Case: Installment Supply (P.) Ltd. And Another Vs. The Union Of India And Others

balance of all the hire hereinbefore mentioned and any other expenses incurred by the owners relating to the transaction."9. It is clear, therefore, that in addition to the contract of hiring an option has been given to the hirer to purchase or not to purchase. The more serious question on this part of the petitioners contention is whether the non obstante clause in the explanation "notwithstanding that the seller retain a title to any goods as security for payment of the price" governs the main clause of the explanation. In our opinion, it does not. The non obstante clause has been added only to emphasise the categorical statement of the law contained in the main clause to the effect that a transfer of goods on hire-purchase, etc., shall be deemed to be a sale even though there may be a stipulation to the effect that in spite of the transfer of goods to the hirer, the owner retains title to those goods until the happening of the ultimate event, namely, completion of title at the option of the hirer.10. There is, thus, no doubt that the agreement in question does contain not only a contract of bailment simpliciter but also an element of sale, which element has been seized upon by the legislature for the purpose of subjecting a transaction like that to the Sales Tax.11. This leads us to the second ground of attack raised by the petitioners, namely, that the explanation, if it has the effect of extending the concept of sale to what, in law, is not a real sale, but only an incipient or inchoate sale, then in so far as the law has extended the definition of sale it is unconstitutional. This contention has lost all its force, if ever it had any, in view of the decision of this Court in Mithan Lals case, 1959 S C R 445 : (AIR 1958 S C 682), (supra).12. But then it is argued that Mithan Lals case, 1959 S C R 445 : (AIR 1958 S C 682) requires re-consideration and that, in any view of the matter, this Court did not consider the further attack based on Art, 14 of the Constitution. It is true that in Mithan Lals case, 1959 S C R 445 : (AIR 1958 S C 682) (supra) the contention that the enactment in question had infringed Art,14 of the Constitution had not been raised. This Court, therefore, had no occasion to pronounce on that aspect of the controversy. We have, therefore, to consider the contention under head (3), namely, that though the Parliament may have had the power to tax something which was not strictly speaking a sale, the law is open to the attack that it discriminates against traders in Delhi inasmuch as, it is further contended, such a law has not been made applicable to the whole of India. In our opinion, there is no substance in this contention because no proper foundation was laid in the pleadings for supporting such a contention. It has not been averred that other Part C States have not been similarly treated. On the other hand, it does appear that under the Central sales tax Act (LXXIV of 1956), the definition of Sale contains the extended definition, without the non obstante clause, discussed above. Section 2(g) of the Central Sales Tax Act, 1956, has the following definition :Sale with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration, and includes a transfer of goods on the hire purchase or other system of payment by instalments, but does not include a mortgage or hypothecation of or a charge or pledge on goods."It would thus appear that hire purchase transactions have been included within the definition of sale for the purpose of Central Sales Tax, and this definition has become applicable throughout India, and it cannot, therefore, be said that the State of Delhi, and now the Union Territory of Delhi, has been selected for hostile discrimination. In our opinion, therefore, there is no substance in the contention that the extended definition of sale in the main statute infringes Art. 14 of the Constitution.13. Now, the remaining contentions raised on behalf of the petitioners may be disposed of by observing that what the Sales Tax Department does, or does not do, cannot change the law. The Department issued its instructions to the Sales Tax Officers, in conformity with the law as laid down in the judgment of the Punjab High Court in (S)AIR 1956 Punj 177 (supra). This Court later laid down the law more authoritatively in Mithan Lals case 1959 S C R 445: (AIR 1958 SC 682 ) (supra) and the Department was bound to take notice of what this Court had laid down. It cannot, therefore, be argued that the Department had, in any sense estopped itself by issuing those instructions, or that this Court, by laying down the law in Mithan Lals case, 1959 S C R 445: (AIR 1958 S C 682) (supra) had laid down a new rule of law which has no application to pending proceedings for levy, assessment and realisation of sales tax, either in Delhi or elsewhere.14. There is another answer to the point of res judicata raised off behalf of the petitioners, relying upon the decision of the Punjab High Court in (S) AIR 1956 Punj 177 (supra).It is well settled that in matters of taxation there is no question of res judicata because each years assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period.(See the decision in the House of Lords in Society of Medical Officers of Health v. Hope, 1960 A C 551 approving and following the decision of the Privy Council in Broken Hill Proprietary Company Ltd. v. Broken Hill Municipal Council, 1926 A C 94.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]7. It is clear that under the Law, as it now stands, which has now been crystallised into the section of the Hire Purchase Act, quoted above, the transaction partakes of the nature of a contract or bailment with an element of sale, as aforesaid, added to it. In such an agreement, the hirer may not be bound to purchase the thing hired ; he may or may not be. But in either case, if there is in obligation to buy, or an option to buy, the goods delivered to the hirer by the owner on the terms that the hirer, on payment of a premium as also of a number of instalments, shall enjoy the use of the goods, which ultimately may become his property, the transaction amounts to one of hirepurchase, even though the title to the goods has remained with the owner and shall not pass to the hirer until a certain event has happened, namely, that all the stipulated instalments have been paid, or that the hirer has exercised his option to finalise the purchase on payment of a sum, nominal orto third term of the agreement, on the hirer duly performing and observing the terms of the agreement, with particular reference to the payment of the monthly instalments, "the hiring shall come to an end and the vehicle shall, at the option of the hirer, become his absolute property; but until such payments as aforesaid have been made, the vehicle shall remain the property of the owners. The hirer shall also have the option of purchasing the vehicle at any time during the currency of this Agreement by paying in one lump sum the balance of all the hire hereinbefore mentioned and any other expenses incurred by the owners relating to the transaction."9. It is clear, therefore, that in addition to the contract of hiring an option has been given to the hirer to purchase or not to purchase. The more serious question on this part of the petitioners contention is whether the non obstante clause in the explanation "notwithstanding that the seller retain a title to any goods as security for payment of the price" governs the main clause of the explanation. In our opinion, it does not. The non obstante clause has been added only to emphasise the categorical statement of the law contained in the main clause to the effect that a transfer of goods on hire-purchase, etc., shall be deemed to be a sale even though there may be a stipulation to the effect that in spite of the transfer of goods to the hirer, the owner retains title to those goods until the happening of the ultimate event, namely, completion of title at the option of the hirer.10. There is, thus, no doubt that the agreement in question does contain not only a contract of bailment simpliciter but also an element of sale, which element has been seized upon by the legislature for the purpose of subjecting a transaction like that to the Salescontention has lost all its force, if ever it had any, in view of the decision of this Court in Mithan Lals case, 1959 S C R 445 : (AIR 1958 S C 682),is true that in Mithan Lals case, 1959 S C R 445 : (AIR 1958 S C 682) (supra) the contention that the enactment in question had infringed Art,14 of the Constitution had not been raised. This Court, therefore, had no occasion to pronounce on that aspect of the controversy. We have, therefore, to consider the contention under head (3), namely, that though the Parliament may have had the power to tax something which was not strictly speaking a sale, the law is open to the attack that it discriminates against traders in Delhi inasmuch as, it is further contended, such a law has not been made applicable to the whole of India. In our opinion, there is no substance in this contention because no proper foundation was laid in the pleadings for supporting such a contention. It has not been averred that other Part C States have not been similarly treated. On the other hand, it does appear that under the Central sales tax Act (LXXIV of 1956), the definition of Sale contains the extended definition, without the non obstante clause, discussedwould thus appear that hire purchase transactions have been included within the definition of sale for the purpose of Central Sales Tax, and this definition has become applicable throughout India, and it cannot, therefore, be said that the State of Delhi, and now the Union Territory of Delhi, has been selected for hostile discrimination. In our opinion, therefore, there is no substance in the contention that the extended definition of sale in the main statute infringes Art. 14 of the Constitution.13. Now, the remaining contentions raised on behalf of the petitioners may be disposed of by observing that what the Sales Tax Department does, or does not do, cannot change the law. The Department issued its instructions to the Sales Tax Officers, in conformity with the law as laid down in the judgment of the Punjab High Court in (S)AIR 1956 Punj 177 (supra). This Court later laid down the law more authoritatively in Mithan Lals case 1959 S C R 445: (AIR 1958 SC 682  ) (supra) and the Department was bound to take notice of what this Court had laid down. It cannot, therefore, be argued that the Department had, in any sense estopped itself by issuing those instructions, or that this Court, by laying down the law in Mithan Lals case, 1959 S C R 445: (AIR 1958 S C 682) (supra) had laid down a new rule of law which has no application to pending proceedings for levy, assessment and realisation of sales tax, either in Delhi or elsewhere.14. There is another answer to the point of res judicata raised off behalf of the petitioners, relying upon the decision of the Punjab High Court in (S) AIR 1956 Punj 177 (supra).It is well settled that in matters of taxation there is no question of res judicata because each years assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period.(See the decision in the House of Lords in Society of Medical Officers of Health v. Hope, 1960 A C 551 approving and following the decision of the Privy Council in Broken Hill Proprietary Company Ltd. v. Broken Hill Municipal Council, 1926 A C 94.