Transfer of right to use buses requires possession or effective control to pass to the hirer; tax levy failed.

Transportation charges for running buses for employee transport were held not to amount to a transfer of the right to use the vehicles where the owner retained control, supplied the driver and conductor, bore operating expenses, and never transferred possession to the customer. On those facts, the levy under section 3F of the U.P. Trade Tax Act, 1948 could not apply. The note states the principle that tax on transfer of the right to use a vehicle arises only when possession or effective control passes to the hirer, and on that basis the tax demand was unsustainable.

---

---

Issues: Whether the transportation charges received for running buses for employee transport amounted to a transfer of right to use the buses, so as to attract tax under section 3F of the U.P. Trade Tax Act, 1948.

Analysis: The agreement showed that the buses remained under the owner's control. The driver and conductor were supplied by the owner, the operating expenses were borne by the owner, and possession of the buses was never transferred to the customer. On these facts, the transaction was not a transfer of the right to use the buses, and the levy under section 3F could not stand.

Conclusion: The tax on the transportation charges was not payable and the revision succeeded.

Ratio Decidendi: A levy for transfer of right to use a vehicle is attracted only when possession or effective control of the vehicle is transferred to the hirer.

---