Transfer of right to use goods not established where mobile cranes remained under supplier control and only a hiring service was provided.

Hiring of mobile cranes on daily rental basis was treated as a service of supplying tangible goods for material handling, not a transfer of the right to use goods. The agreement showed that the cranes remained under the supplier's effective control, with its drivers and crew operating them, while the recipient only supervised the work. Contract terms on operating hours, maintenance records, parking restrictions, and replacement of cranes supported the conclusion that possession and effective control were not transferred. Applying the settled tests for transfer of the right to use, the arrangement did not satisfy the statutory ingredients and was therefore outside tax as such a transfer.

---

---

Issues: Whether the hiring of mobile cranes on daily rental basis amounted to a transfer of right to use goods so as to attract tax under Section 4 of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The agreement showed that the cranes were supplied with the petitioner's drivers and crew, remained under the petitioner's effective control, were operated under the supervision of the recipient, and were not transferred to the recipient's possession. The contractual terms concerning operating hours, maintenance of trip registers, parking restrictions, and replacement of cranes indicated that what was provided was a service of supplying tangible goods for material handling rather than a transfer of the legal right to use the goods. Applying the settled tests governing transfer of right to use, including the requirement of transfer of possession and effective control, the transaction did not satisfy the ingredients of such transfer.

Conclusion: The demand treating the transaction as a taxable transfer of right to use goods was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The assessment-based demands failed, and the writ petitions were allowed with consequential relief.

Ratio Decidendi: A hiring arrangement remains a service and does not constitute transfer of right to use goods unless possession and effective control over the goods are transferred to the recipient for the relevant period.

---