Situs of lease contracts governs VAT levy on right-to-use transactions, barring Haryana tax where agreements were executed outside the State.

Tax on transfer of the right to use goods depends on the situs of the contract, not merely on the location, delivery, or use of the goods. Where the lease agreements were executed at Chandigarh, Haryana lacked the requisite territorial nexus to levy tax under the Haryana Value Added Tax Act, 2003. The Tribunal's contrary view was held to rest on a misreading of the controlling law, and the lease rentals were therefore not taxable in Haryana on the facts stated.

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Issues: Whether lease rentals could be brought to tax under the Haryana Value Added Tax Act, 2003 when the lease agreements were executed at Chandigarh and not in Haryana.

Analysis: The levy on transactions of transfer of the right to use goods depends on the place where the contract is entered into, not merely on where the goods are located, delivered, or used. The binding principle applied was that the State cannot levy tax merely because one event in the chain of transaction occurred within its territory. As the agreements in question were executed at Chandigarh, Haryana lacked the requisite situs for levy, and the Tribunal's contrary view was founded on a misreading of the controlling law.

Conclusion: The lease rentals were not taxable in Haryana on the facts of the case, and the issue was decided in favour of the assessee.

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