Transfer of the right to use goods requires possession and effective control, and qualifying transactions are taxable under the expanded sale concept.

Article 366(29A) expanded the concept of a sale to include transfer of the right to use goods, and the Haryana sales tax amendments were treated as consistent with that enlarged constitutional field. The governing test is whether possession and effective control of the goods pass to the transferee; mere custody, licence to use, or service elements are insufficient. On that basis, transactions involving tents, crockery, utensils, furniture, shuttering and bus hire were treated as transfers of the right to use goods, and gas cylinder detention charges were included in taxable turnover where the commercial arrangement covered supply of gas with the cylinders. The State was therefore entitled to levy sales tax on the qualifying transactions.

---

---

Issues: (i) Whether the Forty-sixth Amendment to the Constitution and the corresponding amendments to the Haryana General Sales Tax Act, 1973 were constitutionally valid. (ii) Whether the transactions relating to tents, crockery, utensils, furniture, shuttering, gas cylinders and buses amounted to transfer of the right to use goods so as to attract sales tax.

Issue (i): Whether the Forty-sixth Amendment to the Constitution and the corresponding amendments to the Haryana General Sales Tax Act, 1973 were constitutionally valid.

Analysis: Article 366(29A) was inserted to widen the concept of tax on the sale or purchase of goods and to bring within its fold, inter alia, transfer of the right to use goods. Once that enlarged constitutional definition was in force, the State Legislature did not require a separate amendment to Entry 54 of List II to amend the State sales tax law consistently with the constitutional expansion. The challenge to the Forty-sixth Amendment was already upheld by the Supreme Court, and the State amendments were enacted in conformity with that enlarged field of taxation.

Conclusion: The constitutional challenge failed and the amendments were held valid.

Issue (ii): Whether the transactions relating to tents, crockery, utensils, furniture, shuttering, gas cylinders and buses amounted to transfer of the right to use goods so as to attract sales tax.

Analysis: A transfer of the right to use goods requires delivery of possession and effective control of the goods to the transferee; mere custody, licence to use, or rendering of services is insufficient. Applying that test, transactions where tents, crockery, utensils, furniture and shuttering were placed at the customer's disposal with effective use and control, and the bus-hire arrangement where the customer had effective control of the vehicles, fell within the extended concept of sale. In the case of gas cylinders, detention charges for retaining cylinders beyond the stipulated period were treated as part of the taxable turnover because the transaction involved supply of gas with cylinders and the right to use the containers formed part of the commercial arrangement.

Conclusion: The impugned transactions were held to be taxable transfers of the right to use goods.

Final Conclusion: The writ petitions were dismissed, and the State was held entitled to levy sales tax on the transactions found to involve transfer of the right to use goods.

Ratio Decidendi: For the purpose of Article 366(29A), a transaction is taxable as a transfer of the right to use goods only when possession and effective control pass to the transferee; where that test is satisfied, the transaction falls within the extended meaning of sale and is exigible to sales tax.

---