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REPORTABLE    IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO(S).10680-10683 OF 2011

M/S HIGH RANGE COFFEE CURING PVT.LTD.    APPELLANT(S)

                               VERSUS

THE STATE OF KARNATAKA & ORS.ETC.       RESPONDENT(S)   

WITH

CIVIL APPEAL NO.10684 OF 2011

O R D E R

1. Heard counsel for the parties.

2. The  opening  ground  urged  by  the

appellant is that the High Court ought not to

have entertained the appeals on merits without

condoning the delay in filing of appeals. This

argument though attractive at the first blush,

does not take the matter any further as we find

the  delay  was  only  of  71  and  283  days

respectively and sufficient explanation has been

offered  by  the  respondent(s)  which  could  be

condoned in the interest of justice and we order

accordingly.

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3. The core issue raised in these appeals,

in our opinion, is no more  res integra.  It has

been answered in the decision of this Court in

“Malnad Areca Processing and Marketing Limited

vs.  Deputy  Commissioner  of  Commercial  Taxes

(Assessment) and Others”, reported in (2008) 11

SCC 536.

4. This  very  Industrial  Policy,  1996  was

considered by the Court. The Court opined that

the same provides for exemption only in respect

of sales tax and not for purchase tax as such.

The relevant discussion in this behalf can be

discerned  from  paragraph  Nos.15  to  19  of  the

said decision, which read thus:

“15. In the government order what is

provided to new industrial units is

the sales tax exemption or deferral

of sales tax under the Act and the

Central Sales Tax Act, 1956 (in short

“the CST Act”).

16. Clause  5  of  the  Government

Order  dated  15-3-1996  of  the

Industrial Policy, 1996-2001 provides

for  sales  tax  concession  and

incentives. The said clause provides

for  an  option  to  industrial

investments  in  the  tiny/SSI/medium

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and  large-scale  sectors  to  claim

either sales tax exemption or sales

tax deferral.

17. A sale and a purchase are two

different  aspects  of  the  same

transaction.  Whether  sale  or

purchase,  it  will  have  same

ingredients, both in common law and

also under the Sale of Goods Act. As

stated by this Curt in Devi Das Gopal

Krishnan  v.  State  of  Punjab1,  the

transaction, which the sales tax laws

are concerned with, is a transfer of

property  in  goods  for  price,  inter

vivos, both in the case of sale as

well as purchase.

18. In the government order, what

is  provided  to  the  new  industrial

units,  is  an  option  to  claim  sales

tax exemption or deferment of sales

tax both under the Act and the CST

Act. In the field of taxation, it is

recognized that the power to classify

the objects or persons to be taxed or

exempted  from  levy  is  with  the

legislature. It also enjoys the power

to select persons or transactions. A

law  of  the  State,  could  therefore,

levy tax both at the sale point and

at the purchase point.

1 AIR 1967 SC 1895 = (1967) 3 SCR 557

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19. Under the government order, the

policy of the Government as spelt out

is,  that  tiny  and  small-scale

industries and medium-and large-scale

industries may exercise their option

either  for  sales  tax  exemption  or

sales  tax  deferment  for  number  of

years  prescribed  in  the  government

order itself. In the context in which

these expressions are used, they only

mean “sales tax holiday” or exemption

from payment of sales tax for number

of  years  specified,  depending  on

where  the  tiny  or  small-scale

industry  is  located.  “Sales  tax”

refers  to  any  tax  which  includes

within  its  scope  all  “business  of

sale  of  goods”  specified  in  the

Schedule.  Similarly,  “sales  tax

deferral”  only  means  the  aforesaid

industries  are  entitled  to  collect

tax but they need not pay sales tax

collected  immediately  to  the  State.

If  understood  in  this  manner  and

thereafter the New Industrial Policy

of the State Government for the years

1993-1998  and  the  exemption

notification is looked into, the only

conclusion that can be drawn is, what

is  exempted  under  the  notification

issued by the State Government is tax

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leviable under Section 5 of the Act

on the goods manufactured and sold by

an  industrial  unit.  Therefore,  the

notification is in no way in variance

or contrary to the industrial policy

for  the  years  1993-1998.  the  above

position has been rightly highlighted

by the High Court.”

5. We are in agreement with the opinion as

recorded  in  the  aforesaid  decision,  that  the

Government  Order  No.CI  30  SPC  96  dated  15th

March,  1996,  namely,  the  Industrial  Policy

merely  provides  for  sales  tax  concession  and

incentives and nothing more.

6. Counsel for the appellant was at pains

to distinguish the judgment on the argument that

it  has  only  considered  the  situation  covered

under Section 6 of the Karnataka Sales Tax Act,

1957, whereas Section 5 of the Act deals with

both  sale  as  well  as  purchase,  and  purchase

being the part of the same sale, the benefit

under the policy concerned must be extended also

for  purchase,  especially,  because  of  the

amendment  to  the  policy  by  inserting  the

industry of the appellant in Appendix-IV. We are

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not impressed by this submission.  

7. The fact that the appellant/assessee’s

industry has been included or added in Appendix-

IV  does  not  mean  that  the  substance  of  the

policy has undergone any change. The purport of

amendment  is  only  to  include  more  industries

which were left out in the first notification of

15th March, 1996.

8. Counsel  for  the  appellant  had  also

placed  reliance  on  the  Constitution  Bench

decision  of  this  Court  in  Devi  Das  Gopal

Krishnan (supra), in particular, paragraph 24,

which reads as under:

"Bearing that in mind let us look at

clause  (ff)  in  Section  2  of  the

Principal  Act  in  which  the  said

clause was inserted. The ingredients

of the definition of "purchase" are

as  follows  :  (i)  there  shall  be

acquisition  of  goods;  (ii)  the

acquisition  shall  be  for  cash  or

deferred  payment  or  other  valuable

consideration; (ii) the said valuable

consideration shall not be other than

under  a  mortgage,  hypothecation,

charge  or  pledge.  Clause  (h)  of

Section 2 defines thus :

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"sale"  means  any  transfer  of

property  in  goods  other  than

goods  specified  in  Schedule  C

for cash or deferred payment or

other  valuable  consideration

but  does  not  include  a

mortgage, hypothecation, charge

or pledge.”

If we turn to the Sale of Goods Act,

Section 4 thereof define contract of

sale of goods. It reads :  

"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...“

The essential requisite of sale are

(i)  there  shall  be  a  transfer  of

property  or  agreement  to  transfer

property by one party to another; and

(ii) it shall be for consideration of

money payment or promise thereof by

the buyer. A sale and a purchase are

different  aspects  of  the  same

transaction. If we look at it from

the standpoint of a purchaser it is

purchase and if we look at it from

the standpoint of the seller it is a

sale.  Whether  purchase  or  sale  it

shall have the said ingredients both

in common law and under the Indian

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Contract  Act.  'Price'  has  been

defined in the Sale of Goods Act to

mean money consideration for the sale

of goods : see Section 2(10) of the

Indian Sale of Goods Act. It will,

therefore,  be  seen  that  the

definition of “purchase” in the Act

prima facie appears to be wider in

scope than “sale”. While transfer of

goods from one person to another is

the ingredient of “sale” in general

law, acquisition of goods, which may

in  its  comprehensive  sense  take  in

voluntary  as  well  as  involuntary

transfers,  is  an  ingredient  of

“purchase”  in  clause  (ff).  While

“price”,  i.e.,  money  consideration,

is  the  ingredient  of  “sale”,  cash,

deferred  payment  or  any  valuable

consideration  is  an  ingredient  of

'purchase’.  But  a  closer  scrutiny

compels  us  to  give  a  restricted

meaning  to  the  expression

"acquisition"  and  "price".

Acquisition  is  the  act  by  which  a

person acquires property in a thing.

"Acquire" is to become the owner of

the  property.  One  can,  therefore,

acquire  a  property  either  by

voluntary  or  involuntary  transfer.

But the Sales Tax Act applies only to

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"sale" as defined in the Act. Under

clause (ff) of Section 2 of the Act

it  is  defied  as  a  transfer  of

property.  As  purchase  is  only  a

different, aspect of sale, looked at

from  the  stand  point  of  the

purchaser, and as the Act imposes tax

at  different  points  in  respect  of

sales, having regard to the purpose

of the sale, it is unreasonable to

assume  that  the  Legislature

contemplated different categories of

transactions  when  the  taxable  event

is at the purchase point. Whether it

is sale or purchase the transaction

is  the  same.  If  it  was  a  transfer

inter vivos, in the case of a sale,

it must equally be so in the case of

a purchase. Context, consistency and

avoidance  of  anomaly  demand  a

restricted meaning. That it must only

mean transfer is also made clear by

the  nature  of  the  transactions

excluded  from  the  acquisition,

namely,  mortgage,  hypothecation,

charge or pledge-all of them belong

to the species of transfer. We must,

therefore,  hold  that  the  expression

"acquisition"  in  clause  (ff)  of

Section  2  of  the  Act  means  only

"transfer".

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9. The exposition in paragraph 24 of the

stated  decision  extracted  above  itself

recognizes  the  distinction  between  sale  and

purchase  as  different  aspects  of  the  same

transaction. As observed in the case of  Malnad

(supra), the State can levy tax both at the sale

point  and/or  at  the  purchase  point.  That

distinction  being  clear,  the  question  of

assuming that the purchase tax was also part of

the industrial policy under consideration cannot

be countenanced. As a result, we find no reason

to deviate from the view taken by the High Court

in  following  the  principle  expounded  in  the

decision of Malnad (supra).

10. The  companion  appeal,  Civil  Appeal

No.10684 of 2011, again raises a technical plea

regarding justness of exercise of jurisdiction

by  the  High  Court  in  recalling  the  entire

decision dated 9th March, 2004 at the instance of

the  appellant,  who  had  merely  moved  an

application  for  recall/clarification  of  one

sentence  occurring  in  the  said  decision.  The

fact remains that the appellant, after recall of

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the entire decision, participated in the appeal

proceedings before the Division Bench and argued

the  matter  on  merits.  As  a  result,  this

technical plea cannot be the basis to undo the

entire judgment which otherwise is in conformity

with the legal principle stated in the case of

Malnad (supra).

11. Hence, these appeals must fail and the

same  are  dismissed  accordingly.  All  pending

applications are also disposed of.  

..................,J.        (A.M. KHANWILKAR)

..................,J.    (DINESH MAHESHWARI)

 NEW DELHI FEBRUARY 05, 2020

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ITEM NO.101               COURT NO.7               SECTION IV-A

              S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS

Civil Appeal  No(s).  10680-10683/2011

M/S HIGH RANGE COFFEE CURING PVT.LTD.              Appellant(s)

                               VERSUS

THE STATE OF KARNATAKA & ORS.                      Respondent(s)

WITH C.A. No. 10684/2011 (IV-A)   Date : 05-02-2020 These appeals were called on for hearing today.

CORAM :           HON'BLE MR. JUSTICE A.M. KHANWILKAR          HON'BLE MR. JUSTICE DINESH MAHESHWARI

For Appellant(s) Mr. Yashraj Singh Deora, Adv. Ms. Shivangi Sud, Adv. Ms. Sonal Mashankar, Adv.

                   For M/S.  Mitter & Mitter Co., AOR                     For Respondent(s) Mr. Basava prabhu S. Patil, Sr. Adv.                     Mr. V. N. Raghupathy, AOR

Mr. Manendra Pal Gupta, Adv. Ms. Rachitha Hirenath, Adv. Ms. Rudrali Patil, Adv.

                   Mr. Joseph Aristotle S., AOR

                   Ms. Radha Rangaswamy, AOR                              UPON hearing the counsel the Court made the following                              O R D E R

The appeals are dismissed and all pending

applications are also disposed of in terms of

the signed reportable order.

(NEETU KHAJURIA) COURT MASTER

(VIDYA NEGI) COURT MASTER

(Signed reportable order is placed on the file.)