KRUSHNA CHANDRA BEHERA Vs. STATE OF ORISSA

JUDGEMENT

(1.) FORTY -sixth Amendment to the Constitution, which came into force with effect from 2nd February, 1983, was aimed at augmenting the State revenues. For this purpose, the ambit of entry 54 of List II of the Seventy Schedule to the Constitution was widened to a considerable extent by providing a definition of "taxes on the sale or purchase of goods" by inserting clause (39a) in article 366 of the Constitution. This inclusive definition created many legal fictions. In the present proceeding we are concerned with the imposition of tax on the "transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration". Following the constitutional clearance to impose tax on the transfer of the right to use any goods, the definition of "sale", as given in section 2 (g) of the Orissa Sales Tax Act, 1947 (shortly "the Act") was amended by Act 13 of 1984, and one of its clauses stated that "transfer of the right to use any goods for any purpose" shall also be included in the expression "sale".

(2.) RELYING on the enlarged definition of "sale", a notice (annexure 1) was issued to the petitioners under section 11 (1), 12 (5) and 12 (8) of the Act by the Sales Tax Officer, Bhadrak Circle (Opposite party No. 2), to complete the assessment for the year 1983-84 under section 12 (5) of the Act. The notice had come to be issued in the wake of giving on hire a bus belonging to the petitioners to the Orissa State Road Transport Corporation (hereinafter, "the Corporation") by treating the same as transfer of the right to use the bus.

(3.) THE question to be decided for the case at hand is as to when there would be a transfer of the right to use any goods, to regard the same as sale within the meaning of section 2 (g) of the Act. It is apparent that the transfer of the right to use any goods does not involve passing of property in the said goods. There is a conceptual distinction between a contract of sale as defined in section 4 of the Sale of Goods Act and a transfer of the right to use goods without being accompanied by transfer of the ownership in the goods in favour of the hire. Unlike sale, in a case of transfer of any right to use goods, the proprietary right in the goods remains with the transferor. The owners of a property has a bundle of rights in it, namely, right to possess, right to use and enjoy, right to usufruct, right to consume, to destroy, to alienate or transfer, etc. In law, it is not only possible but also permissible that the various rights and interest may be vested in various persons. While remaining as the owner of a property, a person may create a charge on the property, mortgage it or lease it. In a transaction of sale, all the rights of the owner are transferred to the purchaser and it is said that the property in the goods passes to the purchaser.