Transfer of right to use goods test excludes mere transportation control, keeping the arrangement outside deemed sale treatment.

The governing test for a transfer of the right to use goods is whether the goods are identified, the transferee acquires a legal right to use them, and the transferor is excluded during that period. On the agreement and work order read as a whole, the tank trucks remained registered in the assessee's name, the permits and licences were retained by the assessee, and the assessee bore the operating expenses and risks. HPCL only regulated how transportation services were to be performed, so the assessee retained possession and effective control. The arrangement was therefore transportation service, not a transfer of the right to use goods, and was not a deemed sale under the MVAT Act.

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Issues: Whether the transportation arrangement for tank trucks under the agreement with HPCL amounted to transfer of the right to use goods and, therefore, a sale exigible to tax under the MVAT Act.

Analysis: The governing test is whether the transaction satisfies the attributes of a transfer of the right to use goods, namely identification of the goods, a legal right in the transferee to use them, and exclusion of the transferor during the period of such use. On a reading of the agreement and work order as a whole, the tank trucks remained registered in the assessee's name, the permits and licences were retained by the assessee, the operating expenses and risks were borne by the assessee, and HPCL only regulated the manner in which transportation services were to be rendered. The contractual clauses relied on by the revenue were directed to ensuring uninterrupted and safe carriage of petroleum products and did not divest the assessee of possession or effective control. The arrangement was, therefore, one for transportation services and not a transfer of the right to use goods.

Conclusion: The transaction did not amount to a transfer of the right to use goods and was not a deemed sale under the MVAT Act. The answer is in favour of the assessee.

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