Right to use goods continues under contract terms, so delayed-return cylinder rent forms taxable turnover.

Rent charged on delayed return of gas cylinders was held to form part of taxable turnover under the Assam General Sales Tax Act, 1993, because the contract did not confine the right to use the cylinders to a fixed 15-day period. The Court found that ownership remained with the manufacturer, but the right to use the cylinders continued for an indefinite duration subject to payment as stipulated in the agreement. On that construction, the rent was not a mere penal recovery and was exigible to sales tax; the reassessment challenge was rejected.

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Issues: Whether rent collected for delayed return of gas cylinders was includible in the taxable turnover as consideration for a transfer of the right to use goods under the Assam General Sales Tax Act, 1993.

Analysis: The agreement provided for supply of cylinders with an initial rent-free period, after which rent accrued on delayed return. The dispute turned on the true nature of the arrangement under the contract, because liability depended on whether the cylinders were transferred for a fixed term only or whether the right to use them continued subject to payment of rent. The Court held that the terms did not clearly confine the right to use the cylinders to 15 days. The property in the cylinders remained with the manufacturer, but the right to use them was transferred for an indefinite duration subject to payment as stipulated in the agreement. On those terms, the rent could not be treated as a mere penal recovery outside the taxing entry.

Conclusion: The rent realised on delayed return of the cylinders was rightly included in the taxable turnover and was exigible to sales tax.

Final Conclusion: The writ petition failed and the challenge to reassessment was rejected.

Ratio Decidendi: Where the contract does not limit the right to use goods to a fixed period and the user continues subject to payment under the agreement, the amounts collected for such use form part of taxable turnover.

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