Transfer of right to use goods requires passing of control and possession; dredger deployment charges were not taxable.

A transaction for deployment of dredgers with manpower was not a transfer of the right to use goods under section 2(g)(iv) because the agreement showed services rendered with the owner retaining effective control and possession. Charges described as mobilisation, demobilisation, idle time, or daily use did not, by themselves, establish a deemed sale. On that basis, the hire and service charges were held not exigible to sales tax. The challenge to the Tribunal's decision to proceed on merits without remand also failed, as the substantive finding on taxability made remand unnecessary in the circumstances.

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Issues: (i) Whether the arrangement for deployment of dredgers with manpower and related charges amounted to a transfer of the right to use the dredgers within section 2(g)(iv) of the Orissa Sales Tax Act, 1947. (ii) Whether the Tribunal was justified in deciding the second appeals on merits without remanding the matter to the Sales Tax Officer.

Issue (i): Whether the arrangement for deployment of dredgers with manpower and related charges amounted to a transfer of the right to use the dredgers within section 2(g)(iv) of the Orissa Sales Tax Act, 1947.

Analysis: A transfer of right to use goods requires a real passing of the right to use, not merely the rendering of services with equipment deployed for executing work. The decisive test is the stipulation in the agreement and whether possession and effective control over the goods pass to the other party. Charges described as mobilisation, demobilisation, idle time, or daily use do not by themselves establish a transfer if the owner continues to deploy the dredgers with its men and retains effective control over their use. The factual finding accepted by the Tribunal was that the dredgers were engaged as a unit for dredging work, that the Corporation retained control, and that the payments were for services rendered. On that basis, the transaction was not a deemed sale under section 2(g)(iv).

Conclusion: The arrangement did not constitute a transfer of the right to use the dredgers, and the hire/service charges were not exigible to sales tax.

Issue (ii): Whether the Tribunal was justified in deciding the second appeals on merits without remanding the matter to the Sales Tax Officer.

Analysis: Once the Tribunal concluded on the principal question that there was no taxable transfer of right to use the dredgers, the issue of remand did not affect the ultimate liability. The Court accepted the Tribunal's substantive determination and found no infirmity warranting interference on the remand question in the circumstances of the case.

Conclusion: The Tribunal's decision on merits was sustained and no remand was directed.

Final Conclusion: The revision failed, the assessee's position was upheld, and the levy on the dredger hire charges was set aside.

Ratio Decidendi: A transaction is taxable as a transfer of the right to use goods only when the agreement effects a real passing of the right to use, evidenced by transfer of control and possessory dominion consistent with a deemed sale.

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