 in List-II and therefore, beyond the legislative
\ncompetence of the State Legislature construing the relevant notifications
\nand contracts, (called Bamboo contracts and Timber con-tracts) this court
\nheld that the Bamboo contracts were in the nature of a grant of interest in
\nimmovable property .and, then fore, beyond the purview of the Act. so far
\nas Timber contracts are concerned; the Court held that inasmuch as .the
\nproperty in the. trees, which were the subject-matter of the contracts
\npassed to. the forest contractor only in the felled trees, i. c. in timber
\nafter all-the condition of the contract has been complied with and after
\nsuch timber- was examined and checked and removed from contract area, they
\ntoo were not governed by the Notifications concerned there in On the basis:
\nof this decision it was contended by Sri Venugopal that taxable. event. if
\nat all, will arise-Only at. the time of transfer of the actual goods
\nimported under and by virtue of the said licence\/scrips but not at the time
\nof transfer of documents. we .are unable. to agree we are unable to see how
\nthe above holding helps the petitioners herein, more particular-ly, in view
\nof our finding that these licences\/scrips have value of their own, are
\nfreely transferable and are openly treated in the market and on stock
\nexchanges.\n<\/p>\n
28. Sri Vaidyananthan relied upon a decision of the Patna High Court in
\nState of Bihar v. Rameshwar Jute Mills, AIR<\/a> (1953) Patna 236 where the sale
\nof loom hours was held not to be a sale of goods, It was held by the Court
\nthat the expression “goods” in Section 2(d) of the Bihar Sales Tax Act
\ncannot be given a wider connotation which is given to that term in the Sale
\nof Goods Act or for that matter the wider connotation given to “movable
\nproperty” in the General clauses Act. It was held that having regard to the
\ndefinition in that Act, the expression “goods” refers only to tangible
\ngoods or tangible movable property and not to any kind of intangible right
\nlike loom hours, actionable claims, stocks, shares or securities. We are
\nafraid, we cannot agree with the said reasoning which appears to be
\ncontrary to the one affirmed by this Court in Anraj.\n<\/p>\n
29. Reliance was then placed upon the dissenting opinion of: Mud-holker, J.
\nin Joint Chief Controller of Imports and Exports v. Aminchand Mutha,<\/a> (1966)
\nl S.C. 262 to contend that transfer of a right to quota is not sale of
\ngoods. The observations relied upon are to the effect that the Import
\nExport policy issued by the Government  of India “would not confer a legal
\nright upon an exporter for the division of the quota rights of a dissolved
\nfirm;” firstly, the majority opinion (Gajendragadkar, CJ, Wanchoo, Shah and
\nSikri, JJ.) is to the contrary. Secondly, quota rights considered therein
\nwere not freely transferable like the licences\/scrips concerned herein. The
\nlast mentioned comment holds good for the other decision relied upon 5.
\nChandra Sekharan & 0m v. Government of Tamil Nadu : & Ors., [1974] 3 S.C.C.\n<\/p>\n
196. This decision deals with the transferability of a
\nLicence\/authorisation in respect of a ration, shop.\n<\/p>\n
30, Sri K.K.Venogopal placed strong reliance upon the decision of the Court
\nof Appeal in Frank Warr & Co. v. London County Council,(1904) 1 K.B. 713.
\nIn particular, the Learned counsel relied upon the observations of Romer
\nLJ. at Pages 720 to 722, It was a case: there a contract was entered into
\nbetween lessees of a theatre and the plaintiffs; Under this contract, the
\nplaintiffs were given the exclusive right for a particular period to supply
\nrefreshments in the theatre. For that purpose, the plaintiffs were<\/p>\n
entitled to use the refreshment rooms, bars and wine cellars in the theatre
\nand were also given the exclusive right to advertise and to let spaces f of
\nAdvertisement ia certain parts of the theatre, It was held by the Court of
\nAppeal that the said contract did not convey to the plaintiffs: an interest
\nin the land which could form the subject- matter of compensation under the
\nLand. .Clauses Consolidation Act, 1845.in that connection, Romer L.J. held.
\nthat the contract created only a licence in favour of the plaintiffs, but
\ndid not create any estate: Of interest in land in their favour. It was also
\nheld. that the right given to the plaintiffs to use refreshment: rooms and
\nbars etc. Was to enable the plaintiffs to supply refreshments at
\nappropriate times and did not involve absolute parting: of possession of
\nthose parts of the theatre by the  lessees to the plaintiffs. Referring to
\nthe earlier decision in Thomas v. Sorrell [1674) Vaugh. 351), the learned
\nJudge held, “a dispensation or licence property passed no interest, nor
\nalters or transfers property in anything, but only makes an action lawful
\nwhich without it had been unlawful,” It is evident, the decision dealt with
\nthe question whether the: interest created in the plaintiffs under the
\naforesaid contract was a lease or a licence. In was held that it was only
\nthe latter. With respect, we are unable to see how tie said observations
\nare of any assistance to the appellants\/petitioners herein.\n<\/p>\n
31. Sri Ganguly, learned counsel for the State of Tamil Nadu relied upon
\nthe dissenting opinion of S.R. Das. J. in Chiranjitlal Chowdhary v. Union
\nof India, [1950] S.C.R. 869) at pages 920 to 922) where the learned Judge
\ndealt with the meaning Of the expression “property” in Article 19(l)(f) and
\nArticle 31 of the Constitution. Haying regard to the context in which the
\nsaid question; had arisen, we do not think it necessary to refer to the
\nobservation relied upon since: the material referred to by us on the
\nmeaning of the expression ”movable property” .and the decision in Anraj.
\nis more to the point;\n<\/p>\n
32.  In the written submissions filed by Sri K.V. Mohan, a new contention,
\nnot urged at the bar, is raised, viz., that R.E.P licences\/’Exim Scrips are
\nincentives granted by the Union of India as concessions from customs duty
\nand that this a matter which comes within the exclusive competence of the
\nUnion Legislature under Entry 41 in List- 1 of Seventh Schedule to the
\nConstitution of India and that, therefore, the State Legislature. has no
\npower to levy sales tax: upon their sale\/purchase, We are Unable to see any
\n:substance in this submission either. Applying the rule of pith and
\nsubstance, it must be held that the enactments in question are referable to
\nEntry 54 in List-II and :not to Entry 41 in List-L By no stretch of
\nimagination can they be related to entry 41 in List-I. The State
\nLegislatures are not seeking to: make a law with respect to customs duties.
\nThey are seeking only to levy tax upon. the sale of goods. The test to be.
\napplied in this behalf has been authoritatively stated by the Constitution
\nBench of this Court in A.S. Krishnan v. State of Madras,<\/a> [1957] S.C.R. 399.\n<\/p>\n
33. Another contention raised in the Written submissions of Sri K.V. Mohan
\nis that even if the said licences\/scrips are treated as goods, the tax must
\nbe levied at the first point of sale, viz ,, upon the authority issuing the
\nlicence. We cannot agree. The grant of licence by the licencing authority
\nto the registered exporter is not a sale. The sale is when the registered
\nexporter or the purchaser Sells it to another person for consideration.\n<\/p>\n
34.  The last submission urged by Sri Vaidyanathan is that these
\nlicenees\/scrips constitute: securities within the meaning of Clause (h) of
\nSection 2 of the Securities Contracts (Regulation) Act, 1956, and
\ntherefore,stand excluded from the definition of “goods” contained in Tamil
\nNadu, Kerala and Karnataka Sales Tax Acts as well as central Sales Tax Act.
\nThe contention is misconcived.lt is true that the definition of “goods” in
\nthe said Sales tax enactments does exclude securities, but the question is
\nwhether these licences\/scrips are securities. They are not. Before the
\ndefinition of the expression “securities” in Clause (h) of Section 2 of the
\nSecurities contracts (Regulation) Act was amended by Act 15 of 1992,the
\ndefinition reads thus :\n<\/p>\n
“(h) ‘securities’ include –\n<\/p>\n
(i) shares, scrip’s , stocks, bonds, debentures, debenture stock or other
\nmarketable securities of a like nature in or :of any incorporated company
\nor other body corporate;\n<\/p>\n
(ii) Government securities;\n<\/p>\n
(iii) rights or interests in securities”\n<\/p>\n
By the said amendment Act sub- clause (iia) was added in the said
\ndefinition, which reads :\n<\/p>\n
“(iia) ;such other instruments as may be declared by the Central<\/p>\n
Government to be securities;”\n<\/p>\n
Firstly, it is not brought to our notice that any declaration has been made
\nby the Central Government to the effect that these licence\/scrips are
\nsecurities. Secondly, any such declaration can only be for the period
\nsubsequent to the coming into force of the said Amendment Act. i.e.,
\nsubsequent to January 30, 1992. All the cases before us pertain to the
\nperiod earlier to the Said date. In this view of the matter, it is not
\nnecessary to pursue this argument further.\n<\/p>\n
For the above reasons, all the appeals and writ petitions fail and are
\ndismissed herewith. No costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Vikas Sales Corporation And Anr. … vs Commissioner Of Commercial Taxes … on 1 May, 1996 Bench: A.M. Ahmadi C.J, B.P. Jeevan Reddy, Suhas C. Sen CASE NO.: Appeal (civil) 7771-75 of 1996 PETITIONER: VIKAS SALES CORPORATION AND ANR. ETC. ETC. RESPONDENT: COMMISSIONER OF COMMERCIAL TAXES AND ANR. ETC. ETC. DATE […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-11568","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nVikas Sales Corporation And Anr. ... vs Commissioner Of Commercial Taxes ... on 1 May, 1996 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/vikas-sales-corporation-and-anr-vs-commissioner-of-commercial-taxes-on-1-may-1996\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vikas Sales Corporation And Anr. ... vs Commissioner Of Commercial Taxes ... on 1 May, 1996 - 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