Sales of Cood AcL 1930

repared by
Apurva Agarwal 30
Sales of Cood AcL 1930
$,0 : Section 4 of the Sale of Goods Act defines "sale
as : A contract of sale of goods is a contract whereby the
seller transfers or agrees to transfer the property in
goods to the buyer for a price.
7002039 94 $,0 : Transfer of property in the goods is
to take place at a future date or after fulfillment of certain
condition.
ire Purchase Agreement is a kind of a bailment where the
owner of the goods lets them on hire to another person
called hirer on payment of certain stipulated periodical
payments as hire charges or rent.
irer makes payment regularly
Option to purchase the good on making a full payment
No compulsion to purchase the good at the end of the
period
Sale vs Contract for work and materials : Sale of good act
applies to contract of sale and not to work contract involving
the exercise of skill or labor of some material
State Of Rajasthan vs Man ndustrial Corporation Ltd on 4
February, 1969
PETTONER: STATE OF RAJASTAN Vs. RESPONDENT:
MAN NDUSTRAL CORPORATON LTD.
ACT: Sales Tax-Contract for providing and fixing goods in
building-Whether sale of goods or for rendering service.
@e respondenL a fabrlcaLor of sLeel wlndows submlLLed a Lender
for rovldlng and flxlng wlndow leaves ln a bulldlng
@e Sales @ax Cfflcer levled sales Lax on Le amounL recelved
oldlng LaL Le conLracL was for sale of goods and Lo promoLe lLs
sale Le respondenL underLook Lo flx Le wlndows wlLouL
demandlng any carge for LaL servlce
Deputy Commissioner Exercise & Taxation held that two
contracts resulted : one for Providing windows , other for fixing
them in the building, and that the price of goods supplied, but
not the charge for service was taxable
The Board of Revenue confirmed that the contract was not a
contract of service
ELD : t was a contract for rendering service and the amount
received by the respondent was not taxable. Whether a
particular contract is for sale of goods or is a contract for
service depends upon the main object of the parties gathered
from the. terms of the contract, the circumstances of the
transaction, and the custom, of the trade, and no universal rule
applicable to all transactions can be evolved
. L. Johar And Company vs Deputy Commercial Tax Officer on
10 November, 1964
PETTONER: . L. JOAR AND COMPANY Vs.
RESPONDENT: DEPUTY COMMERCAL TAX OFFCER
ACT:
ire-purchase transactions included in term 'sale'- Validity of
Explanation-Price of vehicles for purposes of tax how to be
fixed-Sale when completed.
The appellant carried on hire-purchase business in Motor
vehicles. The course of business was that the price of the
vehicle would be paid by the appellant to the motor dealer and
the vehicle would be hired out to the intending purchaser.
@e lrepurcase LransacLlons were LreaLed as sale LransacLlons
under LxplanaLlon 1 Lo S 2(% of Le Madras Ceneral Sales @ax AcL
1939
@e appellanLs wrlL peLlLlon before Le Madras Plg CourL
callenglng Le sald assessmenL falled buL a cerLlflcaLe of flLness Lo
appeal Lo Le Supreme CourL was granLed
@e maln conLenLlons of Le appellanL were (l% Lere was really one
sale ln Le presenL case by Le moLor dealer Lo Le lnLendlng
purcaser of Le velcle Le appellanL belng a mere flnanclng agenL
(ll% LxplanaLlon 1 Lo s 2(% of Le AcL wlc lncluded lre purcase
agreemenL wlLln Le Lerm sale was ulLra vlres and (lll% ln any case
sale Look place only wen Le opLlon Lo purcase was exerclsed by
Le lrer by Le paymenL of 8e 1/ wlc sould Lerefore be Laken
as Le sale prlce
ELD :
The various terms of the hire purchase agreement showed
that the appellant remained the owner of the vehicle for the
duration of the agreement.
The State Legislature when it proceeds to legislate can only
tax a 'sale' within the meaning of that word defined in the
Sale of Goods Act.