Transfer of right to use goods: hiring out a bus was treated as a taxable sale because the user obtained possession and control.

Hiring out a bus constitutes a transfer of the right to use goods, and therefore a sale within the extended meaning of the Orissa Sales Tax Act, where the transferee obtains possession and effective control. The decisive test is not transfer of property, but whether the user acquires general dominion over the goods as distinct from mere custody or a licence to use. On the contract terms, the Corporation controlled routes, timings and operation, while the owner supplied the vehicle, driver and repairs. That allocation showed transfer of possession and loss of possession by the owner, so the assessment notice was upheld as valid.

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Issues: Whether the hiring out of a bus to the Corporation amounted to a transfer of the right to use goods and, therefore, a sale within the extended meaning of section 2(g) of the Orissa Sales Tax Act, 1947.

Analysis: The expanded constitutional concept of sale under article 366(29A) includes a transfer of the right to use goods, but such transfer does not require passing of property. The decisive test is whether the transferee acquires possession and effective or general control of the goods, as distinguished from mere custody or a licence to use. In a transaction of bailment or hire of chattel, delivery of the goods to the transferee is essential, and the right to use is completed only when possession passes. On the agreement terms, the Corporation controlled routes, timings, operation, and directions, while the owner's role was limited to supplying the vehicle, driver, and repairs. This showed acquisition of possession by the Corporation and loss of possession by the owner.

Conclusion: The hiring arrangement constituted a transfer of the right to use the bus and thus amounted to a sale within the extended meaning of the Act; the notice of assessment was valid.

Ratio Decidendi: A transaction amounts to a taxable transfer of the right to use goods only when the transferee obtains possession and effective control of the goods for consideration, not when the transferor merely retains custody or control.

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