Transfer of right to use goods applies to cylinder retention charges, making the rental taxable under sales tax law.

Charges for retaining gas cylinders beyond the stipulated free period were treated as consideration for transfer of the right to use goods and were taxable under section 5-E of the Andhra Pradesh General Sales Tax Act, 1957. The cylinders were supplied on a loan basis for storage of gas only, had to be returned within the free period, and attracted a daily rental if retained longer. Because the cylinders were physically delivered to customers and remained in their possession during use, the charges were held to be rental for use of the cylinders, not merely incidental payments. The essential requirement of transfer of the right to use goods was satisfied, and the levy was upheld.

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Issues: Whether the charges collected for retaining gas cylinders beyond the stipulated period amounted to consideration for transfer of the right to use goods and were taxable under section 5-E of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The cylinders were supplied to customers on a loan basis and the terms expressly permitted their use only for storage of the gas supplied by the petitioner. The customer was required to return the cylinders within the free period, failing which a daily rental was charged. The cylinders were physically delivered to the customers and remained in their possession during the period of use. On these facts, the charges were not merely incidental or incentive-based but were rental charges for use of the cylinders beyond the stipulated period. The essential requirement of transfer of the right to use goods was therefore satisfied.

Conclusion: The charges were rightly treated as taxable under section 5-E and the finding was against the assessee.

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