2007 (9) TMI 584 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of section 3F of the U.P. Trade Tax Act, 1948 regarding tax on the right to use goods, transfer of possession under an agreement, applicability of case law.

Summary:

The case involved a revision under section 11 of the U.P. Trade Tax Act, 1948, challenging an order of the Tribunal related to the assessment year 1999-2000. The dispute arose from the tax levied on hire charges received for providing a bus under section 3F of the Act. The Tribunal allowed the appeal and deleted the tax, leading to the present revision.

The key argument was whether there was a transfer of the right to use the bus under an agreement with UPSRTC. The agreement stated that the possession and control of the vehicle remained with UPSRTC during the contract period, indicating a transfer of possession. Citing the case of Bharat Sanchar Nigam Ltd. v. Union of India, it was contended that in cases of transfer of the right to use, the goods should be in a deliverable stage and actually delivered. As the possession was with UPSRTC as per the agreement, the provision of section 3F applied.

After considering the arguments and reviewing the relevant provisions and authorities, the court held that the possession transfer to UPSRTC fell within the scope of section 3F of the Act. The Tribunal's decision to delete the tax was deemed incorrect as it did not appreciate the legal provision. Consequently, the court allowed the revision, setting aside the Tribunal's order.

In conclusion, the judgment clarified the application of section 3F in cases of transfer of the right to use goods under agreements, emphasizing the importance of possession transfer and delivery in determining tax liability.