Transfer of right to use vehicles not found in election-duty requisition, making sales tax deduction unlawful.

Requisition of vehicles for election duty did not amount to a transfer of the right to use goods because the owners retained control through their drivers, supplied fuel, and no registration, insurance, or independent right to ply the vehicles passed to the State authorities. Applying Article 366(29-A)(d), the HC treated the arrangement as a limited hiring or rental transaction, not a deemed sale. As a result, the Tripura sales tax law and the rules on deduction at source were inapplicable, and deduction of sales tax from the hiring charges was unlawful.

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Issues: Whether requisitioning of vehicles for election duty amounted to a transfer of the right to use goods so as to attract sales tax under the Tripura sales tax law, and whether deduction of tax from the hiring charges was lawful.

Analysis: The vehicles were requisitioned for election purposes, but they continued to remain under the control of the owners through their drivers, with fuel supplied by the owners and no transfer of the registration certificate, insurance cover, or any independent right to ply the vehicles in favour of the State authorities. The legal incidence under Article 366(29-A)(d) of the Constitution of India arises only when there is a transfer of the right to use goods, not merely use under a hiring arrangement. On the facts, the transaction was only one of hiring or rental for a limited purpose and not a transfer of any right or interest in the vehicles. Consequently, the provisions of the Tripura sales tax law and the rules relating to deduction at source had no application.

Conclusion: The requisition did not amount to a taxable transfer of the right to use the vehicles, and the deduction of sales tax from the hiring charges was illegal.

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