The main legal point established in the judgment is the interpretation and application of the legal provisions related to the levy of tax on leasing transactions involving the transfer of the right to use goods, as well as the exclusion of inter-State sales and export sales.

V. K. SINGHAL, J. - The validity of section 5-C read with Explanation (3)(d) of section 2(1)(t) of the Karnataka Sales Tax Act, 1957 have been assailed and since the controversy is common in all these petitions they are disposed of by this common order.

2. In consequence of the 46th Constitutional amendment section 5-C of the Act, was inserted by Act No. 27 of 1985 providing for levying and collection of tax on leasing transactions involving transfer of right to use the goods. In the case of Shetty Leasing (India) Ltd. v. Union of India [1996] 100 STC 533 (Kar), the provisions were struck down and thereafter by Karnataka Act 5 of 1996 the present provisions were inserted retrospectively with effect from April 1, 1986. The provisions are as under :

"5-C. Levy of tax on the transfer of the right to use any goods. - Notwithstanding anything contained in sub-section (1) or sub-section (3) of section 5, but subject to sub-sections (5) and (6) of the said section, every dealer shall pay for each year a tax under this Act on his taxable turnover in respect of the transfer of the right to use any goods mentioned in column (2) of the Seventh Schedule for any purpose (whether or not for a specified period) at the rates specified in the corresponding entries in column (3) of the said Schedule."

Section 2(t) of the Act deals with definition of "sale". By Act 27 of 1985 the scope of definition of "sale" was extended by including besides other transfer of property includes, a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, or for deferred payment or other valuable consideration. The third explanation to the definition of "sale" is as under :

"Explanation (3). - (a) The sale or purchase of goods other than in the course of inter-State trade or commerce or in the course of import or export shall be deemed for the purposes of this Act, to have taken place in the State wherever the contract of sale or purchase might have been made, if the goods are within the State, -

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(d) Notwithstanding anything contained in the Sale of Goods Act, 930 (Central Act 3 of 1930), for the purpose of this Act, the transfer of the right to use any goods for any purpose (whether or not for a specified period), shall be deemed to have taken place in the State, if such goods are for use within the State, irrespective of the place where the contract of transfer of the right to use the goods is made."

3. Clause (d) of Explanation (3) besides the provision of section 5-C of the Karnataka Sales Tax Act have been assailed on the ground that in respect of transactions which are falling under section 3 of the Central Sales Tax Act, 1956 the tax have to be levied only on the basis of the fact that goods are within the State and have been put to use ignoring the nature of the transaction.

4. Constitution 46th Amendment Act of 1982 inserted clause (29A) in article 366 providing definition of "sale" in view of the series of decisions of the apex Court on the jurisdiction of the State Legislature to levy tax on the sale or purchase of goods. Article 366(29A) reads as under :

"(29A) 'tax on the sale or purchase of goods' includes -

(a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;

(b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;

(c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments;

(d) a 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;

(e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;

(f) a tax on the supply, by way of or as part of any service or in