Transfer of right to use goods turns on exclusive control under the contract, making hired vehicles taxable as deemed sales.

A contract for hiring cranes, tankers and trailers amounts to a transfer of the right to use goods, and therefore a deemed sale taxable under sales tax and VAT law read with Article 366(29A)(d), when the contractual terms place the vehicles at the hirer's disposal and confer effective, exclusive control over deployment, timing, location and operational use. Temporary physical custody with the owner, or provision of the operating crew, does not prevent that result if the hirer retains dominion for the contract period. Earlier contrary single-judge views and the cited Supreme Court order were treated as not altering this contractual analysis.

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Issues: (i) Whether the contracts for hiring cranes, tankers and trailers amounted to a transfer of the right to use goods so as to constitute a deemed sale exigible to tax under the sales tax and value added tax laws read with Article 366(29A)(d) of the Constitution of India.

Issue (i): Whether the contracts for hiring cranes, tankers and trailers amounted to a transfer of the right to use goods so as to constitute a deemed sale exigible to tax under the sales tax and value added tax laws read with Article 366(29A)(d) of the Constitution of India.

Analysis: The relevant test is whether the contract effects a transfer of the right to use the goods, which depends upon the construction of the contractual terms. The contracts placed the vehicles at the disposal of ONGC, required them to remain available throughout the contract period, vested ONGC with control over deployment, timing, location and operational use, and permitted ONGC to require work beyond normal hours and even on maintenance off days. The contractor's temporary physical custody did not detract from ONGC's exclusive dominion and control during the subsistence of the contract. On that basis, the contracts satisfied the attributes of transfer of the right to use goods.

Conclusion: The contracts amounted to a transfer of the right to use goods and were exigible to tax as deemed sales; the finding was against the contractors.

Issue (ii): Whether the contrary view taken in earlier single-judge decisions or the order of the Supreme Court required a different result.

Analysis: The earlier single-judge decisions were found to be inconsistent with the contractual analysis adopted in the present cases. The Supreme Court order relied upon did not decide the present controversy on merits and turned on factual matters requiring adjudication by the taxing authority in that case.

Conclusion: No different result followed from the earlier decisions or the Supreme Court order; the appeals could not succeed.

Final Conclusion: The writ appeals and writ petitions failed, and the contracts were held to attract tax on the basis of a transfer of the right to use goods under a deemed sale.

Ratio Decidendi: A contract amounts to a transfer of the right to use goods when, on its terms, the transferee obtains effective and exclusive control over the goods for the period of the contract, even if the owner retains physical custody at times and provides the operating crew.

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