Transfer of right to use goods determines taxable event and situs where the written contract is executed.

Under Article 366(29A)(d) of the Constitution, the taxable event for a deemed sale involving transfer of the right to use goods is the transfer itself, not the mere use of the goods. In the absence of a contrary legal fiction fixing situs, the place of taxable sale is where the written agreement transferring that right is executed. On that footing, a lease transaction executed outside the State could not be taxed merely because the goods were used within the State, and the earlier view was stated to be inconsistent with settled law. The review petition was therefore treated as maintainable on merits and the prior dismissal was set aside, with the writ petition restored for rehearing.

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Issues: Whether the earlier judgment dismissing the writ petition required review and recall on the ground that the taxable event in respect of lease charges was the transfer of right to use goods, and that the situs of the sale was the place where the written agreement transferring that right was executed.

Analysis: The governing principle is that, under Article 366(29A)(d) of the Constitution of India, the taxable event is the transfer of the right to use goods, not the mere use of the goods or their location. In the absence of a contrary legal fiction fixing situs, the place of taxable sale is where the written agreement transferring the right to use is executed. Applying that principle, the lease transaction in question, executed outside the State, could not sustain levy by the State on the footing that the goods were used within the State. The earlier view was therefore inconsistent with the settled legal position and warranted correction in review.

Conclusion: The review petition was maintainable on the merits and the earlier judgment required recall.

Final Conclusion: The prior dismissal stood set aside, and the connected writ petition was restored for rehearing.

Ratio Decidendi: For a deemed sale involving transfer of the right to use goods, the taxable event and situs are determined by the place where the written contract transferring that right is executed, unless a valid legal fiction fixes a different situs.

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