Transfer of right to use goods turns equipment hire into a taxable deemed sale under sales tax law.

A contractual arrangement for exclusive use of identified equipment, tools and machinery was treated as a transfer of the right to use goods. The contractor retained ownership and physical possession, but the equipment was deployed solely for the oil company's work and remained under its operational control, inspection and supervision. Applying Article 366(29A)(d) of the Constitution of India and the definition of sale under the Assam General Sales Tax Act, 1993, actual delivery of possession was not essential. The decisive factor was that the transferee acquired the legal right to use the goods for consideration to the exclusion of the transferor during the contract period, making the arrangement a taxable deemed sale.

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Issues: Whether the contractual arrangement for use of equipment, tools and machinery amounted to a transfer of the right to use goods and thus a deemed sale liable to tax under the Assam General Sales Tax Act, 1993.

Analysis: The contract required the contractor's equipment to be deployed exclusively for the oil company's work, with the equipment remaining identified, hired for charges, and subjected to the oil company's operational control, inspection and supervision. The contractor retained ownership and physical possession, but its liberty to deploy the equipment elsewhere was curtailed during the contract period. In the context of Article 366(29A)(d) of the Constitution of India and the statutory definition of sale under Section 2(33)(iv) of the Assam General Sales Tax Act, 1993, actual delivery of possession was not indispensable. What was material was whether the transferee acquired the legal right to use the goods for consideration to the exclusion of the transferor during the relevant period.

Conclusion: The arrangement constituted a transfer of the right to use the equipment and therefore a taxable deemed sale under the Act, in favour of the Revenue.

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