Oral Judgment: (B.P. Colabawalla J.) 1. This Sales Tax Application is directed against the order dated 8th November 2011 passed by the First Bench of the Maharashtra Sales Tax Tribunal (MSTT) rejecting the Reference Application of the Applicant under section 61 of the Bombay Sales Tax Act 1959 (BST Act) for a reference on the following questions of law for a decision of this Court:- “(i) Whether on the facts and in the circumstances of the case and on a true and correct interpretation of the term 'sales' defined under sub-section 28 of section 2 of the Bombay Sales Tax Act 1959, Hon'ble Tribunal was correct in holding that the impugned transfer of compressor effected by the respondent to its customers is not sale of goods under this Act as there is no consensual agreement of sale of the said compressor? (ii) Whether on the facts and in the circumstances of the case and on a true and correct interpretation of the definition of sales under sub-section 28 of section 2 of the Bombay Sales Tax Act, 1959, Hon'ble Tribunal was correct in holding the impugned transfer of compressor effected by the respondent to its customers against money and old defective compressor together, is not transfer for valuable consideration? (iii) Whether on the facts and in the circumstances of the case and on a true and correct interpretation of the impugned contract, Hon'ble Tribunal was correct in holding that the impugned transfer of compressor effected by the respondent to its customers is transaction of cross transfer of property in defective compressor and repaired compressor off the shelf, from the sales office of the company and not sale of goods under this Act as there is no consensual agreement of sale of the said compressor? (iv) Whether on the facts and in the circumstances of the case and on a true and correct interpretation of the impugned contract, Hon'ble Tribunal was correct in holding that the amount of Rs.2,02, 55,207/-, received by the respnodent from its customers against the impugned transfer of property in compressor is a price of labour charges or repair charges?” 2. The brief facts are as follows:- 3. The Applicant is the Additional Commissioner of Sales Tax, VAT-III, Mumbai. The Respondent is engaged in the business of manufacturing and selling compressors of various models and capacities used in air-conditioners. The brief facts are as follows:- 3. The Applicant is the Additional Commissioner of Sales Tax, VAT-III, Mumbai. The Respondent is engaged in the business of manufacturing and selling compressors of various models and capacities used in air-conditioners. It is also engaged in accepting defective compressors outside the warranty period with certain fixed repair charges and replacing them at the option of the customer with any other repaired compressor, off the shelf. 4. When a customer of the Respondent has a defective compressor outside the warranty period, he approaches the Respondent with the same for repairs. At such time, the customer is informed about the repairing charges and the amount of time it would take for repairing the defective compressor which is normally about 60 days. The customer is then given an option by the Respondent either (i) to wait for 60 days to receive back his defective compressor after repairs; or (ii) to take a repaired compressor of the same capacity, size and model off the shelf of the Respondent, after paying the repair charges. If the customer opts for the latter, he is then given an acknowledgment receipt for the defective compressor and a delivery note cum debit advice in relation to the repaired compressor. It is common ground that the repair charges are uniform all over India. According to the model, repair charges are levied at the time of replacement of the repaired compressor in exchange for the old defective compressor. The defective compressor so received is then sent to contractors for repairing. The repairing contract is given to specific repairers to repair the defective compressor in accordance with the directions given by the Respondent. Once the defective compressor is repaired and the same is received by the Respondent from the repairer, the same is sent to the Sales Office Branch of the Respondent which is then available for replacement in lieu of a defective compressor of another customer. This cycle goes on. The cost of repairs received is mentioned in the books of accounts as 'repair charges' and not as 'sale' of the repaired compressor. 5. In the present case, the Respondent was assessed for the year 2002-03. During the course of the assessment proceedings, the Assessing Officer issued a notice to the Respondent for treating the repair charges as a sale of the old repaired compressors. 5. In the present case, the Respondent was assessed for the year 2002-03. During the course of the assessment proceedings, the Assessing Officer issued a notice to the Respondent for treating the repair charges as a sale of the old repaired compressors. Before the Assessing Officer, the Respondent claimed that there was no sale of old repaired compressors but an exchange of the same for the defective compressors at the option of the customer. It was further contended that the Respondent received repair charges for repairing the defective compressor. The Assessing Officer negated this contention and held that there was a sale of old compressors within the meaning of section 2(28) of the BST Act and that the repair charges received by the applicant was the sale price. He therefore levied sales tax on a gross turnover of Rs.2,02,55,207/-. Being aggrieved, the applicant preferred First Appeal under section 55 of the BST Act before the Joint Commissioner of Sales Tax (Appeals), Pune Division, Pune who vide his order dated 17th June 2009 dismissed the appeal of the Respondent. 6. Being aggrieved by the order passed in the First appeal, the Respondent approached the MSTT in Second Appeal. In Second Appeal, the MSTT, after considering the submissions of the parties, the evidence produced, and the law as laid down by the Supreme Court as well as various High Courts on the subject, allowed the Appeal of the Respondent inter alia holding that a transaction of cross transfer of property between a defective compressor and repaired compressor off the shelf of the Respondent, did not amount to a sale of the repaired compressor by the Respondent to its customer as there was no consensual agreement of sale supported by price or money consideration. This being the case, the MSTT held that there was no taxable event for levy of sales tax on Rs.2,02,55,207/- which was in the nature of labour charges or repair charges. 7. Being aggrieved by the said order of the MSTT passed in Second Appeal, the Applicant preferred a reference application under section 61 of the BST Act for drawing up a statement of case for referring the questions of law set out earlier in this judgment, for a decision of this Court. 7. Being aggrieved by the said order of the MSTT passed in Second Appeal, the Applicant preferred a reference application under section 61 of the BST Act for drawing up a statement of case for referring the questions of law set out earlier in this judgment, for a decision of this Court. By an order dated 8th November 2011, the MSTT rejected the reference application on the ground that the order passed by the MSTT in Second appeal dated 18th April 2011 was decided on the basis of well settled principles enunciated in decisions of the Supreme Court and various High Courts and therefore, it was not necessary to refer the proposed questions of law for the decision of the High Court. Being aggrieved by the aforesaid order of the MSTT, the present Sales Tax Application has been filed. 8. The word 'Sale' has been defined in section 2(28) of the BST Act, which reads as under:- “(28) 'sale' means a sale of goods made within the State for cash or deferred payment or other valuable consideration, and includes any supply by a society or club or an association to its members on payment of a price or of fees or subscription, but does not include a mortgage, hypothecation, charge or pledge, and the words 'sell', 'buy' and 'purchase' , with all its grammatical variations and cognate expressions shall be construed accordingly. Explanation – For the purpose of this clause - (a) a sale within the State includes a sale determined to be inside the State in accordance with the principles formulated in sub-section (2) of section 4 of the Central Sales Tax Act, 1956 (LXXIV of 1956); (b) (i) every disposal of goods referred to in the Explanation to clause (11); (ii) a delivery of goods on hire-purchase or any system of payment by installments; (iii) the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drinks (whether or not intoxicating, where such supply or service is made or is given on or after the 2nd day of February 1983, for cash deferred payment or other valuable consideration; (iv) the transfer, otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (v) the supply of goods by any unincorporated association or body of persons, to a member thereof for cash, deferred payment or other valuable consideration; shall be deemed to be a sale;” 9. The said section clearly stipulates that a sale means a sale of goods within the State for cash or deferred payment or other valuable consideration. Therefore, in order to constitute a sale, it is necessary that there should be an agreement between the parties for the purpose of transferring title to the goods which pre-supposes the capacity to contract; supported by monetary consideration; and the title in the property actually passes in the goods. Unless all these elements are present, there can be no sale. This in fact has been held by the Supreme Court in the case of State of Madras v/s Gannon, Dunkerley and Co. (Madras) Ltd., reported in (1958) 9 STC 353 (SC). Referring to the Benjamin on Sale, 1950 Edition, the Supreme Court quoted with approval the following :- “Sale is the transfer of the ownership of a thing from one person to another for a money price. Where the consideration for the transfer consists of other goods, or some other valuable consideration, not being money, the transaction is called exchange or barter; but in certain circumstances it may be treated as one of sale.” 10. Where the consideration for the transfer consists of other goods, or some other valuable consideration, not being money, the transaction is called exchange or barter; but in certain circumstances it may be treated as one of sale.” 10. The expression “valuable consideration” came up for consideration before the Supreme Court in the case of Devi Dass Gopal Krishnan and others v/s State of Punjab and others, reported (1967) 20 STC 430 (SC). In the said judgment, the supreme Court observed as follows:- “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. We, therefore, hold that clause (ff) of section 2 of the Act is not void for legislative incompetence.” 10. What emerges from the aforesaid judgments is that in order to constitute a sale, it is necessary that; (i) there has to be a transfer of title to the goods which is supported by monetary consideration; and (ii) the words 'valuable consideration' take colour from the preceding expression 'cash or deferred payment' which would mean some other monetary payment in the nature of cash or deferred payment. 11. In the present case, we find that there is no sale at all. As stated earlier, a defective compressor is brought by the customer of the Respondent to its Sales and Service Office. Thereafter, the customer is informed about the normal time of repairs which is approximately 60 days. 11. In the present case, we find that there is no sale at all. As stated earlier, a defective compressor is brought by the customer of the Respondent to its Sales and Service Office. Thereafter, the customer is informed about the normal time of repairs which is approximately 60 days. At that time, on payment of the repair charges, the customer is given an option either to wait for 60 days or to take another repaired compressor off the shelf of the Respondent. If the customer opts for the latter, then a delivery note cum debit advice as well as a repaired compressor is handed over to the customer. It is therefore evident that there is no sale of the repaired compressor. All that is done is that on payment of repair charges, the customer is given an option not to wait for 60 days and instead take another second hand repaired compressor immediately in lieu of the defective compressor. 12. The MSTT, after considering all the evidence in this regard, came to the conclusion that in the present case, there was a transaction of cross transfer of property between the defective compressor and the repaired compressor and therefore, there was no consensual agreement of sale supported by price or other monetary consideration. We are in full agreement with the findings of the MSTT on this aspect. What is paid is only the repair charges and not the price for purchasing the repaired compressor. This is clear from the fact that even if the customer opted not to take a repaired compressor off the shelf of the Respondent, it would still have to pay the same repair charges for repairing its own compressor and wait for 60 days to receive the same from the Respondent, after repairs. This puts it beyond the realm of doubt that what is charged to the customer by the Respondent is only repair charges and not a price for the sale of the repaired compressor. 13. Ms Helekar, learned counsel appearing on behalf of the applicant submitted that repair charges are fixed and uniform all over India. According to her, therefore, that was the price at which the repaired compressor was being sold by the Respondent to the customer. 14. We do not agree. 13. Ms Helekar, learned counsel appearing on behalf of the applicant submitted that repair charges are fixed and uniform all over India. According to her, therefore, that was the price at which the repaired compressor was being sold by the Respondent to the customer. 14. We do not agree. If the repair charges was really the price of the sale of the repaired compressor, there would be no question of the customer having to return his defective compressor and thereafter take the repaired compressor off the shelf of the Respondent. In the scenario suggested by Ms Helekar, all that the customer has to do is simplicitor pay the repair charges and take the repaired compressor off the shelf of the Respondent. That is not the case. It is an admitted position that the defective compressor is handed over to the Respondent alongwith the repair charges and in lieu thereof the customer is handed over a repaired compressor. We therefore find no merit in this contention. 15. Ms Helekar relied upon the judgment of the Supreme Court in the case of State of T.N. v/s Srinivasa Sales Circulation reported in (1996) 10 SCC 648 to contend that even a sale under an implied contract is liable to sales tax. We fail to see how this judgment supports the case of the Applicant. As observed by the Supreme Court, though there may not be a formal contract for sale or purchase of the article in any specific form, such a contract may be spelt out from the correspondence and interaction between the parties. In the facts of that case, the Supreme Court held that an implied contract between the parties was spelt out and therefore, it substantially amounted to sale. In the present case, however, as stated earlier, the Applicant has not been able to spell out the contract for sale at all, implied or otherwise. In this view of the matter, this judgment is wholly inapplicable to the facts and circumstances of the present case. 16. For all the aforesaid reasons, we are of the view that the order of the MSTT rejecting the reference application of the Applicant does not suffer from any error whatsoever. The matter does not raise any substantive question of law. The Sales Tax Application is accordingly dismissed. There shall be no order as to costs.