Transfer of right to use goods: billing records alone did not defeat tax liability on hired machinery and vehicles.

Turnover from hiring machinery and vehicles was treated as taxable under section 5C of the Karnataka Sales Tax Act, 1957 because the assessee failed to show that there was no transfer of the right to use goods. The HC noted that no agreement or supporting material established that the machinery remained under the assessee's effective control and supervision, or that its employees alone operated the equipment. Billing records showing hours of use and hire charges were insufficient by themselves to displace tax liability. The assessment and appellate orders were sustained.

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Issues: Whether the turnover arising from hiring of machinery and vehicles was liable to tax under section 5C of the Karnataka Sales Tax Act, 1957 on the basis of a transfer of the right to use goods.

Analysis: The assessee did not produce any agreement or other material to establish that the machinery and vehicles remained under its effective control and supervision while being used by the customer. The only material relied upon was the billing record, which showed use of machinery for specified hours and hire charges, but did not demonstrate that there was no transfer of the right to use the goods. In the absence of supporting documents showing that the employees of the assessee were operating the machinery and that possession and control never passed to the customer, the authorities were justified in treating the transaction as falling within section 5C.

Conclusion: The turnover was rightly brought to tax under section 5C and the findings against the assessee were upheld.

Final Conclusion: The revision failed and the assessment and appellate orders were sustained.

Ratio Decidendi: Where the assessee claiming to retain control over hired machinery fails to produce material showing absence of transfer of the right to use goods, billing records alone are insufficient to displace liability under section 5C.

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