In Brief
The Supreme Court held that the State Bank of India (SBI) was not liable to pay purchase tax on Exim Scrips acquired from holders at a 20% premium under RBI directions. Although Exim Scrips are ordinarily goods subject to sales tax when freely transferred in commerce, the Court distinguished the situation where scrips are returned to the grantor for cancellation and extinguishment of rights. The SBI, acting as an agent of the RBI in a mopping-up operation to remove scrips from circulation, did not purchase goods for commercial purposes. No transfer of ownership occurred; the transaction extinguished rights rather than transferred them, placing it outside purchase tax provisions.
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