# INSTALMENT SUPPLY LTD v. THE SALES TAX OFFICER, AHMEDABAD-I & ORS.·

- **Citation:** [1975] 1 S.C.R. 386
- **Court:** Supreme Court of India
- **Decided:** 1974-05-01
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/instalment-supply-ltd-v-the-sales-tax-officer-ahmedabad-i-ors-6339
- **Pages:** 8

## Headnote

INSTALMENT SUPPLY LTD.
v.
THE SALES TAX OFFICER, AHMEDABAD-I & ORS.·
May 1, 1974
lA. N. RAY, C.J., K. K. MATHEW, A. ALAGIRISWAMI, P. K. GoswAM!
A
AND R. S. SARKAR!A, JJ.]
B
Gujarat Sales Tax Act--S. 2(28) whe~her sUlle cquM tax goods inside the
.S1ate, but agreen1ent entered into outside the State.
Constitution of /1idia, 1950-Art. 32-When a petition ~vi!l lie.
The petitioner, a limited company with its registered office in New Delhi,
.carries on business of financing purchase of motor vehicles. The intending
buyer of a motor vehicle enters into a hire
purchase
agreement with 1he
petitioner company.
Under the terms of the agreement the hirer makes an
init_ial deposit by way of premium as consideration for granting the lease of
the vehicle, which deposit becemes the absolute property of the company.
fhe hirer undertakes to pay instalments and when all the instalments are
paid the vehicle becomes the property of the hirer at his option, on payment
of rupee one to the company. Till the completion of the instalments the
vehic1e remains the prQperty of the company as owners but the hirer is responsible for any damage or destmction or loss of lhe vehicle.
Until the
option is exercised the hirer is at liberty to return the vebicJe and to put an
end to the hiring agreement. The cOntract of hire purchase was entered
into in Delhi, instalments were paid in Delhi, the option was exercised in
Delhi but the goods were inside the State of Gujarat which taxed the sale.
Section 2 ( 28) of the Gujarat Sales Tax Act which defines sale enacts
''sa1e means the sale of goods made within the State for cash or de!"erred
payment or other valuable consideratiOn and includes any supply by a society
or club or an association to its members on payment of a price or of fees
or subscription but does not include a mortgagel hypothecation, charge
or
pledge ..... "" The explanation to the definition states ';For the purposes of
lhis clause the sale within the State includes
a sale determined to be inside
the State in accordance with the principles formulated in sub·section (2) of
section 4 of the Central Sales Tax Act, 1956.'' Sub-<Section (2) of Section 4
of the Central Sales Tax Act, 1956 enacts "A sale or purchase of goods shall
be deemed to take place inside a State if the goods are within the State (a)
in the case of specific or ascertained goods at the time the contract of sale
is made ..... ''
On the question whether (I) the State of Gujarat could tax the sales and
(2) whether a petition under J\rtic1e 32 lies in this case;
Dismissing the petitions,
HELD :-(a) fn the present case the sale itself took place only when the
Hirer exercised his option to purchase and that was when the goods were
inside the State of Gujarat and, therefore, the State of Gujarat was entitled
to levy tax on that transaction of sale. [392H·393A]
There can be no objection to the incorporation in s. 2(28) of the Gujarat
Act of the definition of -sale
imide the State contained
in s. 4(2) of the
Central Sales Tax Act.
The Gujarat legislation cou1d as well have incorporated the very words of s. 4(2) of the Central Sales Tax Act in the explanation to s. 2(28) and in either case it makes no difference. (392E]
(b) There can be no objection to the State of Gujarat taxing what according to the Central State Tax Act is a sa1e inside the State o.f Gujar~t. . There
can be no objection to a State making . a sale of goods which ~re 1n~1de . the
State at the time the sale takes place liable to sales tax u.nder .1ts legis_lat1on.
The fact that the contract of hire purchase was entered into 1~ De~ht tba!
the instalments were paid in Delhi and the option itself was exerc1~d 10 Delhi
.does not make any difference to this result. All that it means is that the
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INSTALMENT SUPPLY LTD. v. S.T.O. (Alagiriswami, J.)
3 87
agreement of sale was concluded in Delhi whereas the sale itself was completed by the property in the goods passing in Gujarat State and the sale,.
therefor

## Text

INSTALMENT SUPPLY LTD.
v.
THE SALES TAX OFFICER, AHMEDABAD-I & ORS.·
May 1, 1974
lA. N. RAY, C.J., K. K. MATHEW, A. ALAGIRISWAMI, P. K. GoswAM!
A
AND R. S. SARKAR!A, JJ.]
B
Gujarat Sales Tax Act--S. 2(28) whe~her sUlle cquM tax goods inside the
.S1ate, but agreen1ent entered into outside the State.
Constitution of /1idia, 1950-Art. 32-When a petition ~vi!l lie.
The petitioner, a limited company with its registered office in New Delhi,
.carries on business of financing purchase of motor vehicles. The intending
buyer of a motor vehicle enters into a hire
purchase
agreement with 1he
petitioner company.
Under the terms of the agreement the hirer makes an
init_ial deposit by way of premium as consideration for granting the lease of
the vehicle, which deposit becemes the absolute property of the company.
fhe hirer undertakes to pay instalments and when all the instalments are
paid the vehicle becomes the property of the hirer at his option, on payment
of rupee one to the company. Till the completion of the instalments the
vehic1e remains the prQperty of the company as owners but the hirer is responsible for any damage or destmction or loss of lhe vehicle.
Until the
option is exercised the hirer is at liberty to return the vebicJe and to put an
end to the hiring agreement. The cOntract of hire purchase was entered
into in Delhi, instalments were paid in Delhi, the option was exercised in
Delhi but the goods were inside the State of Gujarat which taxed the sale.
Section 2 ( 28) of the Gujarat Sales Tax Act which defines sale enacts
''sa1e means the sale of goods made within the State for cash or de!"erred
payment or other valuable consideratiOn and includes any supply by a society
or club or an association to its members on payment of a price or of fees
or subscription but does not include a mortgagel hypothecation, charge
or
pledge ..... "" The explanation to the definition states ';For the purposes of
lhis clause the sale within the State includes
a sale determined to be inside
the State in accordance with the principles formulated in sub·section (2) of
section 4 of the Central Sales Tax Act, 1956.'' Sub-<Section (2) of Section 4
of the Central Sales Tax Act, 1956 enacts "A sale or purchase of goods shall
be deemed to take place inside a State if the goods are within the State (a)
in the case of specific or ascertained goods at the time the contract of sale
is made ..... ''
On the question whether (I) the State of Gujarat could tax the sales and
(2) whether a petition under J\rtic1e 32 lies in this case;
Dismissing the petitions,
HELD :-(a) fn the present case the sale itself took place only when the
Hirer exercised his option to purchase and that was when the goods were
inside the State of Gujarat and, therefore, the State of Gujarat was entitled
to levy tax on that transaction of sale. [392H·393A]
There can be no objection to the incorporation in s. 2(28) of the Gujarat
Act of the definition of -sale
imide the State contained
in s. 4(2) of the
Central Sales Tax Act.
The Gujarat legislation cou1d as well have incorporated the very words of s. 4(2) of the Central Sales Tax Act in the explanation to s. 2(28) and in either case it makes no difference. (392E]
(b) There can be no objection to the State of Gujarat taxing what according to the Central State Tax Act is a sa1e inside the State o.f Gujar~t. . There
can be no objection to a State making . a sale of goods which ~re 1n~1de . the
State at the time the sale takes place liable to sales tax u.nder .1ts legis_lat1on.
The fact that the contract of hire purchase was entered into 1~ De~ht tba!
the instalments were paid in Delhi and the option itself was exerc1~d 10 Delhi
.does not make any difference to this result. All that it means is that the
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INSTALMENT SUPPLY LTD. v. S.T.O. (Alagiriswami, J.)
3 87
agreement of sale was concluded in Delhi whereas the sale itself was completed by the property in the goods passing in Gujarat State and the sale,.
therefore, took place in Gujarat State. [392F-G]
( c) There can be no objection the State of Gujarat levying a tax in respect of the same good~ even though those goods may have been subject to
tax earlier by the Delhi State. There is no rule that any goods can be subjected to tax only once. Even in respect of the same goods sales tax can
be levied as ofren as there are sales. l392G-H]
f11staln1cnt Supply (P) Ltd. v. Union of India, [1962] 2 SCR 644 referred
to.
(2) The constitutionality of s. 2(28) of the Gujarat Act has
been
questioned and, therefore, the petition is maintainable. An application under
Article 32 will lie (1} where action is
taken
under a
statute which
is
ultra vires of the Constitution (2) where the statute is irztra vires but the
action taken is without jurisdiction and (3) where the action taken is proce~
durally ultra vircs as where a quasi·judicial authority under an obligation to.
act judicially passes an order in violation of principles of natural justice.
[3~Jf.Hl
[393 F-HJ
Ujjambai "..· State of U.P., [1963] I S.C.R. 778 followed.
ORIGINAL JuR.ISD!CTION: Writ petition Nos. 129, 131 of 1969.
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(Petition Under Article 32 of the Constitution of India).
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Ved Vyas, Bishamber La/, H. K. Puri, P. V. Kapur and S. C.
Patel, for the petitioner.
M. C. Bhandare, G. L. Sanghi, M. N. Silrojf and R. N. Sachthey,
for the respondents.
The Judgment of the Court was delivered byALAGIRISWAMI, J. The very same question that arises
in th.,,;e
three petitions, though from a different angle, was considered by this
Court in an earlier litigation to which the petitioner was a party (Instalment Supply (P) Ltd. v. Union of India, [1962] 2 SCR 644.)
The
question is when does sale liable to sales tax take place under a hirepurchase agreement.
On the earlier occasion it was the Delhi State·
that sought to tax certain transactions under hire-purchase agreements
ln the present case it is the Gujarat State that Ilas sought to tax cer•
tain transactions under certain hire-purchase agreements.
The petitioner is a limited company with its registered office in
New Delhi.
It carries on the business of financing the purchase of
motor vehicles. The person desiring to purchase a motor vehicle en·
ters into a hire-purchase agreement with the petitioner company. It
may be useful to give within a short compass the terms of the agreement : The company charges the hirer an initial deposit by way of
premium as a consideration for granting the lease of the vehicle, which
deposit becomes the absolute property of the company, the premium
charged as aforesaid is a substantial amount, being usually 25 % of
the prices in respect of new vehicles.
The hirer undertllkes to pay
in;talments and when all the instalments are paid, the vehicle becomes
the property of the hirer at his option, on payment of rupee one to
the company, as a consideration for the option; until all the stipulated
instalments have been paid and the option exercised as aforesaid,. tlie·
388
SUPREME COURT REPORTS
[1975] l s.c,R.
vehicle remains the property of the company as owners.
The hirer
is delivered possession of the vehicle and he remains responsible to
the company for damage or destruction or loss. The hirer has to pay
interest at the rate of one per cent per mensem on all sums overdue.
Until the option of purchase is exercised by the hirer he is •at liberty
to return the vehicle and to put an end to the hiring agreement, on
certain terms. Thus, under the agreement the hirer has the use of the
vehicle which is entrusted to him as the property of the company, and
it is open to the hirer to become the purchaser of the vehicle as aforesaid, but he is not bound to do so.
The liability to sales tax on the earlier occasion arose under the
Bengal Finance (Sales Tax) Act, 1941, which was extended to the
State of Delhi. Under section 2(g) of that Act 'Sale' means any transfer of property in goods for cash or deforred payment or other valuable consideration, including a transfer of property in goods involved
in the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge.
There was an explanation thereto as
follows:
"Explanation I . . A transfer of goods on hire-purchase
or other instalment system of payment shall, notwithstanding
that the seller retains a title to any goods as security for
pa;yment of the price, be deemed to be a sale."
This Court pointed out that "the definition includes not only what may
be compendiously described as a sale under the Sale of Goods Act,
but also transactions, which, strictly speaking, are not sales, not even
'contract~ of sale' but only contain an element of sale, that is
tho
option to purchase, and that is the reason why the explanation ends
with the words "be deemed to be a sale", thereby
indicating that
a legal fiction has been introduced into the concept of 'sale' as ordinarily understood, and that the explanation has included within its
amplitude a mere transfer of goods without the transfer Of title to the
goods."
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To th~ attack on behalf of the petitioner that the explanation, in
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so far as 1t sought to extend the concept of 'sale' to what in law was
not a real sale, was unconstitutional, this Court pointed out that in
vieV: of its decision .in Mithan Lat's case (1959 SCR 445) this contenti'?n had lost .all its fore~. In Mithan Lal's case this Court upheld
th~ r!ght of Parhament to impose a tax on the supply of materials in
buildrng contracts even though in the State of Madras v. Cannon Dun-
~erley & Co. (Madras) Ltd. (1959 SCR 379) it had been held that
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it could not. be do.ne. This was on the basis that the power of Parliament to 'egislate m respect of Part C States is untremmalled by the
1imit~tions presc~ibed by Art. 246, Cls. (2) and (3), and Entry 54
of Ltst II, and 1s plennary and absolute and there is no restriction
whi.cb is material !O the competency of Parliament to legislate on this
topic.
Though this Court did not say so the reference is obviously to
Entry 97 of List I of the 7th Schedule under which only Parliament
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would be competent to legislate in respect of matters which are not
mentioned in any other entry in the 7th Schedule and therefore could
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INSTALMENT SUPPLY LTD. v. S.T.O. (Alagiriswai;1i, J.)
389
pass a law which makes a transaction which would not be a sale under
the Sale of Goods Act a sale for taxation purposes which a State Legislature would not be competent to do.
Before we proceed to deal with this case further it would be useful
to clear the ground by bringing out the legal incidents of •a 'sale' and
of hire-purchase agreements. These have been set out in the decision
in the Instalment Supply case (1962 2 SCR 644) as well as another
decision of this Court in Johar & Co. v. C.T.O. (1965 2 SCR 112).
'll'e propose to discuss this question for facilitating the decision in the
present case.
Section 4 of the Sale of Goods Act reads as follows :
"4. ( l) A contract of sale of goods is a contract whereby
the seller transfers or agrees to transfer the property in goods
to the buyer for a price. There may be a contract of sale
between one part-owner and another.
(2) A contract of sale may be absolute or conditional.
(3) Where under a contract of sale the property in the
goods is transferred from the seller to the buyer, the contract called a sale, but where the transfer of the property in
the goods is to take place at a future tinie or subject to some
condition thereafter to be fulfilled, the contract is called an
agreement to sell.
( 4) An agreement to sell becomes a sale when the
time elapses or the conditions are fulfilled subject to which
the property in the goods is to be transferred."
The definition is the same as in the English Sale of Goods Act, 1893.
The points to be noticed are that the essence of sale is the transfer of
the property in a thing from one person to another for a price.
The
term "contract of sale" includes an agreement to sell. An- agreement
to sell is known as an executory contract of sale, while a sale is known
as an executed contract of sale. The term "contract of sale" thus includes both •actual sales and agreements for sale. It is important to
distinguish clearly between the two classes of contract. An agreement
to sell is a contract pure and simple whereas a sale is a contract plus
a conveyance. By an agreement to sell a jus in personam is created,
by a sale a jus in rem also is transferred. Where goods have been sold
and the buyer makes default, the seller may sue for the contract price
on the count of "goods bargained and sold", but where an agreement
to buy is broken, the seller's normal remedy is an action for unliquidated damages. If an agreement to sell be broken by the seller, the buyer
has only •a personal remedy against the seller. The goods are still the
property of the seller, and he can dispose of them as he likes. But
if -there has been a sale, and the seller breaks his engagement to deliver the goods, the buyer has not only a personal remedy against the
seller, but also the usual proprietary remedies in respect of the goods
themselves.
In many oases, too, . he can follow the goods into tbc
hands of third parties. Again, if there be an agreement for sale, and
390
SUPREME COURT REPORTS
[1975] 1 s.c.R.
the goods are destroyed, the loss as a rule falls on the seller, while
if them has been a sale, the loss as a rule falls upon the buyer though
the goods have never come into his possession.
(Chalmers' Sale of
Goods Act 14th Edn. pp. 4 .& 12; Halsbury's Laws of England, 3rd
Edn., Vol. 34, paras 29 to 31).
A contract of sale should be distinguished from a contract of hirepurchase. A contract of hire-purchase is properly speaking a contract
of hirn by which the hirer is granted on option. to buy but is not, as
under a contract of sale, under a legal obligation to do so. The contract of hire purchase is one of the variations of the contract of balimcnt, but it is a modern development of commercial life, and the rules
with regard to bailments, which were laid down before any contract
of hir~-purchas-c was contemplated, cannot be applied simpliciter,
because such a contract has in it not only the element of bailment but
also th3 element of sale.
At common law the term "hire purchase"
properly applied only to contracts of hire conferring an option to purchase, but it is often used to describe contracts which are in reality
agrcemcnls to purchase chattels by instalments. subject to a condition
that the property in them is not to pass until all instalments have been
paid.
The distinction between these two types of hire purchase contracts is, however, a most important one, because under the latter type
of contract there is a binding obligation on the hirer to buy and the
hirer can therefore pass a good title to a purchaser or pledgee dealing
with him in good faith and without notice of the rights of the true
owner, whereas in the case of a contract which merely confers an
option to purchase there is no binding obligation -on the hirer to buy,
and a purchaser or pledgce can obtain no better title than the hirer
had.
(Halsbury's Laws of England, 3rd Edn., Vol. 19, para 823,
pp. 510·511).
These propositions of law have been
quored
with
approval by this Court in the t'\'o decisions earlier referred to.
The main point to notice is that in a hire-purchase agreement
there is only an option to purchase and there is no sale till that option
is exercised. It is, however, this option that was described, based on
the statement of law in Halsbury already referred to, as an element of
sale in this Court's decision in Instalment Supply case and the Parlia·
meftt was held competent to levy a sales tax even though it was not a
sale within the meaning of the term in the Sale of Goods Act nor a sale
as commonly understood. In Johar & Co. v. C.T.O. (1965 2 SCR
112) this Court again had to consider the incidents of a hire-purchase
agreement. In doing so it set out the nature of a typical hire-purchase
agreement as distinct from a sale in which the price is to be paid later
by instalments in the following words :
"In the case of a sale in which the price is to be paid by
instalments, the property passes as soon as the sale is made,
even though the price has not been fully paid and may later
be paid in instalments. This follows from the definition of
sale in s.4 of the Indian Sale of Goods Act (as distinguished
from an agreement to sell) which requires that the seller
tron5fers the property in the goods to the buyer for a price.
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i:NSTALMENT SUl'PLY LTD. v. S.T.O. (Alagiriswami, J.)
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The essence o~ a sale is that the property· is transferred from
the sell~r to t?1e buyer for _a price, whether paid at cnce or paid
_later in -instalments, on the other hand, -a hire
purchase
agreement, as its v~ry name implies, bas two aspects.
There
is first an .aspect of bailment of. the goods subjected to ·the
hire ·purchase, and there is next an element" of sale · which
fructifies when the option to purchase, which is usually a term
of hire purchase agreements is exercised by the. intending
purchaser. . Thus ·the intending purchaser is known as the
hirer so long as the. option to ·purchase is not· exercised;
and the essence of ,11 hire purchase agreement properly so
.called is that the propeny in the goods does not. pass at the
tim, of the agreement but remains in the intending seller, and
only passes later wlien the option is exercised by the fatending purchaser. The distinguish_ing feature of a ·typical hire
nurchase a~eement is that 'the prop:rty does not pass when
the agreement is made but only._ passes when· the option is
finaily. exercised after complying with all the. terms of the
agreement
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The next. question that arises is· whether a hire purcha.e
agreement ever ripens into a sale and if so when.
We have
already pointed· out that a hire purchase agreement has two
elements·: (i) element of bailment, and (ii) element of sai.,,
in _the sense that it contemplates ·an. eventual sale.· The element of sale fructifies when the option is exercised by the
intending purchaser after fulfilling the terms of the a~eement.
When· all the terms of the. agreement are satisfied and the
option is exercised a sale takes plac' of the gocids which
till . then had been hired.
When this sale takes pl:ice it will
be liable tn sales tax under· the Act for the taxable· event
urui;r the A ct is the taking place of the sale, the Act providing for a multi-P?int sales tax at the relevent time."
This Court thus pointed out that the taxable event is the sale of goods
and. the tax can. only be levied· when the option is exercised after ful~
filling all the . terms of the hire purchase agreement and that till t!;isale takes place there can be nci liability to sales tax under the Act.
In the earlier Instalment Supply case (1962 (2) SCR 644) w
which the petitioner was a party. what was taxed was .no.t in roolity ·
a sale but only an agreement in which there was an element· of sale.
Even so,_ Parliament was entitled to· legislate treating it as a sale dml
that is the·reason··why this Court upheld the levv .. _,But no State fegislature· is competent to ·•nae! a le,Pslation which would m•ke a hirepurchase agreement a deemed sale. It was so. held in Johar's case
by thi~ Court.
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In.the present.case s~ction 2(28) of _the Gujarat Act d-,fines 'sale'
as follows :
"Sale" means a sale of goods made within the State for
cash: or deferred rayment or other valuable consideration
7-L In Sury Cl/75
392
SUPREME COURT REPORTS
[1975] 1 s.c.R.
a.nd includ.es any supply by a Society or Club or an associaA
tio~ to tts members on payment of a price or of fees or subscnpt10n, but does not include a mortgage, h1ypothecation,
charg·;, or. pledge; a~d the word "sell", "buy",
and
"purchase . with all their grammatical variations and cognate
·expressions shall be construed accordingly.
Explanation : For the purposes o(this dausc, a sale within
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the State includes a sale determined to be inside the State
m accordance with the principles -formulated in sub-section
(2) of principles formulated in sub-section (2) of Section 4
of the Central Sales Tax Act, 1955."
As according to the explanation a sale within the Staie includes a sale
determined to be inside the State in accordance with the principles
formulated in sub-s.(2) of section 4 of the Central Sales Tax Act
1956, it is necessary to set out that sub-section here :
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"4.(2) A sale or purchase of goods shall be deemed to
take place inside a State if the goods are within the State-
( a) in the case of specific or ascertained goods, at the
time the contract of sale is made; and
(b)
........
The actual sale in this case fructified only when the hirer exercised
his option to purchase under the hire purchase agreement and at that
time goods were inside the State of Gujarat.
We see no objection
to the incorporation in section 2(28) of the Gujarat Act of the .defi·
nition of a sale inside a State contained in s.4(2) of the Central Sales
Tax Act. The Gujarat legislation could as well have incorporated the
very words of s.4(2) of the Central Sales Tax Act in the explanation
to s.2(28) and in either case it makes no difference.
We also s·ee
no objection to the Gujarat State taxing what according to the Central
Sales Tax Act is a sale inside the State of Gujarat.
There can be no
objection to a State making a sale of goods which are inside the State
at the time the sale takes place Iiabk to sales tax under its own legislation.
The fact that in this case the contract of hire purchase was
entered into in Delhi,_ that the instalments were paid in Delhi and the
option itself was exercised in Delhi does not make any difference to
this result.
All that it means is that the agr·oement of sale was con·
duded in Delhi whereas the sale itself was, if we may say so, completed by the property in the goods passing in Gujarat State. and the
sale, therefore, took place in Gujarat State. Nor do we see any objecttion to Gujarat levying a tax in respect of same goods even though
those goods may have been subjected to tax earlier by the Delhi State.
There is no rule that any goods can be subjected to tax only onc·e.
Even in respect of the same goods sales tax can be levied as often as
there are sales.
In the present case there was reaUy no sale when the
hire-purchase agreenient was entered into though that transaction was
made liable to tax as a result of a legal fiction which the Parliament
was entitled to create.
Th~ sale itself took place only when the hir·er
,exersised his option to purchase and that was when th~ goods were
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INSTALMENT SUPPLY LTD. v. S.T.O. (Alagiiiswami, 1.) . . 39 3_
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inside th<: State of Gujarat.. and therefore the State of Gujarat was
entitled t.o levy a tax on that transaction of sale.
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We may however point out that the definition of "sale" in the
Bengal Finance (Sales Tax) Act applicable to the State of Delhi has
been amended in 1959 by Act 20 of 1959 and reads as follows :
"Sale", with itS grammatical variations
ancl cognateexpressions means any · tran5fer ·of property in goods by one
person to ,another for cash or for deferred paymenl or for any
other valuable consideration, and includes a transfer of goods
on hire,purchase or other system of payment by instalments,
but does. no include a ·mortgage or hypothecation of. or a
charge or pledge on goods.
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·Explanation.-. A, sale or pprchase of . goods shall . . be
deemed !O take place inside the Uilion territory of Delni if
the goods are within that territory-
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(i) in the case of specific or ascertained goods, at the time
the contract. of sale is made; 'and
(ii) in the cas;; of unascertained or future goods, at·the. time
of their appropriation to the contracr of sale by the seller
or hy the. buyer, whether assent of the other party is .
prior or subsequ.ent to such appropriation."
This definition' is, in effect, th;: same as the one in the Gujarat Act.
Therefore, the type of transactions which were subjected to tax in
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the earlier Instalment Supply case will not be subject to taxation h:reafter and th<: problem.of the same transaction.being subjected to taxa
tion at two diffetent stages will not arise.
Finally w: may refer to an objection taKen by Mr. Bhandare on
behalf of the State of Gujarat that .no petition under Art. 32 of the
C.onstitution lies in this case. He relied on the decision ih Ramjilal v.
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Income-tax Officer; Mohindergarh (1951 SCR 127) for this conten·
lion. But in view of the d;;cision of this Court in Smt. Ujjam Bai v.
State of Uttar Pradesh (1963 1 SCR 778) we are of opinion that there
is nb substance in this contention. It was there held that "an application under Art. 32 will lie (1) where action is taken under a statut<:
which is ultra vires of the Constitution, (2) where the statute is intra
vires but the action taken is without jurisdiction, and (3} where the
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action taken is procedurally ultra vires as where a quasiiudicial autho-.
rity under an obligation to act judicially passes an order in violation.
of the principles of natural justice." The constitutionality of s. 2 (28)
of the Gujarat Act has bee.n questioned, and therefore the petition is
maintainable.
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Th·: petitions are dismissed.
There will, however, be no order as
to costs.
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P.B.R.
Petitions dismissed.