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2008(3) Supreme 693
SUPREME COURT OF INDIA
B.N.Agrawal & G.S.Singhvi & Aftab Alam, JJ
M/s. Yasha Overseas —Petitioner
Versus
Commissioner of Sales Tax & Ors. —Respondents
Civil Appeal Nos. 2155 of 2000, 6893 of 2003 & 4075 of 2007
All decided on 6.5.2008
(b) Transfer of Property Act, 1881 – Section 3 – REP Licence – When these licences/ scrips are being bought and sold freely in the market as goods – It has a value of its own and is by itself a property – When it has a value of its own unrelated to the goods which can be imported thereunder, for all purposes and intents, it is goods – It is idle to contend that they are in the nature of actionable claims. (Para 15)
(1996)4 SCC 433 – Holds the field
(d) Delhi Sales Tax Act, 1975 – Section 2(g) r/w Article 366 (29A)(a) – Lottery ticket, to the extent it evidenced the right to claim the prize, is not ‘goods’ but an actionable claim and, therefore, expressly excluded from the definition of ‘goods’ under the sales tax laws – A transfer of it was consequently not a sale – Lottery ticket per se has no innate value, hence it is not ‘goods’. (Para 22)
(1986)1 SCC 414 – Wrongly decided
(e) Words and Phrases – Goods and Actionable claim – Transferability for value is as much an attribute of actionable claim as any other kind of goods – Therefore, transferability is not the point of distinction between actionable claim and other goods that could be sold – Hence, to say that an article or right was goods and not actionable claim because it was saleable is pointless. (Para 23)
(f) Words and phrases – The word ‘property’ occurring both in the definitions of ‘goods’ and ‘sale’ carries different meanings – In the definition of ‘goods’ the word ‘property’ is used to mean the subject matter of ownership, that is to say, the thing itself – On the other hand, in the definition of ‘sale’ the same word is used to mean the nature of interests in goods, that is, title or ownership – Sale of lottery ticket did not involve transfer of ‘property’ either in the sense of the thing itself (goods) or in the sense of title or ownership (sale). (Paras 24 and 25)
(g) Imports and Exports (Control) Act, 1947 and the Imports (Control) Order, 1955, Import and Export Policy April, 1988 to March, 1991 – REP license – The intrinsic value of REP licence coupled with free transferability makes it a market commodity and it brings within the definition of ‘goods’ – The decision in Vikas is not altered by Sunrise on this account. (Paras 28 and 29)
(h) Delhi Sales Tax Act, 1975; Sections 2(g) 2(l) r/w Sections 2 (xii) and (xxi), Kerala General Sales Tax Act, 1963; Sections 2(13) and 2(28), Bombay Sales Tax Act, 1959 The definitions of “goods” and “sale” under the Delhi, Bombay and Kerala Acts are much the same as the definitions of the two expressions in the Tamil Nadu, Karnataka and West Bengal enactments – Hence, what is said in Vikas and Sunrise in regard to the legal provisions fully applies to the instant cases. (Para 32)
(i) Foreign Trade (Development and Regulation) Act, 1992 – Exim Policy 1997-02 – DEPB – REP licence was replaced by DEPB broadly retaining its other features – DEPB is exactly the same as REP licence in two vital aspects – Like REP license it has an innate value and for which it freely sells in the market – Therefore, its transfer by way of sale would be exigible to sales tax. (Paras 35, 36 and 40)
(j) Words and Phrases – DEPB and Lottery ticket – DEPB (or for that matter REP license!) can only be compared with a lottery ticket that has won the prize – The prize-winning lottery ticket acquires inherent value and becomes itself a thing of value – In buying the prize winning lottery ticket the purchaser would pay the consideration for the value that the piece of paper has acquired and in that situation that ticket can only be described as ‘goods’ – Similar analogy applies with meal tickets. (Paras 41 and 42)
Facts of the case:
1. Does the three-Judge Bench decision in Vikas Sales Corporation v. Commnr. of Commercial Taxes [(1996) 4 SCC 433], holding that the transfer/sale of an import licence called Replenishment Licence (REP licence) granted under the 1992-97 Exim Policy was exigible to sales tax stands impliedly overruled by the Constitution Bench decision in Sunrise Associates v. Govt. of NCT of Delhi [(2006) 5 SCC 603] that held that lottery tickets were actionable claims and were, therefore, excluded from the definition of ‘goods’ under the Sales Tax Act and, hence, the sale of lottery tickets was not subject to sales tax and the earlier two-Judge Bench decision of the court in H. Anraj v. Govt. of Tamil Nadu [1986) 1 SCC 414] holding otherwise, did not lay down the correct legal position? It is to consider this question that this batch of six cases was referred to the three-Judge Bench.
Findings of the Court:
The Constitution Bench decision in Sunrise does not alter the position in regard to levy of tax on sale of REP licence and on that issue the three-Judge Bench decision in Vikas continues to hold the field.
DEPB has an intrinsic value that makes it a market commodity. Therefore, DEPB, like REP licence qualifies as ‘goods’ within the meaning of the Sales Tax laws of Delhi, Kerala and Mumbai and its sale is exigible to tax.
Result: Appeals dismissed.
Key Points: - DEPB has an intrinsic value and is a market commodity; its sale is subject to sales tax. (!) (!) (!) - DEPB is treated like REP licences as "goods" under the sales tax laws of Delhi, Kerala, and Mumbai; the sale is exigible to tax. (!) (!) - Constitution Bench clarified that Sunrise does not alter the position regarding REP licences; Vikas continues to hold for REP licences. (!) (!) - REP licences have their own value, are freely bought and sold, and are goods, not actionable claims. (!) (!) (!) (!) - Anraj held lottery tickets are goods only to the extent of the right to participate; Sunrise overturned aspects about actionable claims, but REP licences remain governed by Vikas. (!) (!) (!) (!) - Definitions of "goods" and "sale" in relevant state acts exclude actionable claims, aligning with the constitutional framework. (!) (!) (!) (!) - The Court dismisses the appeals, upholding taxation of REP licences and DEPB. (!)
JUDGMENT
Aftab Alam, J.—
1. Leave granted in the three Special Leave Petitions in this batch of six cases.
2. Does the three-Judge Bench decision of this Court in Vikas Sales Corporation Vs. Commnr. of Commercial Taxes,1 holding that the transfer/sale of an import licence called Replenishment Licence (REP licence) granted under the 1992-97 Exim Policy was exigible to sales tax stands impliedly overruled by the Constitution Bench decision in Sunrise Associates Vs. Govt. of NCT of Delhi 2 that held that lottery tickets were actionable claims and were, therefore, excluded from the definition of ‘goods’ under the Sales Tax Act and, hence, the sale of lottery tickets was not subject to sales tax and the earlier two-Judge Bench decision of the court in H. Anraj Vs. Govt. of Tamil Nadu3 holding otherwise, did not lay down the correct legal position? It is to consider this question that this batch of six cases was referred to the three-Judge Bench.
3. Apparently, lottery tickets are not the same thing as REP licences but on behalf of the appellants it was submitted that the decision in Vikas while upholding the taxability of REP licences, referred approvingly to Anraj which was expressly overruled by Sunrise. Further, the additional reasons given in Vikas for holding that REP licences were ‘goods’ were also disapproved by the Constitution Bench and, therefore, it must be held that the decision in Vikas too stood impliedly overruled.
4. REP licences were granted under the Import and Export Policy for the period April 1988 to March 1991 issued under the Imports and Exports (Control) Act, 1947. Those were replaced by Duty Entitlement Passbook (DEPB) provided for in the Exim Policy 1997-02 under the Foreign Trade (Development and Regulation) Act, 1992. Out of six cases before us only one relates to the sale of REP licences; the other five arise from the sale of DEPB. In those five cases it is contended on behalf of the appellants that DEPB has materially different features than REP and in any event the decision in Vikas shall not apply to the case of DEPB.
5. We are thus required to consider two questions; whether the decision in Vikas can be said to be impliedly overruled by the Constitution Bench decision in Sunrise? And, if the answer to this question is in the negative and Vikas is still good law, would it also apply to sale of DEPB?
6. It may also be mentioned here that out of the six cases in the batch, four (including the one relating to REP) arose under the Delhi Sales Tax Act, one under the Kerela General Sales Tax Act and one under the Bombay Sales Tax Act.
7. In order to consider the first question we propose to examine the three decisions (Anraj, Vikas & Sunrise) in the order in which those came to be delivered. In Anraj the issue before the court was whether the sale of lottery tickets could be subjected to tax under the T. N. General Sales Tax Act and the Bengal Finance (Sales Tax) Act. On behalf of the assesses, dealers in lottery tickets and agents and stockists of various lotteries organised by different states, including the State of West Bengal, it was contended that the sale of a lottery ticket is nothing more than a sale of a chance to win a prize and no transaction of sale of moveable property takes place or is involved in the sale of a lottery ticket, the ticket itself being merely a token of the chance purchased. It was alternatively argued that assuming, though not admitting that lottery tickets are a kind of movable property or some kind of merchandise they would be so only in the limited sense but in pith and substance they are ‘actionable claims’ that are expressly excluded from the definition of ‘goods’. A two-Judges’ Bench of this Court repelled both the contentions and in paragraph 27 of the judgment held that :
“.......a sale of a lottery ticket confers on the purchaser thereof two rights (a) a right to participate in the draw and (b) a right to claim a prize contingent upon his being successful in the draw. Both
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