Transfer of right to use goods makes bus hire charges taxable when possession and control pass for use.

Hire charges for providing a bus to UPSRTC were held taxable as turnover from a transfer of the right to use goods under section 3F of the U.P. Trade Tax Act, 1948. The court applied the principle that such a transfer exists where goods are in a deliverable state and are placed at another party's disposal for use, with possession and control effectively passing under the agreement. On the facts, the bus remained under UPSRTC's use during the contractual period, so the transaction satisfied that test. The Tribunal's deletion of tax was found incorrect, and the tax levy on the hire charges was restored.

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Issues: Whether the hire charges received for providing the bus to UPSRTC constituted turnover from transfer of the right to use goods and were taxable under section 3F of the U.P. Trade Tax Act, 1948.

Analysis: Section 3F of the U.P. Trade Tax Act, 1948 brings to tax turnover arising from transfer of the right to use goods. On the terms of the agreement, possession and control of the bus remained with UPSRTC during the contractual period, indicating that the vehicle was placed at UPSRTC's disposal for its use. The governing principle applied was that a transfer of right to use requires the goods to be in a deliverable state and to be delivered for use. On the facts found, the arrangement satisfied that test.

Conclusion: The receipt from UPSRTC was taxable under section 3F, and the deletion of tax by the Tribunal was incorrect.

Final Conclusion: The revision succeeded and the Tribunal's order was set aside, restoring the tax levy on the hire charges.

Ratio Decidendi: Where possession and control of goods are transferred to another for use under an agreement, the transaction amounts to a transfer of the right to use goods and is taxable under the relevant charging provision.

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