JUDGMENT The petitioner is a dealer in motor vehicles and automobile parts. One of the methods which it adopted for sale of motor vehicles is the hire-purchase system. It is well-established by the decisions of the Supreme Court that in the case of such a transaction, the sale takes place when the ownership of the vehicle is ultimately transferred by the dealer to the customer in fulfilment of the hire-purchase agreement. The principles for fixing the sale price under such a transaction for the purpose of assessing sales tax have been laid down by the Supreme Court in its decision in Johar and Co. v. Deputy Commercial Tax Officer ([1965] 16 S.T.C. 213 (S.C.)). The court said : "This case in our opinion brings out the true nature of the payment made as hire in hire-purchase agreement. Part of the amount is towards hire and part towards the payment of price, and it would be for the sales tax authorities to determine in an appropriate way the price of the vehicle on the date the hirer exercises his option and becomes the owner of the vehicle after fulfilling the terms of the agreement. There is no legislative guidance available as to how this should be done and perhaps it would be better if the Legislature gives guidance in such matters. But even in the absence of legislative guidance it would be for the sales tax authorities to decide as best they can the value of the vehicle on the date the option is exercised and the property passes to the hirer. There may be two ways of doing it. The sales tax authorities may split up the hire into two parts, namely, the amount paid as consideration for the use of the vehicle so long as it was the property of the owner, and the payment for the option on a future date to purchase the vehicle at a nominal price. If the first part is determined the rest would be towards the payment of price. The first part may be determined after finding out the proper amount to be paid as hire in the market for a vehicle of the type concerned, or in such other way as may be available to the sales tax authorities. If the first part is determined the rest would be towards the payment of price. The first part may be determined after finding out the proper amount to be paid as hire in the market for a vehicle of the type concerned, or in such other way as may be available to the sales tax authorities. The second method may be to take the original price fixed in the hire-purchase agreement and to calculate the depreciation and all other factors that may be relevant in arriving at the price when the second sale takes place to the hirer including the condition of the vehicle at the time of the second sale. It is therefore for the sales tax authorities to find out the price of the vehicle on which tax has to be paid in either of the ways indicated by us above or such other way as may be just and reasonable." The Sales Tax Officer, Special Circle, Trivandrum, who is the first respondent, issued a notice exhibit P-1 dated 19th February, 1970, to the petitioner proposing to assess the petitioner's turnover for the year 1965-66 in the manner indicated therein. The petitioner filed a statement exhibit P-2 dated 16th March, 1970, objecting to some of the proposals. The first respondent overruled the objections and passed an order of assessment exhibit P-3 dated 23rd March, 1970. This writ petition has been filed to quash the said order, in so far as it rejected the petitioner's objections. 2. Counsel for the petitioner assailed the order of assessment only in respect of three matters. The first was regarding the determination of the turnover in respect of sales under the hire-purchase agreements. In the notice exhibit P-1 issued to the petitioner, the first respondent proposed to adopt apparently the second method indicated by the Supreme Court; and he stated that he proposed to deduct 7 1/2 per cent. per annum in the case of cars and scooters and 12 per cent. per annum in the case of lorries, trucks and tractors of the price fixed in the agreement on account of depreciation for fixing the sale price. The petitioner, in his objection statement exhibit P-2, requested the first respondent to inform it the basis of fixing the above rates of depreciation so as to enable it to submit its objections to the said rates and adduce evidence in the matter. The petitioner, in his objection statement exhibit P-2, requested the first respondent to inform it the basis of fixing the above rates of depreciation so as to enable it to submit its objections to the said rates and adduce evidence in the matter. Exhibit P-2 also pointed out that in some cases the vehicles had been sold much before the period fixed in hire-purchase agreements, while in many other cases the period of the agreement had been extended, and the vehicles were sold long after the period fixed in the agreements. The petitioner, therefore, claimed that depreciation should be allowed for the actual period of the hire, irrespective of the period fixed in the agreement. The petitioner further claimed that in addition to the depreciation other relevant factors mentioned in the decision of the Supreme Court should also be taken into account in determining the sale price of the vehicle. The first respondent did not furnish to the petitioner any further information regarding the fixation of the percentage of deduction on account of depreciation. Nor did he give any opportunity to the petitioner to produce any evidence in support of its contention. He straightaway passed the impugned order within one week of the receipt of the objection, fixing the sale price of the vehicles as proposed by him. 3. The petitioner had furnished to the first respondent a list showing the periods during which the hire of the vehicles remained in force irrespective of the periods fixed in the agreements. As already stated, in some cases it was less than the stipulated period, while in many cases it was more. It was not clear from the impugned order whether, in respect of the vehicles sold before the stipulated period, the depreciation has been allowed only for the actual period of hire or for the longer period as fixed in the hire-purchase agreement. The petitioner's reply affidavit states that in such cases the first respondent has calculated depreciation only for the actual period of the hire. Admittedly, in the case of vehicles where the period of hire has been extended, depreciation has been allowed not for the actual period of hire, but for the period fixed in the agreement. The petitioner's reply affidavit states that in such cases the first respondent has calculated depreciation only for the actual period of the hire. Admittedly, in the case of vehicles where the period of hire has been extended, depreciation has been allowed not for the actual period of hire, but for the period fixed in the agreement. In support of this mode of calculation, the counter-affidavit of the first respondent states that the depreciation can be allowed only for the period fixed in the agreement and not for the actual period of the hire. It has not stated any reason for the same. There is also no reason for not applying that method in the case of sales which took place earlier than the period stipulated in the agreements. Whatever that may be, the true legal position is that, until the ownership of the vehicle is transferred from the petitioner to its customer, there is no sale of the vehicle, and therefore depreciation has to be allowed till the ownership is actually transferred, irrespective of the period fixed originally in the hire-purchase agreement. 4. It is also clear from the decision of the Supreme Court cited above, that the amount of depreciation has to be decided on a reasonable basis. That has to be done by the Sales Tax Officer on the basis of relevant materials. The assessee is also bound to produce relevant evidence in order to assist the Sales Tax Officer to come to a correct decision. In this case, the first respondent's decision is not based on any materials; and the petitioner was not also given any opportunity to adduce any evidence in respect of that matter. It would have been helpful for a proper adjudication of the matter on a quasi-judicial basis, if the first respondent furnished the petitioner the basis on which he proposed to decide this question and the petitioner produced evidence in support of its objection, if any, to the proposal made by the first respondent. The Supreme Court has also referred not only to depreciation but "all other factors that may be relevant" in fixing the sale price. There is no indication what those relevant factors would be. It may be because they vary according to the nature of the commodity or market conditions of the place. The Supreme Court has also referred not only to depreciation but "all other factors that may be relevant" in fixing the sale price. There is no indication what those relevant factors would be. It may be because they vary according to the nature of the commodity or market conditions of the place. The assessee must point out what these factors are, and the Sales Tax Officer must decide how for they are relevant, and to what extent allowance can be given on that account in determining the price of the vehicle on the date of sale. What the Supreme Court has indicated is only the guidelines in fixing the said price. In the light of what I have stated, the fixation of sale price of the vehicles sold under hire-purchase agreements in the manner done by the first respondent cannot be sustained. 5. The second objection raised to the impugned order of assessment related to the turnover of trucks. According to the petitioner, there was no sale of trucks as such. What was done was to sell the chassis, and then under a separate contract to build and supply the body. So it was contended that the turnover in respect of the chassis and the body should have been determined separately, and the first respondent was in error in clubbing both as the turnover in respect of sale of motor vehicles and assessing it at 10 per cent., whereas the turnover relating to supply of body was assessable only at 3 per cent. This is a pure question of fact, which the petitioner does not seem to have raised before the first respondent. 6. The third objection urged by the petitioner's counsel relates to disallowance of rebates given to the customers in determining the turnover. This claim has to be considered by the first respondent in the light of Explanation II to section 2(27) of the Kerala General Sales Tax Act, 1963, wherein the term turnover is defined, and rule 9(a) of the Rules made under the Act. 7. The petitioner has also raised a contention that the levy of surcharge is illegal, for the reason that the Kerala Surcharge on Taxes Act, 1957, is unconstitutional. This contention has to be rejected in view of the decision of this court in Kilikar v. Sales Tax Officer ([1968] 21 S.T.C. 252). 8. 7. The petitioner has also raised a contention that the levy of surcharge is illegal, for the reason that the Kerala Surcharge on Taxes Act, 1957, is unconstitutional. This contention has to be rejected in view of the decision of this court in Kilikar v. Sales Tax Officer ([1968] 21 S.T.C. 252). 8. For the reasons stated above, I quash the order exhibit P-3, in so far as it relates to the matters dealt with above, and direct the first respondent to assess afresh the petitioner's turnover according to law and in the light of the observations herein contained. There will be no order as to costs. Ordered accordingly.