TMI Blog1997 (5) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Constitution (Forty-sixth Amendment) Act, 1982. By the Amending Act, 1982, clause (29A) was inserted in article 366. Clause (29A), sub-clause (d) of article 366, which is relevant for the purpose of this case runs as under: "(29A) tax on the sale or purchase of goods includes- (a) to (c)............... (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." 3.. Prior to the insertion of clause (29A) in article 366, trade tax which was formerly known as sales tax was chargeable on sale or purchase of goods but by clause (29A) the definition of the expression "sale or purchase" was made inclusive. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transportation charges received by the petitioner from respondent No. 3 to tax taking the view that the petitioner transferred the right to use of its vehicles to respondent No. 3 for consideration and, therefore, that amounted to sale under section 2, clause (h) of sub-clause (iv) of the Act. Such stand of the department is seriously contested by the petitioner. 5.. The contention of the petitioner is that transportation charges were being paid by respondent No. 3 for service under the agreements deed and that there was no transfer of the right to use the vehicles of the petitioner. It is contended that the petitioner does not have any vehicle of its own and that to fulfil the agreements it arranged vehicles from the open market for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferred. It is submitted that without transfer of possession of specified goods, transfer of the right to use any goods within the meaning of section 3-F cannot be conceived. We see force in this submission of counsel for the petitioner. Unless there is an agreement in respect of specified vehicles, it is difficult to say that the petitioner transferred right to use of vehicles to respondent No. 3. Right to use can be said to have been transferred when complete possession of specified vehicles is vested in respondent No. 3. Under the agreements executed between the parties, respondent No. 3, if called upon to state, cannot state that right to use of any particular vehicle was transferred to it by the petitioner. Neither the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r rendering service on payment and that there was no transfer of the right to use of any specified vehicles to respondent No. 3. 9.. It is averred in the counter-affidavit that four trucks are owned by the petitioner and, therefore, the contention of the petitioner that it arranged vehicles time to time from the open market for the use of respondent No. 3 is incorrect. Even if, the contention of the department that the petitioner owned four trucks is assumed to be correct that will not make any material difference since there is no agreement between the parties that any specified truck belonging to the petitioner will be used for carrying the consignment of respondent No. 3. It is stated in the counter-affidavit that respondent No. 3 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: "In order to decide whether a transaction is of sale , the determinative factor is whether any transfer of right of user is involved. By way of illustration we may indicate that if A allows his vehicle to be used by B for a consideration, and the vehicle is placed at the control, custody, and possession of B , it may be a case of transfer of the right to use the vehicle for any purpose. Where, however, the control, custody and possession over the vehicle remains with A , notwithstanding the fact that certain amounts were received as hire charges, no transfer of the right to use is involved." 12.. The intention of the parties, mode of use and several other surrounding and relevant aspects have to be considered to come to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents made a provisional assessment in view of the enlarged definition of "sale". Then the Andhra Pradesh High Court held that under the agreement, the effective control of the machinery, even while the machinery was in the use of the contractor, was that of the petitioner-company. 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. Therefore, the contractor was entitled to make use of the machinery for purpose of execution of the works of the petitioner and there was no transfer of the right to use it as such in favour of the contractor. This is how the court held that the hire-charges collected by the petitioner from the contractors were not exigible to sales t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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