Section 19 of Sale of Goods Act, the property in goods was transferred at that time only. Section 19 reads as under: “19. Property passed when intended to pass.-(1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case. (3) Unless a different intention appears, the rules contained in sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.” 15) These are clear finding of facts on the aforesaid lines recorded by the Adjudicating authority. However, the CESTAT did not take into consideration all these aspects and allowed the appeal of the assessee by merely referring to the judgment in the case of Escorts JCB Ltd. Obviously the exact principle laid down in the judgment has not been appreciated by the CESTAT.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 5541 OF 2004


|COMMISSIONER, CUSTOMS AND CENTRAL EXCISE,  |.....APPELLANT(S)            |
|AURANGABAD                                 |                             |
|VERSUS                                     |                             |
|M/S ROOFIT INDUSTRIES LTD.                 |.....RESPONDENT(S)           |


                               J U D G M E N T

A.K. SIKRI, J.
            Respondent is the holder  of  Central  Excise  Registration  for
manufacture of RCC and PSC pipes falling  under  Chapter  Heading  6804/6807
for the first  schedule  to  the  Central  Excise  Tariff  Act,  1985.   The
respondent  entered  into  four  agreements  for  designing,  manufacturing,
providing at site, laying, jointing and testing of PSC  pipes  of  specified
sizes.  These are agreements dated 24.06.1996,  01.09.1997,  25.09.1997  and
25.05.1999.

2)    It  is  the  case  of  the  Revenue  that  on  the  basis  of  general
intelligence collected, respondent/assessee  was  indulging  in  evasion  of
central excise duty by not computing the assessable value of finished  goods
properly to the  extent  that  it  was  deducting  the  amount  of  freight,
insurance and unloading charges from the price excisable  goods  though  the
place of removal of finished goods was  different  from  the  factory  gate.
The preventive party  visited  the  factory  premises  of  the  assessee  on
25.03.2000,  conducted  enquiries  and  resumed  the  records  for   further
scrutiny.  After scrutiny of various records and documents, it was  revealed
that  the  assessee  had  received  work  orders  from  various   Government
authorities and private contractors and the agreements entered into  by  the
assessee  with   the   above   mentioned   parties   were   for   designing,
manufacturing, providing at site, laying, jointing and testing of PSC  pipes
of specified sizes.  The agreement entered,  therefore,  entailed  upon  the
assessee, for delivery of the finished goods and not at  the  factory  gate.
It was found that no sale took place till the goods reached the test of  the
projects.

3)    A show cause  notice  dated  02.11.2011  was  issued  as  to  why  the
differential central excise duty amounting to Rs.43,56,318/- for the  period
of 01.01.1996 to 30.06.2000 should not be recovered from them under  proviso
to  Section 11A(1) of the Central Excise Act read  with  Rule  9(1)  of  the
Central Excise Rules, 1994 and why penalty under Section 11AC  and  interest
under Section 11AB should not be imposed.   The  assessee  replied  and  was
given personal hearing.  Learned Adjudicating authority vide  its  order  in
original confirmed the demand to extent  of  Rs.36,16,318/-  on  account  of
under valuation and on the ground that place of removal finished  goods  was
the buyer's premises and not at the factory gate.

4)    Aggrieved by the said order, the respondent  filed  an  appeal  before
CESTAT.  Learned Tribunal vide its impugned judgment and final  order  dated
30.03.2002 has allowed the  appeal  on  the  reasoning  that  the  issue  is
settled in Escorts JCB Ltd. v. Commissioner of Central Excise, Delhi-II[1].

5)    Feeling aggrieved by  the  aforesaid  order  of  the  CESTAT,  present
appeal is preferred by the Revenue under Section 35L(b) of the Act.

6)    The respondent has been duly served in the  appeal.   However,  nobody
has entered appearance on behalf of the  respondent.   Matter  came  up  for
final arguments on 10.04.2015.  On that day, we heard  learned  counsel  for
the appellant for some time as  the  argument  remained  inconclusive.   For
remaining arguments, matter was adjourned to  13.04.2015.   However,  nobody
appeared on behalf of the  respondent  on  10.04.2015  and  13.04.2015.   In
these circumstances, we  had  no  option  but  to  reserve  the  matter  for
judgment after hearing Mr. Kaul, learned ASG, who appeared for the Revenue.

7)    Insofar as the legal  position  is  concerned,  there  cannot  be  any
dispute about the same.  Section 4 of the  Act  is  the  relevant  statutory
provision which deals with valuation of excisable goods for the purpsose  of
charging of duty of excise.  Relevant portion thereof, as it existed  during
the period with which we are concerned, reads as under:
“4.  Valuation of excisable goods  for  purposes  of  charging  of  duty  of
excise.-(1) Where under this Act, the duty of excise is  chargeable  on  any
excisable goods with reference to value, such value shall,  subject  to  the
other provisions of this section, be deemed to be-


(a) the normal price thereof, that is to say, the price at which such  goods
are ordinarily sold by the assessee to a buyer in the  course  of  wholesale
trade for delivery at the time and place of removal, where the buyer is  not
a related person and the price is the sole consideration for the sale:


Provided that-


            (i)        *          *          *


            (i-a)           *          *          *


            (ii)       *          *          *


            (iii)           *          *          *


            (b)        *          *          *

                 (2)-(3)          *          *          *

                 (4) For the purpose of this section,-


            (a)        *          *          *


            (b) 'place of removal' means:


(i)         *          *             *


(ii) a warehouse or any other place or premises wherein the excisable  goods
have been permitted to be deposited without payment of duty.


(iii) a depot, premises of  a  consignment  agent  or  any  other  place  or
premises from  where  the  excisable  goods  are  to  be  sold  after  their
clearance from the factory and from where such goods are removed.”


8)    A contextual examination of the aforesaid provision, for  the  purpose
of the present case, would bring out the following the pertinent aspects:
(i)   The duty of excise is chargeable on excisable goods with reference  to
the value of those goods.
(ii)  The value of the goods is deemed to be the normal price thereof,  that
is to say, the price  at  which  such  goods  are  ordinarily  sold  by  the
assessee to a buyer in the course of wholesale trade.
(iii) The said normal price is to be seen at the time of delivery and  place
of removal.
(iv)  'Place of removal' is specifically defined and for  our  purposes,  it
is to be a place or premises from where the excisable goods are to  be  sold
after their clearance from  the  factory  and  from  where  such  goods  are
removed.
      Thus, place of removal, in a given case, become  determinative  factor
for the purpose of valuation.

9)    If the goods are cleared at the factory gate,  then  the  excise  duty
has to be charged on the valuation  of  the  goods  to  be  arrived  at  the
factory gate as that would be the place of removal of goods.  It would  mean
that the expenses which are incurred after the removal  of  goods  from  the
factory gate namely freight, insurance and unloading charges  etc.  are  not
to be included in the valuation of the goods  for  the  purposes  of  excise
duty.  The reason is that the sale of goods to the buyer is at  the  factory
gate when the property passes to the buyer  and  the  aforesaid  expenditure
are thereafter incurred by the buyer.  It is  this  aspect  which  was  gone
into by this Court in the case of Escorts JCB  Ltd.  (supra).   That  was  a
case  where  question  of  including   insurance   charges   came   up   for
consideration.  It was found as a fact that the goods were  cleared  at  the
factory gate.  On these facts, this Court held that  insurance  charges,  or
for that matter, transport  charges  would  not  be  included  even  if  the
assessee had arranged for the transit insurance.  The Court found  that  the
terms and conditions of sale clearly stipulated that it was ex-works at  the
factory gate of the assessee.  The payment was to be made  before  discharge
of the goods from the factory premises.  In the opinion of  the  Court,  the
machinery which was handed over to the career/transporter on  receiving  the
payment was as good as delivery to the buyer in terms of Section 39  of  the
Sale of Goods Act and, therefore, possession of the sold  goods  was  handed
over to the buyer at the factory gate.  In this manner, the transaction  was
full and complete and nothing remained to be done after the goods  left  the
factory premises.  On these facts, provisions  of  Section  4  of  the  Act,
which deals with valuation of excisable goods for the purposes  of  charging
of duty of  excise  was  taken  note  of  and  analysed,  holding  that  the
aforesaid charges could not be included  for  the  purpose  of  arriving  at
valuation of excisable goods.  The Court found fault with the orders  passed
by the authorities as well as CEGAT in the following manner:
“A perusal of the orders passed by the authorities and the CEGAT  show  that
since transit insurance was arranged  by  the  assessee,  therefore  it  was
inferred and held that the ownership  of  the  goods  was  retained  by  the
assessee until  it  was  delivered  to  the  buyer  on  the  reasoning  that
otherwise there would be no occasion for the seller namely, the assessee  to
take risk of any kind of damage to the goods during transportation.  To  us,
the whole reasoning seems to be untenable.  The two aspects have been  mixed
up – one relating to the transaction of sale of  the  goods  and  the  other
arranging for the transit insurance for the buyer and  charging  the  amount
expended for the purpose  from  him  separately.   In  connection  with  the
proposition that insurance can be taken by  a  third  person  on  behalf  of
another, reliance has been placed by the assessee on “Chitty  on  Contracts”
Twenty-Eight Edition Vol. 2 Spcial Contracts P.978 Chap. 41 Note  007  under
the heading “Insurance of Another's interest”.   It  is  indicated  that  in
varied facts and circumstances and subject to the  statutory  provisions  of
contract, it is possible to ensure the interest of another.  Referring to  a
decision reported in [1947] K.B. 685 Prudential Staff Union versus Hall,  it
is observed that a seller in possession of the goods when the  property  and
risks have passed may insure his buyer's interest.  Referring to a  decision
reported in Hepburn versus A. Tomlinson (Hauliers) Ltd. H.L. (E)  1966  451,
it has been submitted on behalf of the assessee that  a  bailee  apart  from
its interest may also insure the interest of  the  owner  of  the  property.
There may be  floating  insurance  policy  covering  not  only  the  limited
interest but the whole interest of the ownership of  the  customers  in  the
normal course.
      To substantiate the point further, a reference to Para 5-012  at  Page
184 of Benjamin's Sale of Goods Fourth Edition has been  made  which  is  to
the following effect:
      “Insurance.  The  passing  of  property  is  rarely  of  relevance  to
insurance.  A person can insure goods to their full value against  any  loss
on behalf of anyone who may be entitled to an interest in the goods  at  the
time the loss occurs, provided that it appears from the terms of the  policy
that it was intended to cover their interest.  Also a  buyer  will  have  an
insurable interest in goods if they are at his  risk,  whether  or  not  the
property has passed to him”.
      From the above passage it is clear that ownership in the property  may
not have any relevance in so far insurance of goods sold during  transit  is
concerned.  It would therefore  not  be  lawful  to  draw  an  inference  of
retention of ownership in the property sold by the seller merely  by  reason
of the fact that the seller had insured such goods during transit to  buyer.
 It is not necessary that insurance of the goods and the  ownership  of  the
property insured must always go together.  It may be depending upon  various
facts  and  circumstances  of  a  particular  transaction  and   terms   and
conditions of sale.  A reference has also been made to  Colinvauz's  Law  of
Insurance, Sixth Edition by Robert Merkin to  indicate  that  there  may  be
insurance to cover the interest of others that is  to  say  not  necessarily
the person insuring the interest must be the owner of the property.
      In one of the cases referred to  and  reported  in  1983  E.L.T.  1896
(S.C.) Union of India and others etc. etc. versus Bombay Tyre  International
Ltd.  etc.  etc.   the  question  involved  was   regarding   deduction   of
transportation charges along  with  cost  of  insurance.   It  was  held  as
follows:
      “Therefore, the expenses incurred on account of  the  several  factors
which have contributed to its value upto the date of sale, which  apparently
would be the date of delivery, are liable  to  be  included.   Consequently,
where the sale is effected at the factory gate,  expenses  incurred  by  the
assessee upto the date of delivery on account of  storage  charges,  outward
handling  charges,  interest  on  inventories   (stocks   carried   by   the
manufacturer after clearance), charges for other services after delivery  to
the  buyer,  namely  after-sales   service   and   marketing   and   selling
organization expenses incuding advertisement expenses  cannot  be  deducted.
It  will  be  noted  that  advertisement  expenses,  marketing  and  selling
organization expenses and after sale service promote  the  marketability  of
the article and enter into its value in the trade.  Where the  sale  in  the
course of wholesale trade is effected by  the  assessee  through  its  sales
organisation at a place or places outside the  factory  gate,  the  expenses
incurred by the assessee upto the  date  of  delivery  under  the  aforesaid
heads cannot on the same grounds be deducted.   But  the  assessee  will  be
entitled to a deduction on account of the  cost  of  transportation  of  the
excisable article from the factory gate to the place or places where  it  is
sold.  The cost of transportation will include the cost of insurance on  the
freight for transportation of the goods from the factory gate to  the  place
or places of delivery”.

10)   The underlying factor that normal price has to be  the  price  at  the
time of delivery and at the place of removal, in terms  of  Section  4,  has
been  succintly  brought  out  and  amplified  in  VIP  Industries  Ltd.  v.
Commissioner of Customs and Central Excise, Aurangabad[2] in  the  following
words:

“6. We have heard the parties at length. In our view, Section 4  has  to  be
read as a whole. Under Section 4(1)(a), the normal price  is  the  price  at
which goods are ordinarily sold by the assessee to a buyer in the course  of
wholesale trade for delivery at the time and place  of  removal,  where  the
buyer is not a related person and price is the sole consideration for  sale.
Therefore, the normal price is the price at the "time of delivery"  and  "at
the place of removal". Before the amendment, the place of removal  was  only
the factory or any other place or premises where the  excisable  goods  were
produced or manufactured or a warehouse  or  any  other  place  or  premises
where any excisable goods  have  been  permitted  to  be  deposited  without
payment of duty. Thus, the price would be the price at that  place.  By  the
amendment proviso (i-a) to Section 4(1)(a) has  been  added.  Under  Section
4(1)(a)(i-a) where the price of the goods is different for different  places
of removal, each such price was deemed to be the normal price of such  goods
in relation to "such place of removal". Thus, if the place  of  removal  was
the factory, then the price would be the normal price  at  the  factory.  If
the place of removal was some other place like a depot or the premises of  a
consignment agent and the price was  different  then  that  different  price
would be the  price.  It  is  because  the  newly  added  proviso  (i-a)  to
Section 4(1)(a) was now providing for different prices at  different  places
of removal that the definition of the term "place  of  removal"  had  to  be
enlarged. Thus the amendment  was  not  negativing  the  judgments  of  this
Court. If that had been  the  intention  it  would  have  been  specifically
provided that even where price was the same/uniform all  over  the  country,
the cost of transportation was to be added.”





11)   In Commissioner of Central Excise, Noida v. Accurate  Meters  Ltd.[3],
the Court took note of few decisions including in the case  of  Escorts  JCB
Ltd. and reiterated the aforesaid principles by emphasising that  the  place
of removal depends on the facts of each case.

12)   The principle of law, thus, is crystal clear.  It is to be seen as  to
whether as to at what point of time sale is effected namely  whether  it  is
on factory gate or at a later point of time i.e. when the  delivery  of  the
goods is effected to the buyer at his premises.  This aspect is to  be  seen
in the light of provisions of the Sale of Goods Act by applying the same  to
the facts of each case to determine as to when the ownership  in  the  goods
is transferred from the seller to the buyer.  The charges which  are  to  be
added have put up to the stage of the transfer of  that  ownership  inasmuch
as once the  ownership  in  goods  stands  transferred  to  the  buyer,  any
expenditure incurred thereafter has to be on buyer's account and  cannot  be
a component which would be included while ascertaining the valuation of  the
goods manufactured by the buyer.  That is the plain meaning which has to  be
assigned to Section 4 read with Valuation Rules.

13)   In the present case, we find that most of the orders placed  with  the
respondent assessee were by the various Government  authorities.   One  such
order i.e. order dated 24.06.1996 placed by Kerala  Water  Authority  is  on
record.  On going through the terms and conditions of  the  said  order,  it
becomes clear that the goods were to be delivered at the place of the  buyer
and it is only at that place where the acceptance  of  supplies  was  to  be
effected.  Price of the goods was inclusive of  cost  of  material,  central
excise duty, loading, transportation, transit  risk  and  unloading  charges
etc.  Even transit damage/breakage  on  the  assessee  account  which  would
clearly imply that till the goods reach the destination,  ownership  in  the
goods remain with the supplier namely the assessee.  As per  the  'terms  of
payment' clause contained in the procurement order,  100%  payment  for  the
supplies was to be made by the purchaser after the receipt and  verification
of material.  Thus, there was no money given earlier by  the  buyer  to  the
assessee and the consideration was to pass on only after the receipt of  the
goods which was at the premises of the buyer.  From the aforesaid, it  would
be manifest that the sale of goods did not take place at  the  factory  gate
of the assessee but at the place of the buyer on the delivery of  the  goods
in question.

14)   The clear intent of the aforesaid purchase order was to  transfer  the
property in goods to the buyer at the premises of the buyer when  the  goods
are delivered and by virtue  of  Section  19  of  Sale  of  Goods  Act,  the
property in goods was transferred at that time only.  Section  19  reads  as
under:
“19. Property passed when intended to pass.-(1) Where there  is  a  contract
for the sale of specific or  ascertained  goods  the  property  in  them  is
transferred to the buyer at such time as the parties to the contract  intend
it to be transferred.
(2)  For the purpose of ascertaining the intention  of  the  parties  regard
shall be had to the terms of the contract, the conduct of  the  parties  and
the circumstances of the case.
(3)  Unless a different intention appears, the rules contained  in  sections
20 to 24 are rules for ascertaining the intention of the parties as  to  the
time at which the property in the goods is to pass to the buyer.”

15)   These are clear finding of facts on the aforesaid  lines  recorded  by
the  Adjudicating  authority.   However,  the  CESTAT  did  not  take   into
consideration all these aspects and allowed the appeal of  the  assessee  by
merely referring to the judgment in the case of Escorts JCB Ltd.   Obviously
the exact principle laid down in the judgment has not  been  appreciated  by
the CESTAT.

16)   As a result, order of the CESTAT is set aside and  present  appeal  is
allowed restoring the order passed by the Adjudicating authority.


                             .............................................J.
                                                                (A.K. SIKRI)



                             .............................................J.
                                                     (ROHINTON FALI NARIMAN)

NEW DELHI;
APRIL 23,  2015.
-----------------------
[1]   2002 (146) ELT 31 (SC) = (2003) 1 SCC 281
[2]   (2003) 5 SCC 507
[3]   (2009) 6 SCC 52

the assessee-Port Trust would fall within the meaning of "dealer" under Section 2(viii) of the Act and is consequently assessable to tax under the Act.= we are of the considered opinion that the activities of the assessee in respect of buying, selling, supplying or distributing goods, executing works contract, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration, whether in course of business or not, would fall within the purview of Section 2(viii) of the Act. Hence, the assessee-Port Trust would fall within the meaning of "dealer" under Section 2(viii) of the Act and is consequently assessable to tax under the Act.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 1906 OF 2007



|M/s Cochin Port Trust                          |   Appellant(s)             |



                                   Versus

|State of Kerala                                |   Respondent(s)            |




                                  J U D G M E N T

      H.L. DATTU, CJI.


This appeal is directed against the judgment and order passed  by  the  High
Court of Kerala at Ernakulam in TRC No. 412 of 2002 and Sales  Tax  Revision
Nos. 321 and 326 of 2005, dated  23.12.2005,  whereby  and  whereunder,  the
High Court has held that  the  appellant-assessee  is  a  dealer  under  the
Kerala General Sales Tax Act, 1963 (for short, “the Act”) and dismissed  the
tax revision preferred by the appellant-assessee.

The question that  arises  for  consideration  in  this  appeal  is  whether
the appellant-Trust is a dealer under the Act and liable to  pay  sales  tax
under the Act on account  of  certain  activities  in  the  nature  of  sale
transactions carried on by it besides its statutory functions. For the  sake
of convenience and brevity, we would only notice the facts relevant  to  the
discussion with respect to the question(s) before us in this appeal.

Brief factual matrix of the case is as follows:  The  appellant-Trust  is  a
statutory authority constituted for rendering port services under the  Major
Port Trusts Act, 1963. The appellant-Trust is a registered dealer under  the
Act  and  an  assessee  on  the  rolls   of   the   Assistant   Commissioner
(Assessment),  Commercial   Taxes,   Special   Circle,   Mattancherry.   The
assessee’s specific activity of dealing in scrap items (sales  of  water  to
ships, tender forms, firewood, waste paper  and  disposal  of  unserviceable
equipment) is the subject matter of assessments in the  instant  appeal  for
the assessment years 1990-91, 1994-95 and 1997-98.

For the aforesaid assessment  years,  the  assessing  authority  had  raised
demand notices under the Act for the sales of scrap items  effected  by  the
assessee  vide  assessment   orders   dated   18.11.1995,   31.03.1999   and
24.10.2001, respectively.

The assessee aggrieved by the said  assessment  orders  had  approached  the
Deputy Commissioner (Appeals) in first statutory appeal.  The  assessee  had
assailed the assessment orders as illegal and unauthorised  on  the  ground,
inter alia, that it  is  not  engaged  in  any  trading  activity  and  only
discharging its statutory functions under the Major  Port  Trust  Act,  1963
and hence, it is not a “dealer” under the Act and cannot be exigible to  tax
thereunder. The first appellate authority has disposed of  the  said  appeal
by separate orders dated 16.01.1998,  28.10.1999  and  25.04.2002  for  each
assessment year 1990-91, 1994-95 and 1997-98,  respectively.  The  appellate
authority has considered the  definition  of  “dealer”  under  the  Act  and
rejecting the plea of the assessee, held that it is  a  “dealer”  under  the
provisions of the Act.

Aggrieved by the aforesaid order(s), the assessee  had  preferred  T.A.  No.
479 of 1998 for the assessment year 1990-91  before  the  Kerala  Sales  Tax
Appellate Tribunal (for short, “the Tribunal”). The assessee  had  contended
that in the instant case the  assessee-Trust  is  a  statutory  body  merely
discharging its functions of rendering port activities and  not  engaged  in
any trading activity or  “business”.  The  transactions  herein  are  merely
causal and incidental sale transactions which only attract sales tax if  the
registered dealer is otherwise carrying on business under the Act, which  is
not the case herein and therefore, the assessee cannot be  classified  as  a
“dealer” under Section 2(viii) of  the  Act.  Reliance  was  placed  by  the
assessee on the dictum of this Court in State of T.N. v. Board  of  Trustees
of the Port of Madras, (1999) 4 SCC 630 (Madras Port  Trust  case).  By  the
order dated 24.09.2001, the Tribunal rejected the  aforesaid  stand  adopted
by the assessee and  held  that  the  assessee  is  a  “dealer”  engaged  in
activities of sale under the Act and thus, exigible to sales tax.

Further, the assessee has approached the Tribunal in T. A.  No.  1  of  2000
and T. A. No. 143 of  2003  questioning  the  orders  passed  by  the  first
appellate authority for assessment years 1994-95 and 1997-98.  The  Tribunal
has considered the definitions of “dealer”  under  the  Tamil  Nadu  General
Sales Tax Act, 1959 (for short, “the TN Act”)  and  the  Act  and  concluded
that since the two definitions are not pari  materia,  the  observations  of
this Court in Madras  Port  Trust  case  would  not  be  applicable  to  the
assessee-Port Trust. The Tribunal has held that the definition  of  “dealer”
under the Act is wide and in  light  of  the  activities  performed  by  the
assessee, it can be placed in the ambit of “dealer” under the Act and  hence
be liable to pay sales tax under the Act.

Dissatisfied by the orders passed by the Tribunal, the  assessee  approached
the High Court in TRC No. 412 of 2002 and Sales Tax Revision  Nos.  321  and
326 of 2005. The question as to whether the assessee  is  a  “dealer”  under
the Act which was the  cardinal  issue  before  the  Tribunal  was  agitated
before the High Court as the main issue by both  parties  to  the  lis.  The
High Court has delved into the said question  and  also  considered  whether
the Madras Port Trust case decided in the context of the  TN  Act  apply  to
the assessee-Trust which is governed by the Act.  The  High  Court,  in  its
conclusion, has approved the findings of the Tribunal and dismissed the  tax
revision(s) filed by the appellant-assessee.

Aggrieved by the aforesaid, the assessee is before us in this appeal.

Shri V. Giri, learned senior counsel appearing  for  the  appellant-assessee
would submit that the assessee does  not  fall  under  the  ambit  of  under
Section 2(viii) of the Act and cannot be termed  as  a  “dealer”.  He  would
submit that the assessee is only discharging the statutory functions and  is
not engaged in any “business” or trade. Further, that  the  transactions  in
question being incidental and auxiliary would not qualify as business  under
the Act so as to deem the assessee as “dealer” under the Act. He would  draw
support from the observations of  this  Court  in  Madras  Port  Trust  case
wherein this Court has held that the said Port Trust constituted  under  the
Major Port Trust Act, 1963  and  carries  on  statutory  functions,  is  not
exigible to sales tax under the Tamil Nadu General Sales Tax Act, 1959  (for
short, “the TN Act”). He would further contend that since the provisions  of
the TN Act are pari materia with that of the  Act,  the  Madras  Port  Trust
case would squarely apply to the assessee-Cochin Port Trust also.

Per contra, Smt. Liz Mathew, learned counsel appearing for  the  respondent-
Revenue would support the judgment and order passed by the  High  Court  and
contend that the assessee herein is a “dealer”  under  the  Act  engaged  in
sale of scrap material and therefore, exigible to sales tax under  the  Act.
She would submit that the provisions of the TN Act and the Act are not  pari
materia and the claim of  the  assessee  requires  to  be  examined  in  the
context of the Act only and not on the basis of the  provisions  of  the  TN
Act. She would urge that the observations  of  this  Court  in  Madras  Port
Trust case would not be applicable to the instant case in light of  material
difference between the definitions of “dealer” under the  provisions  of  TN
Act and the Act.

The issue that arises for our consideration  and  decision  in  the  instant
case is whether the assessee-Trust is a  dealer  under  the  Act  and  thus,
liable to pay sales tax levied thereunder.
At the outset, it is pertinent to notice Section 2(viii) of  the  Act  which
defines the term "dealer". The said definition is extracted hereunder:

“2(viii) “Dealer” means any person who carries on the  business  of  buying,
selling,  supplying  or  distributing  goods,  executing   works   contract,
transferring the right to use any goods or supplying by way of  or  as  part
of any service, any goods directly or otherwise, whether  for  cash  or  for
deferred  payment,  or  for  commission,  remuneration  or  other   valuable
consideration and includes:

(a)...

(b)...

(c)...

(d)...

(e) a person who, whether in the course of business or not, sells;
(i) goods produced by  him  by  manufacture,  agriculture,  horticulture  or
otherwise; or
(ii) trees which grow spontaneously and  which  are  agreed  to  be  severed
before sale or under the contract of sale;

(f) a person who whether in the course of business or not:
(1) transfers any goods, including controlled goods whether in pursuance  of
a  contract  or  not,  for  cash  or  deferred  payment  or  other  valuable
consideration;
(2) transfers property in goods (whether as goods or  in  some  other  form)
involved in the execution of a works contract;
(3) delivers any  goods  on  hire-purchase  or  any  system  of  payment  by
instalments;
(4) transfers the right to use any goods for any  purpose  (whether  or  not
for a specified  period)  for  cash,  deferred  payment  or  other  valuable
consideration;
(5) supplies, by way of or as part of any service or  in  any  other  manner
whatsoever, goods, being food or any other articles  for  human  consumption
or any drink (whether or not intoxicating), where such supply or service  is
for cash, deferred payment or other valuable consideration;

Explanation.-(1) & (2) ...

(g) a bank or a financing institution which, whether in the  course  of  its
business or not, sells any gold or other valuable article  pledged  with  it
to secure any loan, for the realisation of such loan amount;...”
                                                         (emphasis supplied)


A perusal of the aforesaid definition  would  indicate  that  definition  of
dealer under the Act is  an  inclusive  definition  whereby  wide  range  of
persons has been placed under the ambit of  “dealer”.  It  includes  persons
involved in carrying on any business or trading  activity  and  transactions
effected by them whether in the course of business or not. It is  profitable
to refer to the decision of this Court in Assistant Commissioner,  Ernakulam
v. Hindustan Urban Infrastructure Ltd. and Ors.,  (2015)  3  SCC  735  where
this Court has interpreted the said provision. This Court has  examined  the
scope and ambit of the definition of dealer  under  the  Act.  The  question
before this Court was whether an “Official Liquidator” is a “dealer”  within
the meaning of section 2 (viii) of the Act. This Court in  paragraph  26  of
the judgment has observed:

“…The definition of “dealer” has also been given a wide ambit.  It  includes
any person carrying on business of, inter alia, buying, selling,  supply  or
distribution of goods, whether directly or otherwise. All modes  of  payment
whether  by  way  of  cash,  commission,  remuneration  or  other   valuable
consideration have been included therein. It also includes,  inter  alia,  a
casual trader, a non-resident dealer,  a  commission  agent,  a  broker,  an
auctioneer and other mercantile agents. Sub-section (f)  of  the  definition
further expands the scope of the provision by including  within  its  ambit,
an array of transactions,  which  may  or  may  not  be  in  the  course  of
business. Section 2(viii)(f)(1) expressly includes,  within  the  definition
of a “dealer”, a person who  whether  in  the  course  of  business  or  not
transfers any goods, whether in the pursuance of  a  contract  or  not,  for
cash or deferred payment.”



Therein, this Court has noticed  the  definition  of  dealer  under  various
fiscal legislations and observed that the widest scope  and  ambit  provided
to the “dealer” under the definition clause of  the  Act  is  in  consonance
with the legislative intent to place the persons engaged  in  activities  of
sale and trade which would not otherwise fall in the  restricted  definition
of “business”. This Court has observed as under:

“34. Section 2(viii)(f) further expands the definition of “dealer”  enabling
a far wider class of persons to fall  within  its  ambit.  It  includes  any
person who transfers any goods, transfers property in goods involved in  the
execution of a works contract, delivers any goods on hire  purchase  or  any
system of payment by installments, transfers the right to use any goods  for
any purpose and lastly, any food or beverage supplier or  service  provider,
fit for human consumption. The Explanation 1 to sub-clause  (f)  includes  a
society,  club,  firm  or  an  association  or  body  of  persons,   whether
incorporated or not. Explanation 2 includes the  Central  Government,  State
Government and any of its apparatus within the scope of this section.

35. Therefore, given the exceptionally wide scope of the  definition,  prima
facie, it can be concluded that any person or entity  that  carries  on  any
activity of selling goods, could be categorized  as  a  “dealer”  under  the
Act, 1963. To test the aforesaid conclusion in the context of the  issue  at
hand, we would delve into the interpretation ascribed by this Court  to  the
term “dealer”. A careful reading of the definition  of  “dealer”  under  the
Act, 1963, would make it evident that the legislature  intended  to  provide
for  an  inclusive  criterion  and   broaden   the   ambit   of   the   said
classification. The legislature did not propose to  restrict  the  scope  of
the term as perceived in common parlance.”


Here, since the definition of  “dealer”  is  wide  to  include  transactions
conducted in the course of business or otherwise,  to  answer  the  question
posed before us, we do not deem  it  necessary  to  examine  the  nature  of
activity carried out by the assessee-Port Trust in as  much  as  whether  it
falls under the definition of “business” under the Act or not.

In the instant case, the appellant-assessee  would  place  reliance  on  the
decision of this Court in Madras Port Trust case,  draw  similarity  between
the provisions of TN  Act  and  the  Act  and  therefore,  submit  that  the
observations of the Madras Port Trust would be  applicable  to  the  instant
case. Therein, the question before this Court was whether  the  Madras  Port
Trust is a “dealer”  under  the  TN  Act  or  not.  The  definition  clauses
contained in the TN Act under Section 2(g) and 2(d) have been dealt with  to
examine the aforesaid question. For the sake of clarity, we would  refer  to
Section 2(g) and 2(d) of the TN Act as under:

 “Section 2(g) 'dealer' means any person who  carries  on  the  business  of
buying, selling, supplying or distributing  goods,  directly  or  otherwise,
whether for cash, or for deferred payment, or for  commission,  remuneration
or other valuable consideration, and includes-
(i) a local authority... which carries on such business;

(ii) . . .

(iii) a factor, ... or an auctioneer,  or  any  other  mercantile  agent  by
whatever name called, ... who carries on the business  of  buying,  selling,
supplying or distributing goods on behalf of any principal, or through  whom
the goods are bought, sold, supplied or distributed;

(iv) to (ix) ...

Explanation (1) ...

Explanation (2).-The Central  Government  or  any  State  Government  which,
whether or not in the course of business, buy, sell,  supply  or  distribute
goods, directly or otherwise, for cash, or  for  deferred  payment,  or  for
commission, remuneration or other valuable consideration,  shall  be  deemed
to be a dealer for the purposes of this Act;"

                                     ***

"Section 2(d) 'business' includes,-
(i) any trade, or commerce or manufacture or any  adventure  or  concern  in
the nature of trade, commerce or manufacture, whether  or  not  such  trade,
commerce, manufacture, adventure or concern is carried on with a  motive  to
make gain or profit and whether or not any profit accrues from  such  trade,
commerce, manufacture, adventure or concern; and

(ii) any transaction in connection with,  or  incidental  or  ancillary  to,
such trade, commerce, manufacture, adventure or concern.”


This  Court  in  the  said  decision  has  elaborately  considered   various
provisions of the TN Act in the context of the Major Port Trusts Act,  1963.
This Court has noticed that port trusts are not established for carrying  on
business and thereafter, referred to the various activities  of  the  Madras
Port Trust and observed that its activities and services only indicate  that
the activity in question, that is, the sales of unserviceable  or  unclaimed
goods  is  infinitesimal  as  compared  to  the  very  large  range  of  the
activities and services it is supposed to render. This Court  has  therefore
concluded that the Madras Port Trust is not  involved  in  any  activity  of
"carrying on business" as  provided  for  under  Section  2  (g)  read  with
Section 2(d) of the TN Act and therefore, it is not a  "dealer'  within  the
meaning of Section 2(g) of the TN Act.

In our considered view, the aforesaid  decision  of  this  Court  would  not
enure to the benefit of the assessee in the instant case. The said  decision
was rendered on the  basis  of  the  question  whether  the  Port  Trust  is
carrying on “business” under the TN Act and if it is a  “dealer”  under  the
TN Act so as to be exigible to  tax  thereunder.  The  aforesaid  conclusion
emanates from the stark distinction of definition of “dealer” under  the  TN
Act and the Act. The definition under the Act is a  wider  definition  while
the TN Act as it then stood, provides for a very restricted meaning  of  the
term “dealer”. A comparison of the definition clauses in the Act and the  TN
Act would show that the requirement of "carrying  on  business"  by  buying,
selling, supplying or distributing goods directly or otherwise  whether  for
cash or deferred payment or for commission, remuneration or  other  valuable
consideration was a necessary ingredient of a dealer under the TN  Act,  but
clauses like (e), (f) and (g) of Section 2(viii) of the Act were  absent  in
the TN Act. Thus, the said definitions are not pari materia.


In the Madras  Port  Trust  case,  this  Court  has  laid  emphasis  on  the
expression "carrying on business" in the context of the TN Act,  and  it  is
in that context it has reached the conclusion that the Madras Port Trust  is
not engaged in any business which is  a  necessary  prerequisite  under  the
definition of a “dealer” under the TN Act. In the Act herein, the  necessity
of a person carrying on business  to  be  placed  under  the  definition  of
“dealer” is absent.  The  definition  expressly  includes  the  persons  who
whether in course of business or not engage  in  the  sale  or  transfer  of
goods and thus, does not mandate the requirement of conducting business  for
a person to be exigible under the Act.  The  contradistinction  between  the
definition of “dealer” under the TN Act and  the  Act  makes  it  abundantly
clear that the observations of this Court in Madras Port Trust  case,  which
refer to the definition of TN Act and interprets it to reach the  conclusion
of the Trust not being exigible to tax, cannot be accepted  in  the  instant
case.

Further, it is brought to our notice that  in  Madras  Port  Trust  case the
applications were preferred  by  the  Port  Trusts  of  Cochin,  Kandla  and
Calcutta before this Court for intervention. However, this  Court  has  only
permitted them to support the submissions of the Madras Port  Trust  in  the
context of the Tamil Nadu statute and in paragraph 6 of  the  said  judgment
observed that the exigibility of the said Port Trusts under  the  respective
State enactments is not examined thereunder. Therefore, this Court has  only
referred to the provisions of TN Act and not examined the scope of  the  Act
vis-à-vis the assessee-Port Trust in Madras Port Trust case.

It is further pertinent to notice that the TN Act was amended by Act  22  of
2002 whereby explanation (3) was added to definition clause 2(g) of  the  TN
Act. By the said amendment the Madras Port Trust has now been declared as  a
dealer under the TN Act. Explanation (3)  states  that  if  the  port  trust
disposes of any goods including unclaimed or  confiscated  or  unserviceable
or scrap surplus, old or obsolete  goods  or  discarded  material  or  waste
products whether by auction or otherwise directly or through  an  agent  for
cash or for deferred  payment  or  for  any  other  valuable  consideration,
notwithstanding anything contained in the TNGST Act, it shall be  deemed  to
be a dealer for the purpose of the Act.  Therefore,  by  amendment  act  the
legislature  has  specifically  brought  in  Port  Trust  also  within   the
definition  of  "dealer"  under  Section 2(g) of  the  Act  and  thus,   the
substratum of the judgment in Madras Port Trust case has been lost.

Shri Giri has relied  upon  the  decision  of  this  Court  in  CST  v.  Sai
Publication Fund, (2002)  4  SCC  57  and  submitted  that  where  the  main
activity is not a business then  any  incidental  or  ancillary  transaction
would only amount to business  if  an  independent  intention  to  carry  on
business in the incidental or ancillary transaction is established.  In  the
said case, the provisions of Bombay Sales Tax Act,  1959  were  examined  to
ascertain whether the ancillary activity of publication and  sale  of  books
by Saibaba Trust amounted  to  “business”  under  the  said  Act,  when  the
dominant activity of the said Trust was non-profit dissemination of  message
of Saibaba. Therein the Court has examined the definition  of  dealer  under
Section 2(11) of the said Act and  observed  that  every  person  is  not  a
“dealer” but only those persons “who carry on the  business”  by  buying  or
selling goods are regarded as “dealers”. Thus, under the said Act, from  the
very definition of dealer, it follows that a person would not  be  a  dealer
in respect of the goods sold or purchased by him unless he  carries  on  the
business of buying  and  selling  such  goods.  In  the  instant  case,  the
definition  of  dealer  under  Section  2(viii)  is  wide  and  specifically
includes persons who have effected sale or transfer  of  goods  irrespective
of the said sale or transfer being in course of business or not.  Therefore,
the dictum of this Court in the said decision would also not  be  applicable
in the instant case.

Therefore, in light of the foregoing discussions, we are of  the  considered
opinion that the activities of the assessee in respect of  buying,  selling,
supplying or distributing goods, executing works contract, transferring  the
right to use any goods or supplying by way of or as  part  of  any  service,
any goods directly or otherwise, whether for cash or  for  deferred  payment
or for commission, remuneration or other valuable consideration, whether  in
course  of  business  or   not,   would   fall   within   the   purview   of
Section 2(viii) of  the  Act.  Hence,   the assessee-Port Trust would   fall
within the meaning of "dealer"  under  Section 2(viii) of  the  Act  and  is
consequently assessable to tax under the Act.
We are of the considered opinion that the High Court has not  committed  any
error, whatsoever, and therefore, the  civil  appeal  being  devoid  of  any
merit requires to be dismissed.

In the result, the appeal is dismissed and the judgment and order passed  by
the High Court is confirmed.  No costs.

            Ordered accordingly.

                                                        .................CJI
                                                                [H.L. DATTU]


                                                        ..................J.
                                                              [R.K. AGRAWAL]


                                                        ..................J.
                                                               [ARUN MISHRA]

NEW DELHI,
APRIL 22, 2015.

or.3, rule 1 and 2 C.P.C ; Sec.139 of N.I.Act

or.3, rule 1 and 2 C.P.C ; Sec.139 of N.I.Act

Or.3, rule 1 and  2 C.P.C - Power of attorney holder -  since the Power of attorney holder and principal both were examined - he cannot depose for the principal for the acts done by the principal and not by him - not arise ;
Sec.139 of N.I.Act - Presumption -when the holder of the cheque establishes that he legally received the cheque from the drawer, the presumption under Section 139 follows to the effect that there existed a legally enforceable debt between the parties and cheque was
issued for discharge of said debt.
Burden lies on Accused - If it is the case of the accused that Exs.P2 to P10 and some other cheques were issued by her as security in the year 1998  but not in 2004, she could have elicited the originating year of those cheques
through PW3. Surprisingly, no suggestion was given to PW3 nor the accused took steps to refer the cheque numbers of Exs.P2 to P10 to UBI, Adilabad to find out the year of issuance of those cheques. Such exercise would have
strengthened her version. ; - 2015 TELANGANA & A.P. msklawreports

NDPS Act - Sizer of prohibited contraband - Apex court held that when Independent witnesses PW1 who turned hostile and another independent witness who was examined as DW2 has spoken in one voice that the accused person was taken from his residence-the alleged recovery has been made does not inspire confidence and undue credence has been given to the testimony of official witnesses, who are generally interested in securing the conviction.-2015 S.C. msklawreports

  
For recording the conviction, the Sessions Court as well as the  High Court mainly relied on the testimony of  official  witnesses  and found them sufficiently strengthening the recovery of  the  possession  from the appellant. -  In our considered view, the  manner  in  which  the  alleged recovery has been made does not inspire confidence and  undue  credence  has been given to  the  testimony  of  official  witnesses,  who  are  generally interested in securing the conviction. - In  peculiar  circumstances  of  the case, it may not be possible  to  find  out  independent  witnesses  at  all places at all times.  Independent witnesses who live in the same village  or nearby villages of the accused are at times afraid to  come  and  depose  in favour of the prosecution.-  Though it is well-settled that a conviction  can be based solely on the testimony of official witnesses, condition  precedent is that the evidence of such official  witnesses  must  inspire  confidence.- In the present case,  it  is  not  as  if  independent  witnesses  were  not available. - Independent  witnesses  PW1  and  another  independent   witness examined as DW2 has spoken in one voice that the accused  person  was  taken from his residence.  In such circumstances, in  our  view,  the  High  Court ought not  to  have  overlooked  the  testimony  of  independent  witnesses, especially when it casts doubt on the recovery and the  genuineness  of  the prosecution version. -2015 S.C. MSKLAWPREPORTS

  police officials during patrolling, when talking with one Manjeet  Singh-PW1
and Gamdur Singh-DW2, saw the suspicious 'fitter-rehra' (a  vehicle)  driven
by the  appellant.  
Police  intercepted  the  vehicle  and  questioned  the
appellant about his whereabouts, and found some dubious bags  lying  in  the
vehicle.
Before searching the bags, police intimated to the appellant  that
instead of being searched by police whether he wishes to be  searched  by  a
Gazetted Officer or a Magistrate and the appellant declined to  be  searched
by them and a consent memo (Ext.PA) was  drawn.
Then,  the  police  in  the
presence of independent witnesses, i.e.  Manjeet  Singh  and  Gamdur  Singh,
conducted  the  search  and  during  the  search,  three   bags   containing
commercial quantity of poppy  husk  (120  kgms.)  were  recovered  from  the
appellant's vehicle.  Police seized the bags, took sample of 200 grams  from
each of the bag and sealed them separately, and then  sealed  the  remaining
quantity in separate parcels and deposited the same with  MHC.  
The  sealed
samples were sent to Chemical Examiner, who vide his report (Ext. PK)  found
the samples to be 'Powdered Poppy Husk'.  On  completion  of  investigation,
police laid the chargesheet against the appellant under Section 15  of  NDPS
Act.

 Out of two independent witnesses in the case, Manjeet  Singh-PW1
turned hostile and Gamdur Singh was won over by the  defence  and  had  been
examined as defence witness DW2.

Both PW1 and DW2 have deposed that the appellant  was  not
arrested in their presence nor any recovery was made from him.
PW1 and  DW2
have further deposed that when they went to police station  for  some  work,
they saw  the  appellant  already  in  custody  of  police  and  that  their
signatures were obtained on the blank  papers.
In  his  cross-examination,
though DW2 has admitted that Ext. PB bears his signature at  point  'A',  he
disowned his statement in Ext.PL recorded under Section 161 of the  Criminal
Procedure Code.

 For recording the conviction, the Sessions Court as well as the  High
Court mainly relied on the testimony of  official  witnesses  who  made  the
recovery, i.e. H.C. Suraj  Mal-PW2  and  Inspector  Raghbir  Singh-PW6,  and
found them sufficiently strengthening the recovery of  the  possession  from
the appellant.  In our considered view, the  manner  in  which  the  alleged
recovery has been made does not inspire confidence and  undue  credence  has
been given to  the  testimony  of  official  witnesses,  who  are  generally
interested in securing the conviction.  In  peculiar  circumstances  of  the
case, it may not be possible  to  find  out  independent  witnesses  at  all
places at all times.  Independent witnesses who live in the same village  or
nearby villages of the accused are at times afraid to  come  and  depose  in
favour of the prosecution.  Though it is well-settled that a conviction  can
be based solely on the testimony of official witnesses, condition  precedent
is that the evidence of such official  witnesses  must  inspire  confidence.
In the present case,  it  is  not  as  if  independent  witnesses  were  not
available.  Independent  witnesses  PW1  and  another  independent   witness
examined as DW2 has spoken in one voice that the accused  person  was  taken
from his residence.  In such circumstances, in  our  view,  the  High  Court
ought not  to  have  overlooked  the  testimony  of  independent  witnesses,
especially when it casts doubt on the recovery and the  genuineness  of  the
prosecution version.

  In  the  absence  of  independent  evidence
connecting  the  appellant  with  the  fitter-rehra,  mere  compliance  with
Section 50 of the NDPS Act by itself would not be  sufficient  to  establish
the guilt of the appellant.  It is a well-settled principle of the  criminal
jurisprudence that more stringent the punishment,  the  more  heavy  is  the
burden upon the prosecution to  prove  the  offence.
The conviction of the appellant and the sentence imposed  on  him  is
set aside and this appeal is allowed.   Fine  amount  of  Rs.1,00,000/-,  if
paid, is ordered to be refunded to the appellant.- 2015 S.C. MSKLAWREPORTS

Sec.15 of Hindu Succession Act - Suit for Declaration and Injunction - Property stands in the name of deceased mother who died intestate - suit filed by son as the revenue records were mutated in his name and he is in possession and enjoyment of the same - suit against father and against the children of his second wife - Trial court dismissed the suit - Appellant court partly decreed the suit holding that plaintiff and his father each entitle to 1/2 share as per sec.15 of Hindu Succession Act - High court reversed the order and held that long standing mutation of revenue entries clearly disclosed that the plaintiff's father relinquished his share in the suit property - Apex court held that with out pleading and evidence , High court wrongly misdirected itself by presumptions and wrongly held that long standing mutation of revenue entries in the name of plaintiff deemed to be considered as relinquishment of rights as it is settled law that mere mutation of entries in revenue records does not confer with any title - as such the apex court set aside the High court order and upheld the orders of Appellant court - 2015 S.C. MSKLAWREPORTS

The respondent herein filed the suit against  the   appellants  seeking  for
the relief of declaration  of  his  title  to  the  suit  property  and  for
consequential  relief of permanent  injunction  restraining  the  appellants
herein from interfering with his physical possession.
 Briefly  the  case  of
the plaintiff is that the suit property belonged  to  Guramma  wife  of  the
first defendant and the mother of the plaintiff and on her death  the  first
defendant had given declaration before the  revenue  authorities  to  change
the Katha in the name of the plaintiff  in  respect  of  the  suit  schedule
property and mutation was effected accordingly and the revenue record  stood
in the name of the plaintiff for a long period of time.  
It is  the  further
case of  the  plaintiff  that  the  first  defendant   entered  into  second
marriage with one Jayamma and defendants 2 to 5 are their children and  they
denied the ownership of the plaintiff in the suit  property  and  therefore,
the suit came to be filed.
A common written statement was filed by the defendant stating that
the  suit
property was purchased in the name of Guramma  under  registered  sale  deed
dated 14.11.1959 and sale consideration was paid by the first defendant  and
after the death of Guramma, the first defendant married Jayamma in 1973  and
defendants 2 to 5 were born out of the wedlock and the plaintiff as well  as
the first defendant being the legal heirs of Guramma had  succeeded  to  the
suit property and the first defendant  gifted a  portion  of  suit  property
measuring 5 acres in favour of defendants 2 to 5  by  registered  gift  deed
dated 12.12.2003 and the suit is liable for dismissal.

The trial court framed seven issues and after  consideration  of   oral  and
documentary evidence  dismissed the suit. On the  appeal  preferred  by  the
plaintiff, the lower appellate court held that the  plaintiff and the  first
defendant being class-I heirs of  deceased  Guramma  are  entitled  to  half
share each in the  suit property and decreed the suit in part. 
the courts  were  not  correct  in
assuming that as a result of Mutation No. 1311 dated 19-7-1954,  Durga  Devi
lost her title from that date and possession also was given to  the  persons
in whose favour mutation was effected.
 This court speaking  for  the  Bench  has  clearly  held  as
follows: 
"7. ... Mutation of a property in the revenue  record  does  not  create  or
extinguish title nor has it any presumptive value on title. It only  enables
the person in whose favour mutation is ordered to pay the  land  revenue  in
question. The learned Additional District  Judge  was  wholly  in  error  in
coming to a conclusion that mutation in favour of Inder Kaur  conveys  title
in her favour. This erroneous conclusion has vitiated the entire judgment."

Applying the above legal position,  we  hold  that  the  widow  had  not
divested herself of the title in the suit property as a result  of  Mutation
No. 1311 dated 19-7-1954. The assumption on the part  of  the  courts  below
that as a result of the mutation, the widow divested herself  of  the  title
and possession was wrong. If that be so, legally, she was in  possession  on
the date of coming into force of the Hindu Succession  Act  and  she,  as  a
full owner, had every right to deal with the suit properties in  any  manner
she desired."

 In the  result the impugned judgment and decree of the High Court  are
 set aside  and the judgment and decree of the  lower  appellate   court  is
restored and the appeals are allowed in  the above terms.  No costs.- 2015 S.C.MSKLAWREPORTS