The court emphasized the expanded scope of taxation under article 366(29A) and the redefined concept of 'sale' for the purpose of taxation, allowing for the levy of sales tax on lease transactions with payments received after the enactment of the Act, 2002.

A.K. SIKRI, J.

The petitioner is carrying on the business of leasing of machinery and vehicles all over the country. It leases goods required by the lessee for specified period, namely, 24, 36 and 48 months against lease rentals payable each month of the tenure of the lease. Admittedly such a transaction was not exigible to sales tax under the Delhi Sales Tax Act as it was not treated as "sale of goods" as understood in the Sale of Goods Act. The traditional concept of "sales tax" has undergone a drastic change by amending article 366 of the Constitution and inserting clause (29A) therein. The scope for the levy of sales tax has been expanded thereby inasmuch as clause (29A) provides that sale and purchase of goods would include, besides other transactions, the transfer of the right to use goods. Clause (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 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 or service, is for cash, deferred payment or other valuable consideration,

and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made."

After the said amendment, the sale and purchase of goods, by fiction of law would, include transfer of the right to use goods irrespective of the fact that in leasing transactions, there is no ownership of goods passing from the seller to the buyer. As a result of the Constitutional amendment, the powers of the States were enlarged for making a law for levy of tax on such deeming sales referred to in article 366(29A). Most of the States exercised their powers and amended the respective Sales Tax Acts by extending the scope of the definition of the term "sale" so as to include lease transactions in which transfer of the right to use goods alone has been given. The Delhi State enacted a separate Act known as the Delhi Sales Tax on Right to Use Goods Act, 2002 (hereinafter called as the "Act, 2002") which was notified and came into operation with effect from September 15, 2004. After the enactment of the Act, 2002, all lease transactions in which the transfer of the right to use goods had been effected became liable to sales tax.

This enactment, namely, the Act, 2002 was repealed by the Delhi Value Added Tax Act, 2004 (hereinafter called as, "the DVAT Act") which has been enforced on April 1, 2005. Section 106 of the DVAT Act makes this repealing provisions. Sub-section (2) of section 106, however, provides that the repeal shall not affect the previous operation of the Act, or any right, title, entitlement, obligation or liability, already acquired, accrued or incurred, thereunder.

It is clear from the aforesaid that the Act, 2002 remained in operation from September 15, 2004 to April 30, 2005. All lease transaction agreement entered into during this period would be liable for the tax under this Act. The petitioner herein had, however, entered into various lease agreements prior to September 15, 2004. The