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Report No. 61

1.7. Certain transactions not to be regarded as sale.-

Several other transactions fall outside the concept of "sale" because of the absence of the essential requirement of sale. For example, a transaction between an hotelier and a resident customer of the hotel is one of "service", and is not taxable1 under the head of "sale of goods", if there is a consolidated charge for boarding and lodging.

The allotment of the goods of a firm amongst its partners, on the dissolution of the firm, also does not amount to a "sale". A provision in a Bombay Act2, in so far as it purported to tax such allotment, was held3 to be ultra vires the State Legislature.

1. Associated Hotels of India Ltd. v. Excise & Taxation Officer, Simla, AIR 1966 Punj 449 (454 to 458), paras. 18 to 35.

2. Section 26(3), Bombay Sales Tax Act, 1963 (3 of 1963).

3. State of Gujarat v. Ramanlal & Co., AIR 1965 Guj 60 (69), paras. 17-18.



Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back




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