Transfer of right to use goods: factual proof required to escape State sales tax on lease transactions.

Assessment of lease transactions under section 3-A of the Tamil Nadu General Sales Tax Act, 1959 was upheld because the Supreme Court's rulings on deemed sales and transfer of the right to use goods only supplied the governing legal principles; the assessees still had to prove on evidence that the particular transactions were inter-State sales or sales in the course of import and therefore outside State taxing power. The Tribunal noted that the assessing authority had found the goods remained with the assessees and that the statutory and factual objections had been rejected on evidence, so those disputes were matters for appellate examination rather than a basis to quash the assessments in original jurisdiction. The challenge failed.

---

---

Issues: Whether the assessment orders levying tax under section 3-A of the Tamil Nadu General Sales Tax Act, 1959 on lease transactions could be set aside in view of the Supreme Court's ruling on transfer of right to use goods and the assessees' claim that the transactions were inter-State or in the course of import.

Analysis: The Tribunal noted that the Supreme Court had clarified the legal principles governing deemed sales and the situs of a transfer of the right to use goods, but the assessment orders had recorded findings that the goods were retained by the assessees and leased from their possession. The assessees' claims that the transactions fell within import or inter-State sale had been rejected on evidence by the assessing authority. The Tribunal held that the Supreme Court decision laid down the governing principles, but the assessees still had to establish on evidence that the particular transactions were outside the taxing power of the State. Those contentions involved questions of fact fit for appellate examination and did not justify setting aside the assessment orders in original jurisdiction.

Conclusion: The challenge to the assessment orders failed, and the petitions were dismissed.

---