A motor vehicle remains in the category of unascertained or future goods till its appropriation to the contact of sale by the seller is occasioned by handing over its possession at or near the office of registration authority in a deliverable and registrable state, the Court said.
The Supreme Court, on Friday has observed that though in practical terms sale precedes the event of registration, in normal circumstances and as the law stands, it is co-terminus with registration of a new motor vehicle. Apex Court bench comprising of Justices Dipak Misra and Shiva Kirti Singh dismissed the appeal in Commissioner of Commercial Taxes, Thiruvananthapuram, Kerala vs. M/s K.T.C. Automobiles.
The appeal before Supreme Court was preferred by Commissioner of Commercial Taxes, whose order was set aside by the Kerala High Court. According the Commissioner, who had restored the findings of Intelligence Officer, the sales were concluded by the Dealer at Kozhikode and hence the vehicles should have been registered within the State of Kerala and by showing the sales at Mahe the Dealer had failed to maintain true and complete accounts as an assessee under the KGST Act and had evaded payment of tax to the tune of Rs.86 lakhs and odd during the relevant period.
Sale coterminous with registration
The Court referring to Article 286(2) of the Constitution of India, Section 4(2) Central Sales Tax Act, 1956 and Sections 4, 19 and 20 of the Sale of Goods Act, 1930, transfer of possession from Dealer to purchaser can take place only when the vehicle reaches the place where the registering authority will be obliged to inspect for the purpose of finding out whether it is a roadworthy and register-able motor vehicle and whether its identification marks tally with those given in the sale invoice and the application for registration.
The Court further observed “technically though the registration of a motor vehicle is a post-sale event, the event of sale is closely linked in time with the event of registration. Neither the manufacturer nor the dealer of a motor vehicle can permit the intended purchaser having an agreement of sale to use the motor vehicle even for taking it to the registration office in view of the statutory provisions already noticed. Hence lawful possession with the right of use is permissible to be given to the intended owner only after reaching the vehicle to the office of Registering Authority. “
The Court said that a motor vehicle remains in the category of unascertained or future goods till its appropriation to the contact of sale by the seller is occasioned by handing over its possession at or near the office of registration authority in a deliverable and registrable state.
Read the Judgment here.