C. N. Ramachandran Nair, J. –

The above two tax revision cases filed by the assessee under section 41 of the Kerala General Sales Tax Act, 1963 arise from the assessments for the assessment years 1995-96 and 1996-97. The assessee is a financier engaged in this, purchase and delivery of goods under hire-purchase agreement with parties. Goods such as equipments, machinery, vehicles, etc., are purchased locally in Kerala as well as from outside State. The assessing officer held that the assessee is a purchaser and reseller of theso items and therefore the assessee's sales are subject to sales tax it Kerala except in respect of second sales which are transactions of purchases and sales in Kerala. The assessee's sales are by way of delivery of possession on execution of hire-purchase agreement with customers. The assessee will retain the title of goods, though delivery is given to the customer, and title passes on to the customer only on; payment of the last instalment. In the event of breach of the agreement, the assessee will take over possession of the goods and is free to sell the same. In respect of items purchased in Kerala which have suffered tax in the State, the assessing officer granted exemption when sold by the assessee to customers in Kerala by delivering possession on execution of hire-purchase agreements. However, in respect of items purchased from outside Kerala, but delivered to customers in Kerala, the assessing officer levied tax on the assessee, The assessment on the turnover was confirmed in first appeal, and again by the Tribunal in second appeal. The assessee has come up in revision before us against the orders of the Tribunal confirming the levy. The Tribunal has passed a detailed order after elaborately discussing the terms of the standard hire-purchase agreement and the relevant statutory provisions in the appeal for the assessment year 1996-97 and for the assessment year 1995-96, the Tribunal followed its detailed order in the other appeal, and dismissed the assessee's case. Both the tax revision cases were heard together by us. Learned counsel Sri. V. P. Sukumar appeared and argued the case on behalf of the assessee, and the Government Pleader defended the orders of the Tribunal.

The nature of transaction which is the subject-matter of dispute in these cases, the relevant clauses in the hire-purchasi agreement between the assessee and the customers and the relevant statutory provisions are discussed in detail by the Tribunal in its order for the assessment year 1996-97. The Tribunal has found that the assessee is engaged in the purchase of goods, namely, machinery, equipments, etc., from outside the State and delivery of the same to customers who are located in Kerala for their use in Kerala. It is for the customer to identify the item to be purchased and get quotation from the supplier. Pro forma invoice is obtained by the customer which would be forwarded to the assessee for approval and arranging for finance under the hire-purchase agreement. Once the terms of the financing, such as the extent of the finance, rate of interest, the period of hire purchase, etc., are settled between the assessee and the customer, the hire-purchase agreement is executed between the assessee, the financier, and the customer in Kerala. The assessee will place purchase order with outside State party with direction to deliver the goods to the customer and the payment will also be made by the assessee. Invoice/bill for the goods will be in the name of the assessee and the assessee will retain the title over the goods until the last instalment under the hire-purchase agreement is paid by the customer. In other words, on execution of hire-purchase agreement, possession of the goods is given to the customer and the customer will continue to use the goods on payment of instalments under the hire-purchase agreement and on payment of the last instalment title will be transferred to the customer. In the event of breach of pa