K.G Balakrishnan, J.:— Petitioner in this Original Petition is the partner of a firm which conducts business of Video libtrary in Trivandrum. The nature of the business conducted by the petitioner is that members of the library would be enlisted on payment of a fee of Rs. 50/- with an additional security amount of Rs. 300/-. The members of the library are eligible to borrow cassettes from the library on a lending fee of Rs. 10/- per cassette. The member can retain the cassette for 2 days and if he keeps it for more than 2 days, he has to pay extra fee. The member is also liable to make good any damage or loss caused to the cassette.

2. The 1st respondent issued notice to the petitioner stating that the firm would come within the definition of “dealer” given in S. 2(viii) of the Kerala General Sales Tax Act, 1963 (for short ‘the Act’) and was liable to be assessed under the Act. Petitioner filed objection to the notice. His objections were overruled and Exts. P5 and P6 assessment orders were passed for the year 1984–85 and 1985–86. Petitioner challenged Exts. P5 and P6 orders. Petitioner alleges that he is not a dealer under the Act nor the transaction of lending cassettes to the members on hire would come within the term ‘sale’ as defined in the Act. The respondents have filed a detailed counter affidavit supporting the assessment orders passed by the Government. We heard counsel for the petitioner and the Government Pleader. In Madras State v. Dmkerley & Co. (AIR 1958 SC 560) the Supreme Court held that the expression “sale of goods” as used in the entries in the Seventh Schedule to the Constitution has the same meaning as in the sale of Goods Act, 1930. The Supreme Court in various decisions held that in order to be assessed under the provisions of the Sales Tax Act the transaction must resemble to the “sale of goods” as defined in the Sales of Goods Act and should have the ingredients such as parties must be competent to contract, mutual assent and transfer of property in goods from one of the parties to the contract to the other party thereto for a price. It was felt that this restricted meaning of sale led to avoidance of tax in various ways. The Government also wanted to generate more sources of revenue for the State and by the Forty-sixth Amendment of the Constitution, which came into for in 1982, 29A of Art. 366 was amended and an extended meaning was given to the words ‘tax on the sale or purchase of goods’.

3. Art. (29A) of Art. 366 of the Constitution reads as follows:

“(29 A) tax on the sale or purchase of goods” includes—

(a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;

(b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;

(c) a tax on the delivery of goods on hire purchase or any system of payment by instalments;

(d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration:

(e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;

(f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or an other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration,

and such transfer, delivery or supply of any goods shall be deemed to be sale of those goods by a person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made”.

3. Subsequent to Forty Sixth Amendment of the Constitution various State legislations came into existence and the term “dealer” occurring in S. 2(viii) and “sale” occurring in S. 2(xxi) of the Act were amended by the Kerala Finance Act, 1984 which came into effect on 1.4.1984 The term “dealer” is defined as follows:

“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:”

4. The term ‘sale’ is defined 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;

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Explanation (3B):— A transfer of right to use any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration shall be deemed to be a sale”.

5. The question that arises for consideration is whether the petitioner would come within the meaning of ‘dealer’ as defined in S. 2(viii) of the Act and whether he should be assessed on the basis of the business conducted by him. By the extended meaning of the definition given to the words ‘tax on the sale or purchase or goods’ by clause (29A) of Art. 366 of the Constitution the State can enact legislation to impose tax for transfer of the right to use any goods for any purpose whether or not for a specified period for cash, deferred payment or other valuable consideration. So, there is no doubt as to the legislative competence for the amendment brought about to the definitions ‘dealer’ and ‘sale’ given in the Act. By the changed definition of ‘dealer’ and ‘sale’ given in the Act it is proposed to tax on the transfer of right to use any goods and if the petitioner by lending the video cassettes to the members of the library effects a transfer of right to use that goods is liable to be assessed to tax.

6. Counsel for the petitioner contended that the video cassettes can be used for recording and the contents of the same could be effaced or erased and fresh recording could be made. Video cassettes could be used for keeping very valuable information as a record, and according to petitioner's counsel, viewing of the video cassettes by using a VCP is only one of the uses of the video cassettes and the members of the petitioner's library is given only that restricted right to use it Therefore, it is contended that there is no transfer of right to use any goods as such and that the petitioner is still retaining the ownership and legal possession of the same even while the video cassettes are in the custody of the member. Learned Government Pleader submitted that the video cassettes are given to the members for being viewed on hire charge and by virtue of Explanation (3B) of S. 2(xxi) there is a transfer of right to use any goods and the petitioner is liable to be assessed.

7. As already noticed, the members of the petitioner's library are given video cassettes on payment of Rs. 10/- and the member can retain the cassettes for a period of 2 days and if he keeps these cassettes for more than two days he has to pay additional fee. The member has got exclusive control over the cassettes for the period during which the cassettes are in his custody. It is true that he cannot alter the recordings or cause damage to the video cassettes. Video cassettes are generally used for viewing the contents recorded therein. For the purpose of using the video cassettes there is transfer of that goods in favour of the customer. Hence, we are of the view that the petitioner herein is lending video cassettes to his members of the library and he is effecting a transfer of right to use video cassettes and he would plainly come within the definition of the term ‘dealer’ given in S. 2(viii) of the Act and the transfer effected by the petitioner will come within the explanation (3B) of S. 2(xxi) of the Act.

8. In the matter of interpretation of tax laws is worthwhile to quote the words of Lord Cairns in Partington v. Att.-Gen. (1869) LR 4 HL 100, 122)

“…as I understand the principle of all fiscal legislation, it is this: if the person sought to be taxed comes within the letter of the law he must be taxed, however, great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however, apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute, what is called an equitable construction, certainly such a construction is not admissible in a taxing statute, where you simply adhere to the words of the statute”.

9. We are of the view that the words used in the Explanation (3B) of S. 2(xxi) of the Act are clear and convey the meaning that lending of video cassettes for viewing would come within the meaning of transfer of right to use any goods.

10. Counsel for the petitioner cited two decisions which according to petitioner's counsel support the contentions raised by the petitioner. In Rashtriya Ispat Nigam Ltd. v. Comml. Tax Officer (1990 STC Vol. 77 (at page 182) a Division Bench of the High Court of AP held that lending of certain machineries to the contractor for the purpose of carrying out the work will not come within S. 5E of the Andhra Pradesh General Sales Tax Act, as there was no transfer of the right to use any goods. For the purpose of the steel project at Visakhapatnam different parts of the project work were given to various contractors. To facilitate the execution of work by the contractors with the use of sophisticated machinery, the petitioner had undertaken to supply machinery to the contractors for the purpose of being used in execution of the contracted works of the petitioner and received charges for the same. The respondents made provisional assessment levying tax on the hire charges. The Court held that under the agreement, the effective control of the machinery was with the petitioner company and the contractor was not free to make use of the same for other works or move it out during the period the machinery was in his use and there was a condition that he would be responsible for the custody of the machinery while the machinery was in the site. Therefore, it was held that there was no transfer of the right to use it as such in favour of the contractor. We do not think that the decision can squarely be applied to the facts of the present case. Here, the members of the library can very well obtain video cassettes and use it according to their choice and there is no effective control by the petitioner over the video cassettes lent by him.

11. Another decision relied on by the petitioner is reported in Bank of India v. Commercial Tax officer, Central Section, Calcutta. In this case, the Commercial Tax Officer issued notice to various banks alleging that they were engaged in the business of letting out of movable property, viz., bank lockers on hire/lease/rentals to others for cash, deferred payment or other valuable consideration. The banks were sought to be assessed on the ground that these transactions of giving out bank lockers for hire amounted to transfer of right to use any goods. But a number of banks challenged the notices received by them and the Court held that the extended meaning of “sale” given in S. 2(g)(ii) of the Bengal Finance (Sales Tax) Act, 1941 will not attract such transactions. It was held that the bank lockers were the property of the banks specially equipped and fitted out for a special purpose and let out and there was no parting with possession of the property for the purpose of earning income. Lockers were not allowed to be opened by the customer and the banks had built a strong room, installed a steel cabinet with safety lockers with double locking system and these were part of their customer service and the bank had a lien on the goods stored in the locker for the rent payable by the customer. Under the above circumstances, it was held that there was no transfer of right to use goods as such and the banks were not liable to be taxed under the Act. This decision also cannot be applied to the facts of the present case. As the lending of video cassettes to the members of the library amounts to transfer of right to use such goods for hire the petitioner would come within the definition of dealer and he is liable to be taxed. We see no reason to quash the assessment orders passed against him.

12. Original Petition is without any merit and it is dismissed.