Transfer of right to use buses attracted trade tax where UPSRTC had effective control under the contract.

A bus-operator arrangement was treated as a taxable transfer of the right to use goods where the contract gave UPSRTC effective control over the buses. The assessee supplied the bus and driver, while UPSRTC supplied the conductor and handled ticket distribution and fare collection, which indicated use and control sufficient to attract Section 3-F of the U.P. Trade Tax Act. A contrary view based on a later notification was found inapplicable because that notification was prospective and did not govern the relevant assessment year. The revisions were therefore rejected, and the turnover was held taxable.

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Issues: Whether the amount received by the bus owners from UPSRTC for plying buses on specified routes was taxable under Section 3-F of the U.P. Trade Tax Act on the ground that there was a transfer of the right to use the buses to UPSRTC.

Analysis: The agreement showed that the buses were plying under arrangements by which the assessee supplied the bus and driver, while UPSRTC provided the conductor for ticket distribution and fare collection. The controlling question was whether UPSRTC obtained effective control over the buses so as to amount to a transfer of the right to use the goods. The issue had already been decided by a coordinate Bench in earlier cases, holding that similar contractual arrangements constituted a transfer of the right to use because UPSRTC had effective control over the buses. The relied-upon contrary decision was held inapplicable because it proceeded on a later notification that was prospective and unavailable for the assessment year in question.

Conclusion: The tax under Section 3-F was rightly attracted, and the question was answered in favour of the Revenue and against the assessee.

Final Conclusion: The revisions were rejected because the contractual arrangement amounted to a taxable transfer of the right to use the buses in favour of UPSRTC.

Ratio Decidendi: Where a contract confers effective control over a vehicle on the other party, the transaction amounts to a transfer of the right to use the goods and is taxable under the relevant turnover provision.

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