Transfer of right to use hired equipment was taxable where the lessee had possession, control, and commercial use.

Hiring cinematographic cameras was treated as a transfer of the right to use where the lessee had possession, effective control, and the commercial benefit of the equipment during the hire period, so tax under Section 3-A of the Tamil Nadu General Sales Tax Act applied. The claim for deduction under Section 3A(2)(b) failed because no adequate material was produced to identify the locally purchased taxable equipment or substantiate the deduction basis. The assessment under Section 3-A was therefore sustained, and no deduction was allowed.

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Issues: (i) Whether the transaction of hiring cinematographic cameras amounted to a transfer of right to use so as to attract tax under Section 3-A of the Tamil Nadu General Sales Tax Act. (ii) Whether the assessee was entitled to deduction under Section 3A(2)(b) of the Tamil Nadu General Sales Tax Act.

Issue (i): Whether the transaction of hiring cinematographic cameras amounted to a transfer of right to use so as to attract tax under Section 3-A of the Tamil Nadu General Sales Tax Act.

Analysis: The agreement and surrounding circumstances showed that the cameras were given on hire for use by the lessee for filming, and the lessee had the effective control and enjoyed the economic benefit of the equipment during the lease period. On those facts, the assessee could not deny transfer of the right to use merely because ownership remained with it.

Conclusion: The transaction was liable to tax under Section 3-A and the finding of the Tribunal was upheld.

Issue (ii): Whether the assessee was entitled to deduction under Section 3A(2)(b) of the Tamil Nadu General Sales Tax Act.

Analysis: No adequate material was produced to identify the locally purchased taxable equipments or to establish the basis for the claimed deduction. In the absence of such evidence, the deduction could not be granted.

Conclusion: The claim for deduction was rightly rejected.

Final Conclusion: The revisions failed and the assessment under Section 3-A was sustained, with no deduction allowed under Section 3A(2)(b).

Ratio Decidendi: Where the lessee has possession and effective control of hired equipment and enjoys its commercial use, the transaction amounts to a transfer of the right to use and is taxable accordingly.

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