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TMI BlogNavigating the Taxation Labyrinth: The Supreme Court's Guidance on Transfer of Right to Use GoodsX X X X Extracts X X X X X X X X Extracts X X X X ..... y the Supreme Court of India. The case revolves around the interpretation of sub-clause (d) of Clause 29A of Article 366 of the Constitution of India and its applicability to various contracts involving the supply of trailers, cranes, and tank trucks. The central issue is whether these transactions amount to a sale within the meaning of the Value Added Tax (VAT) Act or constitute the rendering of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not on the use of goods but on the transfer of the right to use goods. Tests for Transfer of the Right to Use Goods The Court relied heavily on the tests laid down by Dr. AR Laxmanan, J. in the case of BHARAT SANCHAR NIGAM LTD. (BSNL) Versus UNION OF INDIA - 2006 (3) TMI 1 - Supreme Court , which have been consistently followed in subsequent decisions. These tests include: There must be goods ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the right to use the goods. Key factors that led to this conclusion included: The contractors retained control over the equipment, providing crew members, fuel, maintenance, and bearing liability for any accidents or damages. The transferee (e.g., ONGC or IOCL) was not required to face legal consequences for using the supplied equipment. The use of the equipment was merely permissive, without t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the right to use the goods. Instead, they were contracts for rendering services, where the contractors retained substantial control over the equipment and did not transfer the right of possession and effective control to the transferee. This judgment provides clarity on the distinction between a transfer of the right to use goods and mere permissive use or licensing of goods, resolving a long-stan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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