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Issues: Whether bulldozer hire charges collected by the respondent constitute a transfer of right to use goods under Section 5(E) of the APGST Act.
Analysis: The Bench examined the contractual terms and contemporaneous conditions governing the transactions and applied the attributes required for a transfer of right to use goods. The contracts show that the respondent retained physical possession and operational control of the machinery; respondent's personnel operated the bulldozers; licenses, insurance, road taxes, fuel and maintenance obligations remained with the respondent; there was no delivery of the machinery to the users and no legal right vested in the users to independently use or control the equipment. The contractual stipulations that require payment despite stoppages and place security obligations on the applicant serve commercial protection and do not effectuate transfer of control. The Bench also applied the principles in relevant higher court authorities that where substantial control and possession remain with the supplier and the transaction is for execution of work by the supplier's men and machinery, the transaction is a service/works contract and not a transfer of right to use goods under the statutory provision.
Conclusion: The issue is answered in favour of the assessee. The bulldozer hire charges do not constitute a transfer of right to use goods under Section 5(E) of the APGST Act and the transactions are held to be works contracts for land development rather than taxable transfers of right to use goods.
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