Transfer of right to use goods test: crane hire without effective control was not treated as a taxable sale.

Hiring of cranes did not amount to transfer of the right to use goods where the contract left effective control with the owner: the respondent supplied the driver, cleaner, diesel, oil and accessories and retained ultimate possession and control. Applying the settled test that a mere licence or hire arrangement is insufficient, the transferee had not obtained the incidents of ownership of use, including exclusive control and necessary permissions. The transaction therefore lacked the essential attributes of a taxable transfer of the right to use goods and was not a sale under the Maharashtra Sales on Transfer of Right to Use Any Goods for Any Purpose Act, 1985. The respondent was not a dealer and the reference was answered against the Revenue.

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Issues: Whether hiring of cranes under the contract amounted to transfer of the right to use goods so as to make the respondent a dealer and the transaction a sale under the Maharashtra Sales on Transfer of Right to Use Any Goods for Any Purpose Act, 1985.

Analysis: The statutory scheme treats a person as a dealer only if he transfers the right to use any goods, and a transaction as a sale only if such right is transferred for consideration. The contract showed that the respondent retained the crane, provided the driver, cleaner, diesel, oil and accessories, and kept the ultimate control over the equipment. The transferee was not shown to have obtained the legal consequences of ownership of use, including exclusive control, permissions or licences. Applying the settled test that a mere licence or hire arrangement is not enough and that effective control must pass to the transferee, the transaction did not satisfy the essential attributes of transfer of the right to use goods.

Conclusion: The respondent was not a dealer within section 2(4) and the crane-hire transaction was not a sale under section 2(10); the reference was answered against the Revenue and in favour of the assessee.

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