K.S. Radhakrishnan, J. 1. The question that has come up for consideration before us is whether the Tribunal is justified in taking the view that the return of gold with labour charges in exchange of gold ornaments, would amount to sale within the meaning of Section 2(xxi) of the Kerala General Sales Tax Act, 1963. When these two tax revision cases came up for consideration before a Division Bench of this Court, the Bench doubted the correctness of the decision in Radhas Printers, Kollam v. State of Kerala [1993] 90 STC 201 ; (1992) KLJ (TC) 379, and referred the matter to a Full Bench. T.R.C. No. 65 of 1993 is filed by the assessee and T.R.C. No. 77 of 1993 is filed by the Revenue. They arise out of a common order passed by the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam, in T.A. No. 23 of 1991.
2. The assessee is a jeweller borne on the file of the Assistant Commissioner (Assessment), Special Circle, Ernakulam. The assessment year in question is 1980-81. On verification of the accounts of the assessee, for the purpose of assessment under the Kerala General Sales Tax Act, it was noticed that he had purchased 2,293.480 gms. of gold ornaments from dealers outside the State giving in return equal quantity of gold with labour charges. The assessing authority took the view that the said transaction is inter-State sale assessable under the Central Sales Tax Act. It was therefore proposed to assess the turnover under the said Act.
3. The assessee filed objections to the said proposal stating that the transaction in question was not a purchase or sale under the Central Sales Tax Act. The assessee contended that the gold supplied to dealers outside the State would not come within the definition of "sale" under the Kerala General Sales Tax Act or Central Sales Tax Act. According to the assessee, the expression "valuable consideration" under Section 2(xxi) of the Kerala General Sales Tax Act is intended to cover only cheques, promissory notes and other negotiable instruments. Objections raised by the assessee were overruled holding that receipt of gold ornaments and entrustment of gold with labour charges subsequently are two independent transactions and have got the character of inter-State sale.
4. Aggrieved by the said order, the assessee filed appeal before the Deputy Commissioner (Appeals), Ernakulam. The Deputy Commissioner dismissed the appeal holding that the issue of gold to dealers outside the State is to be treated as a separate transaction, and there are no circumstances to hold that it was not consequent to a sale within the meaning of Section 2(g) of the Central Sales Tax Act. The assessee preferred appeal before the Sales Tax Appellate Tribunal as T.A. No. 23 of 1991 against the order of the Deputy Commissioner (Appeals), Ernakulam. The Tribunal mainly relied on the decision of the Madras High Court in V.P. Vadivel Achari v. Madras Sales Tax Appellate Tribunal (Second Additional Bench), Madras [1969] 23 STC 273, and took the view that there is an element of sale in the transaction of purchasing new readymade gold ornaments and in return giving gold of equal quantity with manufacturing charges. The Tribunal therefore found that the said transaction is a sale within the meaning of Section 2(xxi) of the Kerala General Sales Tax Act. The Tribunal, however, found that there was no inter-State sale so as to attract the Central Sales Tax Act, and therefore the assessment made on the assessee under the Central Sales Tax Act was set aside. Aggrieved by the order of the Tribunal, assessee as well as the Revenue have come up in revision before this Court.
5. The revision petitioner in T.R.C. No. 65 of 1993 has raised the following questions of law :
1. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that the supply of old gold by the petitioner to the non-resident persons in return for new ornaments received from them amounted to sale of old gold is correct ? Is the reasoning of the Tribunal that the new ornaments received constituted valuable consideration for the sale of the old gold within the meaning of the definition of "sale" in Clause (xxi) of Section 2 of the Kerala General Sales Tax Act sustainable in law ?
2. Has not the Tribunal committed grave error and breach of judicial propriety in following the decision of the Madras High Court in Vadivel Achari [1969] 23 STC 273 in preference to the ruling of this honourable High Court in Radhas Printers [1993] 90 STC 201 ; (1992) KLJ (TC) 379 where this Court specifically dissented from the ruling of the Madras High Court in Vadivel Achari's case [1969] 23 STC 273 ?
The Revenue in T.R.C. No. 77 of 1993 has also raised the following questions of law :
1. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that no prior contract for the sale has been established an order a movement of the goods purchased from Kerala to outside State as a result of such contract has not been proved ?
2. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that there is no sale and there is only an exchange of goods ?
3. Is the finding and conclusion arrived by the Tribunal justified in law ?
6. We have heard counsel for the assessee Smt. Deepsur D. Jayan and also Senior Government Pleader Sri V.V. Ashokan. Counsel for the assessee contended that there is no element of sale in the transaction and it is only an exchange of new articles for the old articles with same weight. According to her sale has been defined under Section 2(xxi) of the Kerala General Sales Tax Act as a transfer for cash or for other valuable consideration. Consideration was neither fixed nor contemplated between the assessee and his customers, either for the old gold or for the gold ornaments. What is collected from the customers is charges for covering the old gold into gold ornaments. Counsel also referred to definition of "sale" under Section 54 and of "exchange" under Section 118 of the Transfer of Property Act, 1882, and submitted that the meaning of term "sale" is different from "exchange" which is also known as barter. It is also submitted that sale under Section 4 of the Sale of Goods Act, 1930 takes place when the property in goods has passed to the purchaser for a price, which generally means monetary consideration. Counsel also urged that the expression "any other valuable consideration" under Section 2(xxi) of the Kerala General Sales Tax Act as well as under Section 2(g) of the Central Sales Tax Act had to be confined to two preceding specific terms "cash" and "deferred payment".
7. Learned Government Pleader however contended that since the definition of "sale" in Section 2(xxi) of the Kerala General Sales Tax Act covers a transfer of property for cash as well as "other valuable consideration" it may include such consideration as gold which can be readily convertible into cash and it is as good as cash. According to him, it is not essential that the consideration of sale need entirely be paid in cash. It is also his case, the gold given in exchange could be converted into money and therefore the same would amount to "valuable consideration" within the meaning of Section 2(xxi) of the Kerala General Sales Tax Act, which reads as follows :
" 'sale' with all its grammatical variations and cognate expressions means every transfer (whether in pursuance of a contract or not) of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge."
In order to constitute a sale it is necessary that there must be an agreement between the parties transferring title to goods which of course pre-supposes capacity to contract, that it must be supported by money consideration and that as a result of the transactions property must actually be passed in goods. The abovementioned definition clause also uses the word "means". When a statute says that a word or phrase shall "mean"--not merely that it shall "include"--certain things or acts, "the definition is a hard-and-fast definition, and no other meaning can be assigned to the expression that is put down in definition". A definition is an explicit statement of the full connotation of a term : Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court (1990) 3 SCC 682.
8. The essence of sale also lies in the transfer of property "for cash or for deferred payment or for other valuable consideration". The definition of "sale" contained in the Kerala General Sales Tax Act cannot be construed to include within its ambit those transactions which do not fall within the definition of "sale" contained in the Sale of Goods Act, and the definition in the Sales Tax Act, must therefore be construed accordingly. Section 4 of the Sale of Goods Act defines "sale" as a transaction whereby there is transfer of property in goods to the buyer for a price. Section 2(10) of the Sale of Goods Act defines "price as money consideration for a sale of goods". Thus in order that a transaction may amount to a sale in accordance with the Sale of Goods Act, the consideration has to be money.
9. A transaction like the one with which we are concerned wherein the substantial consideration is supply of gold and money part represents the labour charges cannot be construed as amounting to sale within the meaning of the Sale of Goods Act. The definition of "sale" given in Section 2(xxi) of the Act should also therefore be construed similarly. The words "other valuable consideration" in the context have to be considered as equated with money, the word money being wider than cash.
10. In State of Madras v. Gannon Dunkerley & Co. [1958] 9 STC 353, the Supreme Court considered the meaning of the word "other valuable consideration" contained in the Madras General Sales Tax Act. After examining the scope of the Act vis-a-vis the Sale of Goods Act, 1930, the Supreme Court held that sale of goods must be construed in the sense in which they occur in the Sale of Goods Act. The words "other valuable consideration" which occur in Section 2(h) of the Madras General Sales Tax Act and which do not find a place in the definition of "sale" in the Sale of Goods Act were held to be ultra vires the scope of the Provincial or State Legislature. It was further held that in order to constitute a sale it is necessary, among other things, that there should be an agreement between the parties for the purpose of transferring the title to goods, which of course, pre-supposes capacity to contract, and that it must be supported by money consideration. If the consideration for the transfer was not money, but other valuable consideration, it may then be exchange or barter, but not a sale, Supreme Court held.
11. The Supreme Court had occasion to consider a similar question in Devi Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430. While construing Section 2(h) of the Punjab General Sales Tax Act, 1948, defining "sale", which is analogous to Section 2(xxi) of the Kerala Act, Supreme Court held :
"Now, coming to the expression 'price' it is no doubt defined in the Sale of Goods Act as 'money consideration'. Cash or deferred payment in Clause (ff) of Section 2 of the Act satisfies the said definition. The expression 'valuable consideration' has a wider connotation, but the said expression is also used in the same collocation in the definition of 'sale' in Section 2(h) of the Act. The said expression must bear the same meaning in Clause (ff) and Clause (h) of Section 2 of the Act. It may also be noticed that in most of the Sales Tax Acts the same three expressions are used. It has never been argued or decided that the said expression means other than monetary consideration. This consistent legislative practice cannot be ignored. The expression 'valuable consideration' takes colour from the preceding expression 'cash or deferred payment'. If so, it can only mean some other monetary payment in the nature of cash or deferred payment."
In view of the abovementioned principle laid down by the Supreme Court, the expression "cash or deferred payment or other valuable consideration" used in the definition of "sale" in Section 2(xxi) of the Kerala General Sales Tax Act has to be construed to mean cash or some other monetary payment.
12. The Allahabad High Court had occasion to consider a similar question in Sales Tax Commissioner v. Ram Kumar Agarwal [1967] 19 STC 400. The question that came up for consideration before the court was whether the giving of bullion by a dealer in exchange for purchase of readymade ornaments manufactured by goldsmith is a "sale of bullion" within the meaning of the U.P. Sales Tax Act or is a barter or exchange transaction. The court took the view that obtaining new ornaments by giving in exchange bullion from the assessee plus manufacturing charges to the goldsmith did not amount to a sale of bullion and as such that part of the transaction was not liable to sales tax under the U.P. Sales Tax Act. The Allahabad High Court following the decision of the Supreme Court in State of Madras v. Gannon Dunkerley & Co. [1958] 9 STC 353 held that it is difficult, if not impossible, to equate bullion with cash or coins, cheques or a negotiable instrument, when gold bullion, an item of stock-in-trade was exchanged with that of assessee. The definition of bullion is "uncoined gold and silver in mass". Bullion is not sovereign or guinea and as such, particularly when it happens to constitute the stock-in-trade of the assessee's business, it cannot be treated as cash or deferred cash payment within the meaning of Section 2(h) of the Act, and therefore will not satisfy the definition of "sale" in the Sale of Goods Act, which has the same meaning as in the U.P. Sales Tax Act.
13. The Madhya Pradesh High Court in Commissioner of Sales Tax v. Kansari Udyog Sahakari Samiti [1979] 43 STC 176 again followed the decision of the Supreme Court in Gannon Dunkerley's case [1958] 9 STC 353. It was a case where the assessee manufactured utensils made of kansa (an alloy) and supplied readymade "kansa" utensils to the customers for a consideration which is equal in weight of kansa in the shape of old goods and some money considered as labour charges including profit. Question arose as to whether the transaction amounted to sale within the meaning of Section 2(n) of the M.P. General Sales Tax Act. The Madhya Pradesh High Court followed the principle laid down by the Allahabad High Court in Ram Kumar Agarwal's case [1967] 19 STC 400 and took the view that the words "other valuable consideration" in Section 2(n) have to be construed as equated with money, the word "money" being wider than "cash". It was held in order that a transaction may amount to a sale, the consideration has to be money. A transaction wherein the substantial consideration is the supply of an equal amount of raw material and the money part represents only the labour charges cannot be treated as amounting to sale under the M.P. General Sales Tax Act.
14. The Gauhati High Court in Assam Oil Company Ltd. v. Commissioner of Taxes, Guwahati [1991] 81 STC 37 also considered the expression "valuable consideration". That was a case where the assessee, a manufacturer in the State of Assam of petroleum and petroleum products, despatched certain quantities of goods to three companies outside the State. The companies later in turn supplied goods of equivalent value to the agent at different places outside the State. The agent thereafter remitted the monetary value of such goods to the applicant. On the question whether it was a sale within the meaning of Section 2(g) of the Central Sales Tax Act, the court followed the principle laid down by the Supreme Court in Devi Dass Gopal Krishnan's case [1967] 20 STC 430, and held that the transaction would not amount to sale under the Central Sales Tax Act, even though the court held that the transfer of property in the goods to the companies so far as the applicant was concerned had taken place for "deferred payment" and therefore the transaction was "sale" within the meaning of Section 2(g) of the Act.
15. The Andhra Pradesh High Court recently analysed various decisions on the question in Vijaya Aluminium Industries v. State of Andhra Pradesh [1996] 103 STC 508. That was a case where the assessee converted aluminium scrap collected as such or in the shape of old aluminium articles from customers, and after converting them into new aluminium articles, supplied them to the same customers, charging labour charges. The weight of the old articles or scrap was the same as that of the new articles. The price of the scrap or old articles or the new articles was nowhere mentioned in the bills. Question arose as to whether such a transaction would amount to sale of new articles under Section 2(n) of the A.P. General Sales Tax Act. The court took the view that the expression "cash or deferred payment or other valuable consideration" used in the definition of "sale" under Section 2(n) of the Act has to be construed to mean cash and not any mode of payment other than cash.
16. Almost identical question came up for consideration before the Madras High Court in South India Metal Works and Rolling Mills [1960] 11 STC 507. That was a case where the assessee collected scrap materials from its customers, melted the scrap, manufactured sheets and rings and gave back to the customers the new sheets and rings after collecting labour charges, the total weight of the scrap tallied with the total weight of the sheets and rings. The Madras High Court held that there was no question of purchase when the scrap metal was entrusted by the customer to the assessee, nor was there any sale as such of the brass and copper sheets or rings, It was noted the assessee collected scrap from a number of customers, had all that scrap melted, manufactured sheets and rings, and gave back the customers the exact weight, but in new sheets and rings. It was held the identity of the new sheets and rings could not be correlated to and established with the scrap supplied by the customer is not really germane in deciding the real question at issue--was there a sale or purchase at any time either when the assessee took over the scrap for the specific purpose of melting it and converting it into sheets and rings, or when there was a delivery of the finished products, that is, sheets and rings, by the assessee to the customer.
17. Identical question came up for consideration again before the Madras High Court in Raju Chettiar and Brothers v. State of Madras [1955] 6 STC 131, where the Madras High Court held that there was no purchase of the scrap by the assessee and no acquisition of properly in the scrap metal ; it is a little difficult to understand the basis for the view that, when the sheets and rings were made over to the customer there was a sale involving an element of transfer of property.
18. Following the decision of the Madras High Court in South India Metal Works and Rolling Mills [1960] 11 STC 507, that court in Vishweshwaradass Gokuldass v. Government of Madras [1962] 13 STC 113 held that where the aluminium scrap collected was converted into aluminium circles and supplied in equal weight after collecting labour charges, transaction was not a sale.
19. The principle that can be deduced from the above decisions is that receipt of gold ornaments in exchange of gold with labour charges would not come within the definition of "sale" under Section 2(xxi) of the Kerala General Sales Tax Act. The words "other valuable consideration", which occur in Section 2(xxi) of the Act can be interpreted by rules of ejusdem generis, as the payment of cheque, bills of exchange or other negotiable instruments. The words "deferred payment or other valuable consideration" used in Section 2(xxi) of the Kerala General Sales Tax Act merely enlarge the ambit of the consideration beyond cash, but do not carry it outside the scope of the term "money". In the present case, gold is an item of stock-in-trade which was exchanged for ornaments which also formed part of the stock-in-trade of the assessee's business. It is difficult to equate gold with coins, or cheque or negotiable instruments.
20. Learned Government Pleader placed much reliance on three decisions of the Madras High Court. The Madras High Court in Jayarama Chettiar, In re [1948] 1 STC 168 considered the scope of expression "sale" under Section 2(h) of the Madras Sales Tax Act read with Section 15(a) of the Sale of Goods Act. According to the Madras High Court, in order to bring a transaction within the ambit of the term "sale" as defined in the Madras General Sales Tax Act, money alone need not necessarily be the consideration. That was a case where a dealer in silver transferred to a purchaser the property in a finished silver article in exchange for an equivalent weight in silver along with a sum of money equal to the manufacturing or making charges. Similar is the view taken by the Madras High Court in V.P. Vadivel Achari v. Madras Sales Tax Appellate Tribunal, Second Additional Bench, Madras [1969] 23 STC 273. According to the court "other valuable consideration" in the definition of "sale" in the Madras General Sales Tax Act, means some other monetary payment in the nature of cash or deferred payment. Money is not necessarily confined to coins or currency notes, but has a wider connotation and sense. Gold being in the nature of money, payment by gold may be regarded as payment in the nature of cash or as money consideration in the context of sale of goods.
21. Premier Electro Mechanical Fabricators v. State of Tamil Nadu [1984] 55 STC 371 (Mad.), is a case where the assessee sold items of machinery to a private limited company, The parties first agreed about the sale and followed up that bargain by further agreeing that the liability of the company for payment of the sale consideration has to be discharged by the issue to the petitioner of fully paid-up shares in the company. The assessing authority brought the aggregate sale value of items of the machinery to assessment rejecting the contention of the assessee that the transactions were not sale but only a barter or exchange as the consideration received by the assessee was not cash, but only the equity shares of that very company. While considering the words "other valuable consideration" the court held that it was a sale within the meaning of "sale" under the Tamil Nadu General Sales Tax Act. Even though reliance on the Supreme Court decision in Devi Dass Gopal Krishnan [1967] 20 STC 430 was placed, the Madras High Court took the view that the Supreme Court noted the goods passed is something akin to cash or deferred payment.
22. We are afraid that we cannot agree with the view taken by the Madras High Court on the scope and ambit of the term "sale" in the light of the decisions of the Supreme Court in Gannon Dunkerley's case [1958] 9 STC 353 and Devi Dass Gopal Krishnan's case [1967] 20 STC 430. Supreme Court in Gannon Dunkerley & Co.'s case [1958] 9 STC 353 has categorically held that in order to constitute sale, there must be an agreement between the parties, for the purpose of transferring the title to goods, which of course pre-supposes capacity to contract and that must be supported by money consideration. According to the Supreme Court, if the consideration is not money, but for other valuable consideration, it can then only be not a sale. Same is the view taken by the Supreme Court in Devi Dass Gopal Krishnan's case [1967] 20 STC 430.
23. We are of the view that when gold was an item of stock-in-trade and it was exchanged for ornaments which also formed part of the stock-in-trade of the assessee's business, it is difficult to equate gold with cash or cheque or negotiable instrument. The words "valuable consideration" can only be interpreted on the basis of rules of ejusdem generis, as payment by cheques, bills of exchange, and other negotiable instruments. They cannot cover a case when no price is paid, and it is merely one of exchange or barter. We may also notice in this connection that the term "money" has a legal meaning as well as a popular sense, both of which bar the inclusion of gold or metal of any kind as such in the concept of "money". When gold forms part of the stock-in-trade of the assessee's business, it cannot be treated as cash or deferred cash payment within the meaning of Section 2(xxi) of the Kerala General Sales Tax Act. Therefore, the transaction would not satisfy the definition of "sale". We are of the view that the decision in V.P. Vadidvel Achari's case [1969] 23 STC 273, Jayarama Chettiar In re case [1948] 1 STC 168 and Premier Electro Mechanical Fabricators [1984] 55 STC 371 are not correctly decided by the Madras High Court, in view of the various decisions of the Supreme Court and other High Courts already referred to.
24. It is well-settled that the burden is on the Revenue to establish that a particular transaction would satisfy the expression "sale" and consequently liable to incidence of tax under the relevant statute. In Bengal Immunity Company Limited v. State of Bihar [1955] 6 STC 446 (SC), it was held that sale could be said to be in the course of inter-State trade only if two conditions concur, namely, (a) a sale of goods, and (b) a transport of those goods from one State to another. Unless both these conditions were satisfied, there could be no sale in the course of inter-State trade. There must be evidence that the transportation was occasioned by the contract, and as a result of goods moved out of the bargain between the parties from one State to another. This position was upheld by the Supreme Court in Commissioner of Sales Tax v. Suresh Chand Jain [1988] 70 STC 45. In the instant case, revenue has not established the abovementioned ingredients, so as to establish that there was inter-State sale and consequently, it is liable to be taxed under the Central Sales Tax Act. Therefore we are of the view that the assessee is not liable to be taxed under the Central Sales Tax Act, and the Tribunal has correctly held so. Since we have already found that transaction involved in the case would not come within the definition of "sale" within the meaning of Section 2(xxi) of the Kerala General Sales Tax Act, question of applicability of Section 2(g) of the Central Sales Tax Act does not arise.
25. We therefore hold that the exchange of old gold with labour charges in return of gold ornaments would not come within the definition of "sale" under Section 2(xxi) of the Kerala General Sales Tax Act. The expression "cash or deferred payment or other valuable consideration" used in the definition clause has to be considered to mean cash or some other monetary payment. We are therefore of the view that the decision in Radhas Printers case [1993] 90 STC 201 (Ker) does not require reconsideration and has correctly decided on the basis of the various decisions of the Supreme Court. We respectfully disagree with the decisions of the Madras High Court in Vadivel Achari 's case [1969] 23 STC 273 and Jayarama Chettiar's case [1948] 1 STC 168 referred to above.
26. In view of the abovementioned reasons, we hold that the finding of the Kerala Sales Tax Appellate Tribunal in T.A. No. 23 of 1991 that there was element of "sale" within the meaning of Section 2(xxi) of the Kerala General Sales Tax Act in the transaction entered into by the assessee with the supplier of the gold ornaments from outside the State, is unsustainable in law. We affirm the finding of the Tribunal that the assessee is not liable to be taxed under the Central Sales Tax Act.
In the result the assessment order dated August 7, 1989 passed by the Assistant Commissioner (Assessment), Special Circle against the assessee for the year 1980-81 is set aside. T.R.C. No. 65 of 1993 filed by the assessee is allowed and T.R.C. No. 77 of 1993 filed by the Revenue is dismissed.