Lloyds Finance Ltd. vs Deputy Commercial Tax Officer and Others

S.R. Nayak, J.—The petitioner-company is a non-banking financial company carrying on business of non-banking transactions such as hire-purchase, lease, bills discounting, etc. The second respondent is a customer of the petitioner-company which entered into hire-purchase agreement with the petitioner-company under which the second respondent agreed to take on hire-purchase a Swaraj Mazda LMV. The vehicle is registered as AP 3 IV 1107. Under the terms of the hire-purchase agreement dated September 23, 1998, the second respondent agreed to pay monthly hire charges at Rs. 10,700 per month for 30 months. According to the petitioner, the second respondent had paid only 10 instalments and failed to make payment of the balance instalments.

The second respondent is an assessee on the rolls of the Commercial Tax Officer, Dwarakanagar, Visakhapatnam. The Second respondent fell on arrears of sales tax of Rs. 7,37,610 for the assessment years 1991-92 to 1993-94 under the Andhra Pradesh General Sales Tax Act, 1957 and Central Sales Tax Act, 1956. According to the first respondent every effort made by the department to recover the tax from the second respondent went in vain and as a last resort to recover the tax from the second respondent, the vehicle Swaraj Mazda was attached under the provisions of the A.P. Revenue Recovery Act, 1864 read with Section 17-C of the Andhra Pradesh General Sales Tax Act, 1957.

It appears from the counter-affidavit filed by the first respondent that against the attachment of the vehicle on an earlier occasion the second respondent filed W.P. No. 36262 of 1998 in this Court. It is pertinent to note that in the affidavit filed in support of that writ petition the second respondent did not deny that he was the owner of the vehicle at the relevant point of time. The said writ petition was contested by the first respondent by filing a counter-affidavit and this Court by order dated April 15, 1999 dismissed the said writ petition confirming the action of attachment of the vehicle.

When the matters stood thus, the present writ petition is filed by the petitioner for mandamus or any other appropriate writ, order or direction directing the respondents to release the vehicle bearing Reg. No. AP 3 IV 1107 (Swaraj Mazda make LMV) to the petitioner and to handover the same to the petitioner and pass such other order or orders as this honourable Court may deem fit in the circumstances of the case. This relief is sought by contending that the attachment of the Swaraj Mazda vehicle by the Deputy Commercial Tax Officer, Gopalapatnam, Visakhapatnam, is illegal inasmuch as the ownership of the vehicle was not transferred from the petitioner to the second respondent under the hire-purchase agreement and it could be transferred on payment of the last instalment. It is pertinent to notice that according to Explanation I appended to Section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957 regarding definition of "sale" a delivery of goods on hire-purchase or any other system of payment of instalment shall, notwithstanding the fact that the seller retains title on the goods as security for payment of price, be deemed to be a sale. In view of this Explanation, it should be held that there is transfer of property from the petitioner to the second respondent by way of sale and, therefore, the second respondent is the absolute owner of Swaraj Mazda vehicle and, therefore, the attachment is perfectly valid. Even assuming that the second respondent in terms of the hire-purchase agreement did not pay the instalments, that fact itself would not alter the situation having due regard to Explanation I appended to Section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957.

Before concluding a decision cited by the learned Counsel for the petitioner before us be noted. The learned counsel placed reliance on the judgment of a learned single Judge of this Court in The Asia Pacific Investments Trust Ltd. Vs. Ac, Excise and Prohibition, Hyderabad and Others, The said judgment will no way advance the case of the petitioner, for nothing is placed before us to show that the petitioner is the owner of the subject motor vehicle. Even in the registration certificate produced at page No. 10 of the material papers, nowhere the name of the petitioner is mentioned against the column "name of the registered owner". Only the name of the second respondent is mentioned against the said column.

In the result and for the foregoing reasons we do not find any merit in this writ petition and it is accordingly dismissed with no order as to costs.