Transfer of right to use goods test limits sales tax on work orders where machinery use does not show transfer of control or possession.

Consideration received under a work order is not liable to sales tax unless the transaction is shown, by specific finding and supporting material, to involve transfer of property in goods or transfer of the right to use goods. Mere use of a mechanical excavator and allied machinery, or a reference to sales tax having been collected, is insufficient where control, custody, and possession of the goods were not transferred to the hirer. On the stated facts, the arrangement was treated as comparable to a prior transport and hiring contract, and the amount received under the work order was held not exigible to sales tax, with the deducted tax treated as refundable.

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Issues: Whether work executed under the work order involved transfer of property in goods or transfer of the right to use goods so as to attract sales tax under Section 2(g) of the Orissa Sales Tax Act.

Analysis: The decisive test was whether the transaction disclosed any transfer of property in goods or transfer of the right to use the mechanical excavator and allied machinery. The assessment and appellate orders contained no specific finding that such a transfer occurred during execution of the work. A mere reference to some sales tax having been collected did not establish that the work order itself involved a taxable sale. In the absence of material showing that control, custody, and possession of the goods were transferred to the hirer, the transaction could not be treated as a sale. The facts were found to be on the same footing as the previously decided transport and hiring arrangement relied upon by the assessee.

Conclusion: The issue was answered in the affirmative in favour of the assessee and against the Department. The entire amount received under the work order was held not exigible to sales tax, and the TDS deducted was held refundable.

Ratio Decidendi: In the absence of a specific finding or supporting material showing transfer of property in goods or transfer of the right to use goods, consideration received for execution of a work order is not liable to sales tax merely because it involves use of machinery or hire charges.

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