Home       Top Rated       Submit Article     Advanced Search     FAQ       Contact Us       Lawyers in India       Law Forum     RSS Feeds     

Register your Copyright Online

We offer copyright registration right from your desktop click here for details.

Latest Articles | Articles 2014 | Articles 2013 | Articles 2012 | Articles 2011 | Articles 2010 | Articles 2009 | Articles 2008 | Articles 2007 | Articles 2006 | Articles 2000-05

Search On:Laws in IndiaLawyers Search

Mutual Consent Divorce in Delhi
We provide fast, cost effective and Hassle free solution.
Contact us at Ph no: 9650499965 (Divorce Law Firm Delhi)
File Caveat in Supreme Court
Contact Ph no: +9650499965

Main Categories
 Accident Law
 Animal Laws
 Aviation Law
 Bangladesh Law
 Banking and Finance laws
 Case Laws
 Civil Laws
 Company Law
 Constitutional Law
 Consumer laws
 Contracts laws
 Criminal law
 Drug laws
 Dubai laws
 Educational laws
 Employment / Labour laws
 Environmental Law
 family law
 Gay laws and Third Gender
 Human Rights laws
 Immigration laws
 Insurance / Accident Claim
 Intellectual Property
 International Law
 Juvenile Laws
 Law - lawyers & legal Profession
 Legal Aid and Lok Adalat
 Legal outsourcing
 Media laws
 Medico legal
 Real estate laws
 Right To Information
 Tax Laws
 Torts Law
 Woman Issues
 Workplace Equality & Non-Discrimination
 Yet Another Category

More Options
 Most read articles
 Most rated articles

Subscribe now and receive free articles and updates instantly.


Published : June 13, 2010 | Author : juhibansal
Category : Tax Laws | Total Views : 7355 | Rating :

Juhi Bansal, 5th Year student at Gujarat National Law University, Gandhinagar

Leviability Of Sales Tax To Actionable Claim

A Quick Background:
Prior to the amending Act 2 of 1900, actionable claim embraced all claims which civil court recognized as affording grounds for relief. Even a right to sue for damages for breach of contract and tort were held to be actionable claims even though such right was not attachable as such. But after this Act, the definition of actionable claim was restricted to unsecured debts and beneficial interests in movable property not in possession of the claimant. The affect of this amendment is that now a clear distinction lies between property (actionable claim) and a right to sue.

Issues Raised:
The issues dealt by me in this article are as follows:
I) Whether actionable claim can be considered as goods?
II) Whether sales tax can be levied on actionable claim?

Definition of Actionable claim:
Section 3 of Transfer of Property 1882 defines “Actionable claim”. As per Mulla’s T.P. Act an actionable claim is a claim to any unsecured debt. Such a debt should be other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property (because these are not transfers of claim but of the property itself) or a claim to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant. The claim should be such as Civil Court would recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent; Such transfer of an actionable claim shall be effected only by execution of an instrument is writing by the assignor to the assignee. [Section 130 of Transfer of Property 1882].

Definition of Goods:
Definition of goods under Sale of Goods Act 1930 - “Goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. [section 2(7)].

Definition of goods under Central Sales Tax Act 1956- “Goods” includes all materials, articles, commodities and all other kinds of movable property, but does not include newspapers, actionable claims, stocks, shares and securities. [section 2 (d)]

Issue I & ii: Determination Whether Actionable Claim Or Goods With The Help Of Relevant Case Laws

H. Anraj v. State of Tamil Nadu (1986) 1 SCC 414

Issue: Whether sales tax can be levied by a State Legislature on the sale of the Lottery Tickets in the concerned State?

The Supreme Court held that the lottery tickets, to the extent they comprise an entitlement to participate in a draw, are "goods" as they constitute a dealer's (in lottery tickets) stock in trade which is capable of being bought and sold in the market (and that there is a transfer of property in goods in every sale of the same). Lottery tickets are goods and not actionable claims. Both were held to be beneficial interests in moveable property, the former in present, and the latter in future, depending on the contingency.

Vikas Sales Corporation v Commissioner of Commercial Taxes AIR 1996 SC 2082

Issue: Whether transfer of import license (REP) by the holder to another person constitute sales of goods?

S.C examined if it does, it is exigible to sales tax, otherwise not. The features of REP licence include an innate value and freely transferable. These features make it a marketable commodity. Thus it held that it was a highly attractive and sought after instrument/means for importing goods. Infact, those licenses were being traded freely in the market and for that reason alone those were goods. Also, when they have a value of their own unrelated to the goods which can be imported there under, it is idle to contend that they are in the nature of actionable claims.

Sunrise Associates vs. Govt. of NCT of Delhi & Ors 2006 (5) SCC 603

Issue: Whether decision in Anraj case that lottery tickets are goods for purposes of levying sales tax was correct?

S.C. held that the lottery ticket has no value in itself as it is mere piece of paper. Its value lies in fact that it represents chance or right to conditional benefit of winning prize of greater value than consideration paid for transfer of that chance. It is nothing more than token or evidence of this right. Three ingredients in the sale of lottery tickets, namely, (i) prize; (ii) chance; and (iii) consideration. So, when one purchases a lottery ticket, he purchases for a prize, which is by chance and the consideration is the price of the ticket. The distinction drawn in H. Anraj case between the chance to win and the right to participate in the draw was held to be unwarranted and specious. Even if taken as a separate right, it would still be considered to be an actionable claim. A Constitutional Bench of the S.C. overturned the decision in the H Anraj case, holding that the sale of lottery tickets is, at best, an actionable claim.

Yasha Overseas v. Commissioner of Sales Tax (2008)

Issue: Whether the decision in Vikas case can be said to be impliedly overruled by the Constitution Bench decision in Sunrise? If no, whether Vikas case is still a good law and apply to cases of DEPB?

S.C. held that It was indeed true that the Constitution Bench in Sunrise Associates’ case (supra) did not approve the decision in Vikas Sales Corpn.’s case (supra) insofar as it gave their free transferability as an additional reason to hold that REP licences were not actionable claims but ‘goods’ properly so called. But there this question did not come for reference and hence no decision was given on this issue. Decision in Vikas sales still holds good and is applicable to DEPB as well.

State of Kerala and Ors. v. Mini Shamsudin and Ors. (2009)

Issue: Whether decision in Sunrise case is correct?

H.C. upheld the decision of Sunrise case. It held that actionable claims are `goods' and movable property but not for the purpose of the Sales Tax Acts. Consequently, an actionable claim is movable property and ‘goods’ in the wider sense of the term but a sale of an actionable claim would not be subject to the sales tax law.

Actionable claim can be considered as goods but not for the purpose of levying of sales tax.

Authors contact info - articles The  author can be reached at: juhibansal@legalserviceindia.com

1 2 3 4 5
Rate this article!     Poor

Most viewed articles in Tax Laws category
Interpretation of taxing statute as strict construction and exemption
Renting of Immovable Property - Service Tax
Export of Services- An analysis

Deductions Under Section 80d & 80e Of The Income Tax Act
Assessment of Income From House Property
Carry Forward and Set off of Losses
Regulatory Aspects of Venture Capital In India
The Bhopal Gas Tragedy: On Whether and How the Indian Companies Act, 1956 can be used to make a case for imposing social responsibility on corporations?
The Double Tax Avoidance Agreement between India and Mauritius
Vodafone vs. Union of India
Silent Features of GST Bill 2016
Non Resident Indian under Income Tax Act, 1961
General Anti Avoidance Rule GAAR - An Indian and International Perspective
Leviability of Sales Tax to Actionable Claim
Custom Valuation & Transfer Pricing
Most recent articles in Tax Laws category
Applicability and Exemption under Central Goods and Services Tax Act, 2017
Delegation of Taxation Power
NRIs, PIO and OCI to Share Tax Info Under FATCA/CRS Agreement
SEZ Eligibility under SEIS Scheme
Goods and Service Tax (GST) Working In India
Silent Features of GST Bill 2016
Why Tax Practitioners Bill Required For India
Non Resident Indian under Income Tax Act, 1961
Fearlessness of the Judiciary
Tax Implications on Business Reorganization Schemes
General Anti Avoidance Rule GAAR - An Indian and International Perspective
Comparables and Transfer Pricing
Interpretation of taxing statute as strict construction and exemption
Feasibility of GAAR for removing the practice of Tax Avoidance
Tax chages in Nepal by Finance Act 2067
Carry Forward and Set off of Losses

Article Comments

Posted by cludgels on February 08, 2012
check this link, at my estore

Posted by MR HOSAIN, ADVOCATE on August 05, 2010
thanks for such case laws and textuality of the matter of the Act.

Please login or register a new free account.

Random Pick
Most women seeking divorce have 3 priorities: 1. Divorce Certificate 2. Custody of the children 3. Maximum Financial support and settlement

» Total Articles
» Total Authors
» Total Views
» Total categories

Law Forum

Legal Articles

Lawyers in India- Click on a link below for legal Services

lawyers in Chennai
lawyers in Bangalore
lawyers in Hyderabad
lawyers in Cochin
lawyers in Pondicherry
lawyers in Guwahati
lawyers in Nashik

lawyers in Jaipur
lawyers in New Delhi
lawyers in Dimapur
lawyers in Agra
Noida lawyers
lawyers in Siliguri

For Mutual consent Divorce in Delhi

Ph no: 9650499965
For online Copyright Registration

Ph no: 9891244487
Law Articles

lawyers in Delhi
lawyers in Chandigarh
lawyers in Allahabad
lawyers in Lucknow
lawyers in Jodhpur
Faridabad lawyers

lawyers in Mumbai
lawyers in Pune
lawyers in Nagpur
lawyers in Ahmedabad
lawyers in Surat
Ghaziabad lawyers

lawyers in Kolkata
lawyers in Janjgir
lawyers in Rajkot
lawyers in Indore
lawyers in Ludhiana
Gurgaon lawyers


India's Most Trusted Online law library
Legal Services India is Copyrighted under the Registrar of Copyright Act ( Govt of India) 2000-2017
 ISBN No: 978-81-928510-1-3