N.N. Mathur, J. - (1.) THESE three writ petitions have been filed by M/s Shree Rajasthan Syntex Ltd. engaged in manufacture of Synthetic Yarn. The Commercial Taxes Officer, Anti Evasion, Udaipur served a notice dated 2.12.1996 on the petitioner under Section 28 of the Rajasthan Sales Tax Act, 1994 (hereinafter referred to as the RST Act) mentioning therein that the business premises of the petitioner Company was checked and surveyed on 14.5.1996 and on inquiry as contemplated under Section 71 of the RST, it came to his notice that in the year 1996 -97 the petitioner Company had given on lease machineries worth Rs. 12,95,99,530/ - to M/s Rajasthan Texchem Ltd. As per the agreement petitioner Company received Rs. 21,79,890 -/ - as a lease rent for the period onwards April 1996, but with an intention to evade tax the said figure was concealed. The petitioner was further asked to show cause under Section 64 as to why the penalty double the amount of tax be also not imposed.
(2.) THE petitioner by way of instant writ petitions had challenged the notice dated 2.12.1996 (Annex. 4). The petitioner has inter alia challenged the constitutional validity of Clause (b) under Explanation -II to Section 2(38) of the Rajasthan Sales Tax Act, 1994. The say of the petitioner is that it had agreed to provide lease financing/plant and machinery on lease to Shree Rajasthan Texchem Ltd. to the extent of Rs. 15 Crore vide MOU dated 19th May, 1995. Under the said MOU the petitioner was to provide technical expertise, infrastructure etc. for the implementation of the synthetic yarn spinning project of Shree Rajasthan Texchem Ltd. with the installed capacity of 17,280 spindles at Dungarpur apart from providing plant and machinery on lease. The said MOU preceded to execution of lease agreements Annexures 1 & 2 which were admittedly executed at New Delhi after the dispatch machinery by Overseas Suppliers for the purpose of leasing them out to the lessee and before their delivery, directly to it i.e. by way of leasing them out in the course of import. The machineries were directly delivered to the lessee in pursuance to the said lease agreements in the course of import. The delivery of the machines to the lessee started from November, 1995 and in terms of the lease agreement the lease rent started thereunder. Thus, according to the petitioner at the time when the lease agreements were executed the machineries were available for transfer of right to use inasmuch as the orders were placed earlier with the suppliers and they were despatched. The right to use them was transferred to the lessee under the said lease agreement at New Delhi and machineries were delivered to the lessee at Dungarpur directly in the course of import under the said lease agreements. In order to appreciate the contention, it would be convenient to read Section 2(38) of the RST, which is extracted as follows: Section 2(38) of the RST Act, 1994 has defined 'sale' as under: (38) 'sale' with all its grammatical variations and cognate expressions means every transfer of property in goods by one person to another for each, deferred payment or other valuable consideration and includes, - - (i) a transfer, otherwise than in pursuance of a contract of property in goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) any delivery of goods on hire purchase or other system of payment by installments; (iv) a transfer of the right to use goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) a supply of goods by an unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; and (vi) a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply is for cash, deferred payment or other valuable consideration; and such transfer, delivery or supply shall be deemed to be a sale and the word 'purchase' or 'buy' shall be construed accordingly; Explanation -I ..... ..... ..... ..... Explanation -II - -A sale or purchase shall be deemed to take place inside the State - - (a) ..... ..... ..... ..... (b) in a case falling under Sub -Clause (iv), if the goods are used by the lessee within the State whether or not for a specified period, notwithstanding that the agreement for the lease has been made outside the State or that the goods have been moved from outside the State or the goods have been delivered to the lessee outside the State or the goods have been delivered to the lessee outside the State.
(3.) THUS , Sub -Clause (b) of Explanation -II of Section 2(38), provides that in case of sale by a transfer of right to use the goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration (falling under Sub -Clause (iv) above) if the goods are used by the lessee within the State whether or not for a specified period notwithstanding that the agreement for the lease has been made outside the State or that the goods have been moved from outside the State or the goods have been delivered to the lessee outside the State, the sale shall be deemed to have taken place inside the State.;