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Allahabad High Court · body

2006 DIGILAW 1137 (ALL)

MOHD. WASIM KHAN v. COMMISSIONER OF TRADE TAX.

2006-04-26

RAJESH KUMAR

body2006
JUDGMENT RAJES KUMAR, J. - Present four revisions under section 11 of the U.P. Trade Tax Act, 1948 (hereinafter referred to as "the Act") are directed against the order of the Tribunal dated July 3, 1998 relating to the assessment years 1987-88, 1988-89 and 1989-90. Brief facts of the case are that the applicant is an owner of buses and have entered into a contract with Indian Farmers Fertiliser Co-operative Limited, Phoolpur, Allahabad. M/s. Bharat Pump and Compressors Limited, Naini, Allahabad and the General Electric Company of India Limited, Naini, Allahabad for providing the buses for the transportation of their employees from their place of residence to the factory to and fro. In pursuance of the contract, buses were provided and hire charges were received as per contract. The assessing authority levied the tax on the hire charges received from the aforesaid companies under section 3F of the Act towards transfer of right to use the buses. Orders of the assessing authority have been confirmed in first appeals. The applicant filed second appeals before the Tribunal. The Tribunal by the impugned order allowed the appeals in part. The Tribunal has reduced the turnover but upheld the orders of the assessing authority levying the tax on the hire charges under section 3F of the Act. Heard learned counsel for the parties. Learned counsel for the applicant submitted that the buses were provided to IFFCO, BPCL and GEC, companies for transportation of their employees from their residence to the factory and from factory to their residence. He submitted that the effective control over the vehicles have never been passed on to the aforesaid three companies and always remained with the applicant. He submitted that the driver and other employees of the vehicles were of the applicant; road permit was in the name of the applicant; diesel and other maintenance expenses were borne by the applicant; prices were fixed with reference to the kilometer; applicant had to take the insurance for the vehicles and the workmen. It was also agreed that in case of failure to provide the vehicle every day, the applicant would be liable for penalty and the earnest money would be forfeited. On these facts, it is submitted that the possession of the vehicles was never given to the aforesaid companies and the effective control over the vehicles was always remained with the applicant. On these facts, it is submitted that the possession of the vehicles was never given to the aforesaid companies and the effective control over the vehicles was always remained with the applicant. He submitted that for the levy of tax under section 3F of the Act under the transfer of right to use the goods, the transfer of possession is sine qua non. In support of his contention he relied upon the decision of the apex court in the case of State of Andhra Pradesh v. Rashtriya Ispat Nigam Ltd. reported in [2002] 126 STC 114; [2002] UPTC 273 (SC); [2002] JT 2 SC 493, Division Bench decisions of this court in the case of Ahuja Goods Agency v. State of Uttar Pradesh reported in [1997] 106 STC 540; [1997] UPTC 629; [1997] 11 NTN 484, Commissioner, Trade Tax v. Jamuna Prosad Jaiswal reported in [2008] 13 VST 403; [2006] UPTC 285; [2005] 28 NTN 156, Commissioner of Trade Tax v. Sunil Agrawal reported in [2006] 29 NTN 98 and the latest judgment of the apex court in the case of Bharat Sanchar Nigam Ltd. v. Union of India in writ petition (Civil) No. 183 of 2003 decided on March 2, 2006 ([2006] 145 STC 91; [2006] 3 VST 95). Learned Standing Counsel submitted that under the agreement after providing the vehicles each day, the vehicles had gone under the control of the aforesaid three companies and the movement of the vehicles was fully controlled and governed by the companies. He submitted that during the period, the vehicles were engaged for the transportation of their employees from one place to another place, the vehicles were in effective control of the companies and the applicant had completely lost the control over the vehicles, thus, on the facts of the case, there was a transfer of right to use the vehicles in favour of the companies and hire charges received for such transfer was liable to tax under section 3F of the Act. Having heard the learned counsel for the parties, I have perused the order of the Tribunal and the authorities below. It is useful to refer the terms of the contract of IFFCO, BPCL and GEC. INDIAN FARMERS FERTILISER CO-OPERATIVE LTD. "Ref. : 72/0000/821-C M/s. Mohd. Wasim Khan 3, Mission Road, Allahabad. Letter of Intent Sub. : Hiring of 50/52 seater bus. Ref. It is useful to refer the terms of the contract of IFFCO, BPCL and GEC. INDIAN FARMERS FERTILISER CO-OPERATIVE LTD. "Ref. : 72/0000/821-C M/s. Mohd. Wasim Khan 3, Mission Road, Allahabad. Letter of Intent Sub. : Hiring of 50/52 seater bus. Ref. : Your quotation No. Nil dated March 10, 1987 and subsequent discussion dated April 6, 1987. Dear Sirs, With reference to the above we are pleased to inform you that your offer has been accepted on the following terms and conditions : (1) You will place at the disposal of IFFCO three 50/52 seater buses Model 1987. These will be used and will run as per the directives of representative of IFFCO. Generally, the vehicle will run between IFFCO and Allahabad, but sometimes it may be required to go outside Allahabad. (2) You will ensure availability of drivers, spare tyres, tools and other necessary items and ensure that the vehicle is available for use everyday. (3) This contract will be valid for a period of one year with effect from July 1, 1987. (4) Performance guarantee in the form of demand draft bank guarantee for five per cent of the total contract value as per pro forma invoice will be submitted by you failing which the same would be recovered from your first running bill. This deposit will be non-interest bearing and would be returned after satisfactory completion of the contract. (5) The vehicle will have foam seats and fitted with seat covers and curtains of good quality and the same must be maintained. Seat must be of 4" foam and back must be of height of 3" thick foam. (6) Payment shall be paid on the following rates : (a) Lump sum rate for first 2500 km in any month Rs. 15,000. (b) Rate for distance beyond 2500 km in any month Rs. 2.20 per km. (7) The above rates will remain firm for the duration of contract irrespective of any increase in the prices of tyres, spare parts or any other connected items. (8) In the event of upward revision in the prices of diesel by Government, compensation on the basis of consumption of one litre diesel covering a distance of four km will be payable extra with effect from March 10, 1987. (8) In the event of upward revision in the prices of diesel by Government, compensation on the basis of consumption of one litre diesel covering a distance of four km will be payable extra with effect from March 10, 1987. (9) The entire running and maintenance cost including diesel, payment of salary and overtime allowance to drivers, insurance, taxes, permits extra will be borne by you. (10) Toll tax at Shastri Bridge will be entirely borne by IFFCO. (11) Payment will be made on the basis of actual use of vehicle. No compensation will be allowed in the event of vehicle running lesser distance than estimated. (12) IFFCO reserves the right to terminate the contract without assigning any reason whatsoever. In the event of such termination you will not be entitled to any compensation from IFFCO. (13) The driver and conductor of the vehicle will be responsible if unauthorised persons are found boarding/travelling in the vehicle. (14) The vehicle will be accepted and supervised by our authorised representative from time to time. The suggestion offered by our representative shall be implemented by the owner of the vehicle. (15) The contractor will have to take insurance cover for their workmen and vehicle to cover the risk of accident/death and payment of compensation as per rules. (16) In case you fail to place your vehicle within the stipulated period, IFFCO will forfeit your earnest money deposits without prejudice to any other rights. Please sign and return two copies of this letter of intent as token of acceptance. Formal contract will be issued shortly wherein all other terms and conditions will be incorporated. Yours faithfully, For Indian Farmers Fertiliser Co-op. Ltd. (V. K. Grover) Materials Manager M/s. Bharat Pump and Compressors Ltd." Whereas Sri Mohd. Wasseem Khan, S/o. Sri Mohd. Please sign and return two copies of this letter of intent as token of acceptance. Formal contract will be issued shortly wherein all other terms and conditions will be incorporated. Yours faithfully, For Indian Farmers Fertiliser Co-op. Ltd. (V. K. Grover) Materials Manager M/s. Bharat Pump and Compressors Ltd." Whereas Sri Mohd. Wasseem Khan, S/o. Sri Mohd. Ibrahim Khan, resident of 3, Mission road, Allahabad (hereinafter called transporter) has offered to run a minibus for transporting the employees/customers of Bharat Pumps and compressors Ltd. (A Government of India Enterprise) with its registered office at Naini, Allahabad from Allahabad City to Bharat Pumps and Compressors Ltd. and back as and when required including out of station journeys and whereas M/s. Bharat Pumps and Compressors Ltd., have agreed to engage of minibus of the said transporter on the following terms and conditions : (1) That the transporter will run a minibus No. CIE-35 (Tata 407 - 1986 model) in good running condition for transporting the employees/customers of Bharat Pumps and Compressors Ltd., from Allahabad City to Bharat Pumps and Compressors Ltd., and back as and when required including out of station journeys. That in case of the above minibus being out of order, the transporter shall provide an alternative/substitute minibus after due approval of such minibus by the company for such period as the company thinks reasonable. (2) That the minibus will be operated for company's duties round the clock as per the timings fixed from time to time from various places in Allahabad city to Bharat Pumps and Compressors Ltd., Naini, and back including out of station journeys. (3) That the minibus will pickup/drop company's employees/customers from different places/pickup points and routes as and when required including out of station journeys. (4) That the minibus must be duly insured under the Motor Vehicles Act to cover the passengers travelling. (5) That in consideration of the above services to be rendered by the transporter M/s. Bharat Pumps and Compressors Ltd., shall pay the hire charges for local as well as out of station journeys on the rates as written hereunder payable monthly after rendering actual services : (a) That for a minimum run of 4500 kms in a month Rs. 10,000 will be paid in normal conditions. (b) Beyond 4500 kms run in a month : the rates would be Rs. 1.55 per km. 10,000 will be paid in normal conditions. (b) Beyond 4500 kms run in a month : the rates would be Rs. 1.55 per km. In case of any rise in the rates of fuel by any Government notification below 20 n.p. will not be entertained and above 20 n.p. the extra cost above 20 n.p. will be paid to the transporter based on actual consumption of fuel per month to be calculated on 10 kms per litre basis. The present rate of diesel is Rs. 3.90 per litre. (6) That in case for any reason, whatsoever, the transporter fails to provide the said minibus and/or is unable to transport the employees/customers of Bharat Pumps and Compressors Ltd., on any day/trip, as the case may be, in addition to proportionate recovery of hire charges, he shall have to pay by way of liquidated damage, a sum of equal to double the hire charges for that day/trip. (7) That the minibus will run on all the days of the month including company's holidays/weekly off days also, except for twice in a month, the vehicle can be released for maintenance purpose on advance notice on weekly off days only. (8) That this agreement and contract to run the minibus as mentioned above shall remain in force for period of 24 calendar months commencing from January 16, 1987. The company may extend the period of contract, if mutually agreed upon to on the same terms and conditions or on such other terms and conditions as may be necessary. (9) That this agreement can be terminated by either party on giving 30 (thirty) days notice to this effect. However, in case of failure to provide properly and timely service as required, BPC reserve the right to terminate the contract immediately without assigning any reason or notice period and the transporter will not be entitled to claim any damages or compensation from BPC. (10) That the contractor will have to deposit security money of Rs. 3,000 (rupees three thousand) only before operating the minibus in the company and after award of contract. (11) In case of any breach of contract by the transporter, BPC shall be entitled to forfeit in their favour the security deposit for that particular minibus, without prejudice to the rights of M/s. Bharat Pumps and Compressors Ltd., to take legal recourse for the said breach in the matter as deemed fit. (11) In case of any breach of contract by the transporter, BPC shall be entitled to forfeit in their favour the security deposit for that particular minibus, without prejudice to the rights of M/s. Bharat Pumps and Compressors Ltd., to take legal recourse for the said breach in the matter as deemed fit. (12) That the responsibility of keeping the minibus in good running condition as also to bear the cost of fuel, etc., including the salary and wages of the staff employed by the transporter for running of this minibus, would exclusively be of the transporter and Bharat Pumps and Compressors Ltd., will in no way be responsible to pay any part of such expenditure as mentioned hereinbefore. (13) That the transporter shall obtain the route permit, etc., for running this minibus and M/s. Bharat Pumps and Compressors Ltd., shall in no way be responsible for obtaining such permit, etc., payment of taxes such as passenger tax, surcharge, insurance charges, to concerned authorities will be the liability of the contractor and Bharat Pumps and Compressors Ltd., will in no way be responsible to pay any part of such taxes. The contractor will have to produce the above documents, as and when required by the authorised officer of Bharat Pumps and Compressors Ltd. (14) That while the said minibus is in run for the transport of the employees/customers of Bharat Pumps and Compressors Ltd., the transporter shall not allow any other person to travel in the minibus nor shall, carry any goods or loads of any such person excepting that of the employees/customers of Bharat Pumps and Compressors Ltd. (15) That the transporter will arrange at his own cost for the parking and garaging of the minibus at Allahabad city or any other place the transporter may like to garage and keep the minibus. But on the outward journey to the factory site of Bharat Pumps and Compressors Ltd., the minibus will be allowed to be parked inside the factory or at the company's guest house in city as the case may be for fulfillment of this contract. (16) That the transporter undertakes to run the minibus with punctuality so that the duties entrusted shall not be delayed or disrupted. (16) That the transporter undertakes to run the minibus with punctuality so that the duties entrusted shall not be delayed or disrupted. (17) That Bharat Pumps and Compressors Ltd., shall not be liable for wear and tear, maintenance or loss or damage to the minibus while in use or while garaged or parked. (18) That a logbook shall be provided by the company to the driver of the minibus, who has to record all the journeys performed by the said minibus in the logbook and obtain the signatures of concerned travelling officials as indicated to him. (19) That the transporter will keep and send the driver driving the minibus in a proper uniform. (20) That in the event of any question or dispute arising under these conditions of contract or in connection with this contract the same shall be decided in arbitration by the managing director of BPC or any officer, nominated by the managing director, and his decision shall be final and binding on the parties. Both the parties have clearly understood the terms and conditions of this agreement as mentioned hereinabove from paragraphs 1 to 20 and in witness whereof both the parties have put their hands to this agreement of this day the January 11, 1987, one thousand and nine hundred eighty-seven at Naini, Allahabad. For and on behalf of transporter For and on behalf of Sd/- Sd/- (Mohd. Wasim Khan) (Mahmood Fazal) Transporter Chief of Personnel." "THE GENERAL ELECTRIC COMPANY OF INDIA LIMITED. Ref. : A-1-15 June 5, 1988. Mohd. Wasim Khan 31, Mission Road Allahabad. Sub. : Hiring of your 35 seater 608 Tata bus (New) for transporting our employees. Dear Sir, With reference to your verbal request for hiring your 608 Tata new bus (35 seater) directly for transporting our employees and our subsequent negotiations, we confirm having agreed to hire your bus on following mutually agreed terms and conditions : (1) You will give us on hire your 608 Tata Bus (new) 35 seater capacity for transporting our employees between our factory at Naini and their residences at various points in Jhunsi-Nibi-Sahson Bazar in three shifts 'A', 'G' and 'B', i.e., to bring the employees at 6.00 a.m., 8.00 a.m. and 2.30 p.m. and leave at 2.40 p.m., 4.40 p.m. and 11.10 p.m. respectively on all working days. (2) You will provide the necessary driving staff, two drivers in the bus, for satisfactory running of the vehicle as per route and time schedule laid down by us and amended from time to time. The payment of salary and overtime allowance to drivers, insurance, taxes, permits, etc., will be your responsibility and will be borne by you. (3) Your vehicle will pick up and drop the company's employees from various pick up points so fixed by the company and amended as considered expedient. (4) Names of the driving staff detained with the vehicles would be approved by the company. In case of any valid complaints against drivers you will change them immediately. The driving staff shall possess valid driving licence and other papers as statutorily required. (5) You will ensure that your drivers shall not allow any other persons to travel in the vehicle, other than those authorised by the company. While running, the vehicle shall not be detained at any unauthorised place and would be parked during the day at the factory main gate and during the night at a mutually agreed place as concurred by the company. (6) You will ensure strict punctuality in the running time of the vehicle as laid down by the company so that the travelling employees are not delayed while coming to/returning from their duties from Naini works. (7) Your vehicle shall be running on all working days of the month and shall be given a day off on all Wednesdays. On these off days you may get the vehicle serviced/maintained as required and repairs attended to, if any. The vehicle should always be in a satisfactory state of use. (8) In exceptional circumstances your vehicle may be detained beyond the laid down shift timings or asked for on weekly off days for any other essential duty. It will be used for a short-while on August 15 and January 26 every year. In such cases you will be paid Rs. 10 per hour extra as overtime. (9) If for any reason the vehicle fails to perform duty as specified above, you will make immediate alternative arrangements to perform the duties. It will be used for a short-while on August 15 and January 26 every year. In such cases you will be paid Rs. 10 per hour extra as overtime. (9) If for any reason the vehicle fails to perform duty as specified above, you will make immediate alternative arrangements to perform the duties. However, if you fail to transport the company employees to and from the works as per shifts specified above, except for reasons beyond your control, a compensation in lieu of such default shall be payable by you to the company as follows : (a) for late arrival of bus : ---------------------------------------------------------- (i) 10 minutes to 30 minutes Rs. 100 per shift. ---------------------------------------------------------- (ii) Beyond 30 minutes Rs. 300 ---------------------------------------------------------- (b) for failure to provide bus any day/shift due to whatever reason : (i) Rs. 500 per day for the first day. (ii) Rs. 750 for the second and subsequent days. Such deductions will be adjusted from your bills at the time of payment of each bill. However, continuous absence for more than four days will entail cancellation of contract without notice and with forfeiture of earnest money deposit. The Vehicle shall not be used for personal use without express permission from the company in writing. (10) This contract for transporting the employees of the company shall be for a period of three years from May 1, 1988 and renewal on further three year basis can be considered at mutually agreeable terms at the end of each three year period. (11) The agreement may be terminated by either party by giving one month's notice in writing. However, in case of negligence, misbehaviour, misconduct on the part of driving staff or if the vehicle is found to be detrimental to the interest of the company or its employee, the company will have the exclusive right to terminate the contract without giving any notice or compensation and company's decision will be final in this matter. (12) The vehicle when not transporting shift employees to and fro Naini works may be used on any other duty in the interest of the company's work. (13) Necessary repairs, replacement of essential parts and timely maintenance including the use of mobil oil, lubricants, etc., will be carried out by you with a view to keep the vehicle always in good working condition. (13) Necessary repairs, replacement of essential parts and timely maintenance including the use of mobil oil, lubricants, etc., will be carried out by you with a view to keep the vehicle always in good working condition. (14) All taxes, Government dues or other obligatory levies imposed by the authorised agencies shall be paid by you directly from your own account. Any liability arising in the course of the running of the vehicle during the contractual period shall be entirely borne by you. (15) It will be your responsibility to pay any damages/compensation to anybody arising out of the negligence of the driver while transporting the employees to and fro Naini works. (16) In consideration of the above terms and conditions of the contract, the G.E.C. of India Ltd., Naini would pay you Rs. 6,000 (Rs. Six thousand only) per month as hiring charges for the use of your vehicle. No escalation or any other charges would be payable to you during the currency of this contract. (17) Diesel shall be provided by the company for the use of the vehicle and will be adjusted in your account at 7 km/litre of diesel for 8000 kms, for kms. exceeding 8000 kms. you will be paid Rs. 1.75/km, for this purpose you would maintain a vehicle log book showing all details of duties performed daily. This is to be produced for check and scrutiny daily. (18) The bills for the services rendered during the month shall be paid within 10 days of its receipt in the accounts department. (19) You are required to pay security deposit amounting Rs. 2000 (rupees two thousand only) in cash or by demand draft, before June 10, 1988. This security deposit shall be refunded to you after satisfactory termination of the contract. This deposit will not bear any interest. (20) The names of passengers authorised to travel, with details of picking points and pick up timings have been already made known to you. Please sign the duplicate copy of this letter by way of your confirmation and acceptance of the terms and conditions stipulated above. Thanking you, Yours faithfully, For the G.E.C. of India Ltd. (G. C. Mehrotra) Chief Administrative Manager." Section 3F of the Act reads as follows : "Section 3F. Rate of tax on the right to use any goods or goods involved in the execution of a works contract. Thanking you, Yours faithfully, For the G.E.C. of India Ltd. (G. C. Mehrotra) Chief Administrative Manager." Section 3F of the Act reads as follows : "Section 3F. Rate of tax on the right to use any goods or goods involved in the execution of a works contract. - Notwithstanding anything contained in section 3A, or section 3AAA or section 3D, the turnover relating to the business of transfer of the right to use any goods for any purpose or of transfer of the property in the goods involved in the execution of a works contract shall be determined in the manner prescribed and shall be liable to tax at such rate, not exceeding fifteen per cent, as the State Government may, by notification, declare, and different rates may be declared for different goods or different classes of dealers." Similar question came up for consideration in Kandoi Transport v. Sales Tax Officer, Assessment unit, Barbil [1992] 43 STL 67 (Orissa). In this case also the petitioner entered into a contract with M/s. Minerals and Metals Trading Corporation of India Ltd., for transportation work including loading, unloading and stacking. The contention of the transporter was that there was no transaction of sale and that the contract was for purely labour and service. The department, however, contended that "hire charges" received by the transporter come within the definition of "sale price". Considering the enlarged definition of "sale" in view of the Constitutional amendment, the Orissa High Court held as follows : "In order to decide whether a transaction is of 'sale', the determinative factor is whether any transfer of right of user is involved. By way of illustration we may indicate that if 'A' allows his vehicle to be used by 'B' for a consideration, and the vehicle is placed at the control, custody and possession of 'B', it may be a case of transfer of the right to use the vehicle for any purpose. Where, however, the control, custody, and possession over the vehicle remains with 'A', notwithstanding the fact that certain amounts were received as hire charges, no transfer of the right to use is involved." In Rashtriya Ispat Nigam Ltd. v. Commercial Tax Officer, Company Circle, Visakhapatnam [1990] 77 STC 182 (AP), the petitioner which owned the Visakhapatnam Steel Project, for the purpose of the steel project, allotted different parts of the project work to contractors. To facilitate the execution of work by the contractors with the use of sophisticated machinery, the petitioner had undertaken to supply the machinery to the contractors for the purpose of being used in the execution of the contracted works of the petitioner and received charges for the same. The respondents made a provisional assessment in view of the enlarged definition of "sale". Then the Andhra Pradesh High Court held that under the agreement, the effective control of the machinery, even while the machinery was in the use of the contractor, was that of the petitioner - company. The contractor was not free to make use of the same for other works or move it out during the period the machinery was in his use. Therefore, the contractor was entitled to make use of the machinery for purpose of execution of the works of the petitioner and there was no transfer of the right to use it as such in favour of the contractor. This is how the court held that the hire charges collected by the petitioner from the contractors were not exigible to sales tax. To come to this conclusion, the Andhra Pradesh High Court relied on corpus juris secundum, vol. 87, page 892 which emphasised that the essence of transfer is passage of control over the economic benefits of property which results in terminating rights and other relations in one entity and creating them in another. While construing the word "transfer" due regard must be had to the thing to be transferred. A transfer of the right to use the goods necessarily involves delivery of possession by the transferor to the transferee. Delivery of possession of a thing must be distinguished from its custody. It is not uncommon to find the transferee of goods in possession while transferor is having custody. Against the aforesaid decision of the Andhra Pradesh High Court, the State of Andhra Pradesh filed special leave petition before the apex court in the case of State of Andhra Pradesh v. Rashtriya Ispat Nigam Limited reported in [2002] 126 STC 114; [2002] UPTC 273 (SC); JT [2002] 2 SC 493. Against the aforesaid decision of the Andhra Pradesh High Court, the State of Andhra Pradesh filed special leave petition before the apex court in the case of State of Andhra Pradesh v. Rashtriya Ispat Nigam Limited reported in [2002] 126 STC 114; [2002] UPTC 273 (SC); JT [2002] 2 SC 493. The apex Court had affirmed the order of the Andhra Pradesh High Court and held as follows : "The High Court after scrutiny and close examination of the clauses contained in the agreement and looking to the agreement as a whole, in order to determine the nature of the transaction, concluded that the transactions between the respondent and contractors did not involve transfer of right to use the machinery in favour of the contractors and in the absence of satisfying the essential requirement of section 5E of the Act, i.e., transfer of right to use machinery, the hire charges collected by the respondent from the contractors were not exigible to sales tax. On a careful reading and analysis of the various clauses contained in the agreement and, in particular, looking to clauses 1, 5, 7, 13 and 14, it becomes clear that the transaction did not involve transfer of right to use the machinery in favour of contractors. The High Court was right in arriving at such a conclusion. In the impugned order, it is stated and rightly so in our opinion, that the effective control of the machinery even while the machinery was in use of the contractor was that of the respondent - company, the contractor was not free to make use of the machinery for the works other than the project work of the respondent or move it out during the period the machinery was in his use; the condition that the contractor would be responsible for the custody of the machinery while it was on the site did not militate against respondent's possession and control of the machinery." A similar question came up for consideration before the division bench of this court in the case of Ahuja Goods Agency v. State of Uttar Pradesh reported in [1997] 106 STC 540; [1997] UPTC 629; [1997] 11 NTN 484. Petitioner received transportation charges from a distillery in connection with the transportation of Indian-made foreign liquor from the distillery to various Government bonded warehouses. Petitioner received transportation charges from a distillery in connection with the transportation of Indian-made foreign liquor from the distillery to various Government bonded warehouses. The question for consideration was whether the transportation charges were liable to tax under section 3F of the Act. The contention of the petitioner was that the transportation charges were paid for service under the agreement and there was no transfer of right to use the vehicle. The division bench examined the agreement and held that the truck to be used for carrying the goods will continue to remain in the custody of the drivers employed by the owners of the trucks. The distillery could have used the vehicle only for the purpose of specified goods and not for any other purpose. The transit risk was of the petitioner and not of the distillery. It was the duty of the transporter to abide by all the laws relating to the motor vehicle and the excise. From these factors, it is manifest that there was no transfer of possession even of the vehicle, which were being used for carrying the goods. On these facts the division bench held that in the absence of transfer of possession of vehicle there was no transfer of right to use the goods and the provisions of section 3F of the Act shall not be applicable. In writ petition (Civil) No. 183 of 2003, Bharat Sanchar Nigam Ltd. v. Union of India decided or March 2, 2006 ([2006] 145 STC 91; [2006] 3 VST 95) the larger Bench of the apex court considered the scope of transfer of right to use the goods. In writ petition (Civil) No. 183 of 2003, Bharat Sanchar Nigam Ltd. v. Union of India decided or March 2, 2006 ([2006] 145 STC 91; [2006] 3 VST 95) the larger Bench of the apex court considered the scope of transfer of right to use the goods. Honourable Justice Ruma Pal, J. in her judgment has considered the decision of the apex court in the case of State of Uttar Pradesh v. Union of India reported in [2003] 130 STC 1; [2003] UPTC 404 (SC); JT [2003] 1 SC 574, the observations of the Constitution Bench of the apex court in the case of 20th Century Finance Corporation Ltd. v. State of Maharashtra reported in [2000] 119 STC 182; [2000] UPTC 593; [2000] 6 SCC 12 and other decisions of the apex court and held as follow : "In the State of Uttar Pradesh v. Union of India [2003] 130 STC 1 (SC); [2001] 3 SCC 239 it was also held : 'Handing over of the possession is not sine qua non of completing the transfer of the right to use any goods, as was held by a Constitution bench of this court in 20th Century Finance Corporation Ltd. v. State of Maharashtra [2000] 119 STC 182 (SC); [2000] UPTC 593 (SC); [2000] 6 SCC 12. ... Once DoT connects the telephone line of the assigned number of the subscriber to the area exchange, access to other telephones is established. There cannot be denial of the fact that giving such an access would complete the transfer of the right to use the goods.' With respect, the decision in 20th Century Finance Corporation Ltd. v. State of Maharashtra [2000] 119 STC 182 (SC); [2000] UPTC 593 (SC); [2000] 6 SCC 12 cannot be cited as authority for the proposition that delivery of possession of the goods is not a necessary concomitant for completing a transaction of sale for the purposes of article 366(29A)(d) of the Constitution. In that decision the court had to determine where the taxable event for the purposes of sales tax took place in the context of sub-clause (d) of article 366(29A). Some States had levied tax on the transfer of the right to use goods on the location of goods at the time of their use irrespective of the place where the agreement for such transfer of right to use such goods was made. Some States had levied tax on the transfer of the right to use goods on the location of goods at the time of their use irrespective of the place where the agreement for such transfer of right to use such goods was made. Other States levied tax upon delivery of the goods in the State pursuant to agreements of transfer while some other States levied tax on deemed sales on the premise that the agreement for transfer of the right to use had been executed within that State. This court upheld the third view, namely, merely that the transfer of the right to use took place where the agreements were executed. In these circumstances the court said that : 'No authority of this court has been shown on behalf of respondent that there would be no completed transfer of right to use goods unless the goods are delivered. Thus, the delivery of goods cannot constitute a basis for levy of tax on the transfer of right to use any goods. We are, therefore, of the view where the goods are in existence, the taxable event on the transfer of the right to use goods occurs when a contract is executed between the lessor and the lessee and situs of sale of such a deemed sale would be the place where the contract in respect thereof is executed. Thus, where goods to be transferred are available and a written contract, is executed between the parties, it is at that point situs of taxable event on the transfer of right to use goods would occur and situs of sale of such a transaction would be the place where the contract is executed'. In determining the situs of the transfer of the right to use the goods, the court did not say that delivery of the goods was inessential for the purposes of completing the transfer of the right to use. The emphasised portions in the quoted passage evidences that the goods must be available when the transfer of the right to use the goods takes place. The court also recognised that for oral contracts the situs of the transfer may be where the goods are delivered. In our opinion, the essence of the right under article 366(29A)(d) is that it relates to user of goods. The court also recognised that for oral contracts the situs of the transfer may be where the goods are delivered. In our opinion, the essence of the right under article 366(29A)(d) is that it relates to user of goods. It may be that the actual delivery of the goods is not necessary for effecting the transfer of the right to use the goods but the goods must be available at the time of transfer, must be deliverable and delivered at some stage. It is assumed, at the time of execution of any agreement to transfer the right to use, that the goods are available and deliverable. If the goods, or what is claimed to be goods by the respondents, are not deliverable at all by the service providers to the subscribers, the question of the right to use those goods, would not arise. In State of Andhra Pradesh v. Rashtriya Ispat Nigam Ltd. [2002] 126 STC 114 (SC); [2002] UPTC 273 (SC); [2002] 3 SCC 314, it was claimed by the sales tax authorities that the transaction by which the owner of certain machinery had made them available to the contractors was a sale. The court rejected the submission saying that : '... the transaction did not involve transfer of right to use the machinery in favour of contractors ... The effective control of the machinery even while the machinery was in use of the contractor was that of the respondent - company, the contractor was not free to make use of the machinery for the works other than the project work of the respondent or ...' But in the case of Aggarwal Brothers v. State of Haryana [1999] 113 STC 317 (SC); [1999] 9 SCC 182 when the assessee had hired shuttering to favour of contractors to use it in the course of construction of buildings it was found that possession of the shuttering materials was transferred by the assessee to the customers for their use and therefore, there was a deemed sale within the meaning of sub-clause (d) of clause (29A) of article 366. What is note worthy is that in both the cases there were goods in existence which were delivered to the contractors for their use. In one case there was no intention to transfer the right to use while in the other there was. What is note worthy is that in both the cases there were goods in existence which were delivered to the contractors for their use. In one case there was no intention to transfer the right to use while in the other there was. But if there are no deliverable goods in existence as in this case, there is no transfer of user at all. Providing access or telephone connection does not put the subscriber in possession of the electromagnetic waves any more than a toll collector puts a road or bridge into the possession of the toll payer by lifting a toll gate. Of course the toll payer will use the road or bridge in one sense. But the distinction with a sale of goods is that the user would be of the thing or goods delivered. The delivery may not be simultaneous with the transfer of the right to use. But the goods must be in existence and deliverable when the right is sought to be transferred. Therefore whether goods are incorporeal or corporeal, tangible or intangible, they must be deliverable. To the extent that the decision in State of Uttar Pradesh v. Union of India [2003] 130 STC 1 (SC); [2003] 3 SCC 239 held otherwise, it was, in our humble opinion erroneous." In the same case honourable Dr. Therefore whether goods are incorporeal or corporeal, tangible or intangible, they must be deliverable. To the extent that the decision in State of Uttar Pradesh v. Union of India [2003] 130 STC 1 (SC); [2003] 3 SCC 239 held otherwise, it was, in our humble opinion erroneous." In the same case honourable Dr. A. R. Lakshamanan, J., held as follows : "To constitute a transaction for the transfer of the right to use the goods the transaction must have the following attributes : (a) There must be goods available for delivery; (b) There must be a consensus ad idem as to the identity of the goods; (c) The transferee should have a legal right to use the goods - consequently all legal consequences of such use including any permissions or licenses required therefor should be available to the transferee; (d) For the period during which the transferee has such legal right, it has to be to the exclusion to the transferor - this is the necessary concomitant of the plain language of the statute, viz., a 'transfer of the right to use', and not merely a licence to use the goods; (e) Having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others." Thus, in the light of the ratio laid down by the apex court, on the terms of the agreement - referred hereinabove, it has to be examined whether there was transfer of right to use the vehicles. No doubt, vehicles are available at a deliverable stage, but the question is whether they have been delivered at any stage. Whether transferee had got a legal right to use the vehicles - consequently all legal consequences of such use including any permission or licence required therefor was available to the transferee and for the period during which the transferee has such legal right there was a complete exclusion of legal rights to use by the transferor, or mere licence to use the vehicles was given and not the full control or physical possession of the vehicles. On the terms of the agreements, in my opinion, the present case does not come within the purview of transfer of right to use the goods for following reasons : The agreement was for providing buses for the transportation of the employees of the companies from one place to another place; drivers, spare tyres, tools and all other necessary items were of the applicant; Diesel and other running expenses, insurance, taxes, permit, etc., were borne by the applicant; payment was to be made on the basis of the actual use of the vehicles; Drivers and conductors of the vehicles were held responsible if any unauthorised persons were found boarding/travelling in the vehicles. The applicant had to take the insurance cover for their workmen and vehicles to cover the risk of accident/death and the payment of compensation as per rules. In case of failure to provide the vehicle, the applicant was liable for penal action; the payment was on kilometer basis. The aforesaid terms of the contract clearly shows the effective control over the vehicles always remain with the applicant and has never been passed on to the companies. All the legal consequences arising from the use of the vehicle were the responsibility of the applicant. At no point of time, there was a complete exclusion of legal rights to use such vehicles by the transferor. Thus, the present case on the aforesaid facts does not fall under the transfer of right to use the goods, in view of the law laid down by the apex court in the aforesaid cases. For the reasons stated above, the order of the Tribunal is liable to be set aside. In the result, all the revisions are allowed. The order of the Tribunal is set aside. The Tribunal is directed to pass appropriate order under section 11(8) of the Act. However, there shall be no order as to cost.