ORDER : P. Sam Koshy, J. Heard Mr. Swaroop Oorilla, learned Special Government Pleader for State Tax appearing on behalf of the petitioner; and Mr. Suribabu Samudrala, learned counsel for the respondent. 2. The instant Tax Revision Case under Section 22(1) read with Rule 10 of the APGST Rules under the APGST Act has been preferred by the petitioner - State challenging the order passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad (for short, the ‘STAT’), in T.A.No.556 of 2008, decided on 05.09.2008. 3. The respondent M/s. A.P. State Agro Industries Development Corporation Limited is engaged in the business of dealing with tractors, trailers and agricultural implements. During the assessment year 2001-02, under the APGST Act, the assessing authority initially allowed exemption on hire charges received by the respondent for the bulldozers working on an hourly basis considering these transactions as service charges rather than transfer of right to use goods. However, the Deputy Commissioner (CT), Abids, revised this order and levied tax at 8% under Section 5(E) of the APGST Act, treating the bulldozer hire charges as turnover liable to tax. The Deputy Commissioner further held that the transaction involved transfer of right to use goods in the form of bulldozers hired to farmers on hourly basis. 4. Aggrieved by the Deputy Commissioner's order, the respondent filed an appeal before the STAT. The STAT allowed the appeal in favor of the respondent, setting aside the order of the Deputy Commissioner. The STAT opined that there was no transfer of right to use the goods as there was no effective control of the chattel vested with the transferee (farmers). The STAT concluded that the essential ingredients of transfer of right to use goods under Section 5(E) of the APGST Act were not satisfied in the present case thereby granting exemption to the respondent from tax liability on bulldozer hire charges. 5. Aggrieved by the STAT’s order, the instant Tax Revision Case has been preferred by the State. 6. Learned Special Government Pleader for State Tax contended that the STAT erred in law by holding that the bulldozer hire charges collected by the respondent corporation did not constitute turnover under Section 5(E) of the APGST Act. 5. Aggrieved by the STAT’s order, the instant Tax Revision Case has been preferred by the State. 6. Learned Special Government Pleader for State Tax contended that the STAT erred in law by holding that the bulldozer hire charges collected by the respondent corporation did not constitute turnover under Section 5(E) of the APGST Act. The learned Special Government Pleader for State Tax further contended that all essential ingredients of lease transactions are present in the agreements between the respondent and the farmers, viz., i. A definite period of use (calculated on hourly basis), ii. Consideration (hire charges paid by farmers); and iii. Effective control over the bulldozers transferred to the farmers for the stipulated period. 7. Learned Special Government Pleader for State Tax argues that Section 5(E) was substantially amended by the Act 22 of 1995 w.e.f. 01.04.1995 and by the Act 27 of 1996 w.e.f. 01.08.1996 rendering the earlier Circular dated 25.11.1985 inapplicable to the present transactions. He further relies on the three-fold test laid down by the Hon'ble Supreme Court in the case of BSNL vs. Union of India , (2006) 42 APSTJ 85 , which requires: (i) Goods available for delivery; (ii) Consensus ad idem as to the identity of goods; and (iii) The transferee having legal right to use the goods. According to the learned Special Government Pleader for State Tax, all the aforesaid conditions are satisfied in the instant case. 8. Learned Special Government Pleader for State Tax further submits that the terms and conditions of the agreements clearly establish that effective control over the bulldozers was transferred to the farmers during the period of hire. According to the agreement terms, if the execution of work is halted for any reason attributable to the applicant (farmer), the amounts remain payable and the corporation is not responsible for results of the work, therefore, the applicant has no right to seek refund on account of lack of results and most significantly the security of the machinery during use is the responsibility of the applicant. These conditions demonstrate that the farmers acquired complete control over the bulldozers for the agreed period and purposes and the fact that the tenure of use is short (hourly basis) and that ownership is not transferred does not vitiate the transaction from being a transfer of right to use goods. These conditions demonstrate that the farmers acquired complete control over the bulldozers for the agreed period and purposes and the fact that the tenure of use is short (hourly basis) and that ownership is not transferred does not vitiate the transaction from being a transfer of right to use goods. He thus contends that it is immaterial whether the bulldozers are used for purposes other than those mentioned in the agreement or even works executed strictly within the framework of the agreements constitute taxable turnover under Section 5(E) of the APGST Act. 9. Lastly, the learned Special Government Pleader for State Tax relied on several judicial precedents to support his contentions. Firstly, he relied upon a full Bench judgment of the STAT in M/s. Vananberg I T Park vs. State of A.P. (T.A.Nos. 958, 959, 960/2007) wherein it was upheld that tax levied on rentals received towards lease of equipment to IT companies, recognizing such transactions as falling within the definition of Section 5(E) of the APGST Act. Secondly, he relied upon a decision rendered by the Gauhati High Court in M/s. HLS Asio Limited vs. State of Assam , 8 VST 314 wherein it was held that transfer of equipment, tools and machinery to be operated by technically qualified personnel of another company falls under lease transactions. Thirdly, he relied upon another decision of the Gauhati High Court in the case of State of Tripura vs. Tripura Bus Syndicate , 122 STC 175 , wherein it was held that when vehicles are taken under control by election authorities and plied according to their directions, there is transfer of right to use constituting a sale. Lastly, he relied upon a decision of Orissa High Court in the case of Krushna Chandra Behera vs. State of Orissa , 83 STC 325 , wherein it was held that where effective control of a vehicle rests with the hirer, there is transfer of right to use constituting a sale. 10. Learned counsel for the respondent, however, opposing the instant Tax Revision Case contended that the transaction in question does not involve a transfer of the right to use goods but rather constitutes a works contract for the development of land using bulldozers and related apparatus. 10. Learned counsel for the respondent, however, opposing the instant Tax Revision Case contended that the transaction in question does not involve a transfer of the right to use goods but rather constitutes a works contract for the development of land using bulldozers and related apparatus. The learned counsel for the respondent further argues that under the terms and conditions of the agreement with the applicant farmers, the respondent retains complete control and possession of the machinery at all times. The machinery is operated by the respondent’s personnel and the applicant farmers have no legal right to use, control or possess the equipment independently. The farmers merely provide access to their land for the development work to be carried out by the respondent’s men and machinery. 11. Learned counsel for the respondent relied on the Supreme Court's decision in the case of BSNL (supra), which laid down five essential attributes that must be present for a transaction to constitute a transfer of the right to use goods. The learned counsel for the respondent submits that none of these attributes are present in the instant case, viz., i. There is no delivery of goods to the farmers; ii. No consensus ad idem as to the identity of specific goods being transferred; iii. No legal right vested in the farmers to use the machinery; iv. No exclusion of the appellant's rights during the period of work; and v. No possibility of the appellant transferring the same rights to others since the appellant retains complete control throughout. 12. Additionally, the learned counsel for the respondent points out to the earlier precedents including the decision of the Deputy Commissioner for assessment years 1986-87 and 1987-88 which held that under similar terms and conditions there was no transfer of right to use machinery in favour of contractors. The learned counsel for the respondent argues that the application form clearly describes it as an "Application for development of land by bulldozer and related apparatus" emphasizing that it is a service contract for land development work, rather than a lease or transfer of equipment. The various rules appended to the application further demonstrate that the respondent maintains responsibility for the machinery, its operation, and execution of the work while the farmers' obligations are limited to payment and providing access to the land. 13. The various rules appended to the application further demonstrate that the respondent maintains responsibility for the machinery, its operation, and execution of the work while the farmers' obligations are limited to payment and providing access to the land. 13. Having heard the contentions put forth on either side and on perusal of records, the question of law that arises for consideration in the instant case is “whether the transaction involving bulldozer hire charges collected by the respondent corporation constitutes a transfer of right to use goods under Section 5(E) of the APGST Act?” 14. It would be trite at this juncture to refer to a recent judgment of the Hon’ble Supreme Court in the case of K.P. Mozika vs. Oil and Natural Gas Corporation Ltd. and Another , 2024 SCC OnLine SC 28 , wherein the Hon’ble Supreme Court held at paragraph Nos.40 and 42 as under: “40. On a conjoint reading of the aforesaid terms of the contract, it is apparent that the contractor has an option of replacing the cranes in case one of the cranes was not working properly. Only the contractor is liable to take care of the legal consequences of using the cranes. The contractor must maintain the cranes, and it is for the contractor to pay for consumables like fuel, oil, etc. Even the cranes must be moved and operated by the crew members appointed by the contractor. Moreover, in case of any mishap or accident in connection with the cranes or connection with the use of the cranes or as a consequence thereof, the entire liability will be of the contractor and not of the ONGC. Thus, in short, the contract is for providing the service of cranes to ONGC. The reason is that the transferee (ONGC) is not required to face legal consequences for using the cranes supplied by the contractor. Therefore, the tests laid down in clauses (c) and (d) of paragraph 97 of the decision of Dr. AR Laxmanan, J are not fulfilled. 42. Essentially, the transfer of the right to use will involve not only possession, which may be granted at some stage (after execution of the contract), but also the control of the goods by the user. When the substantial control remains with the contractor and is not handed over to the user, there is no transfer of the right to use the vehicles, cranes, tankers, etc. When the substantial control remains with the contractor and is not handed over to the user, there is no transfer of the right to use the vehicles, cranes, tankers, etc. Whenever there is no such control on the goods vested in the person to whom the supply is made, the transaction will be of rendering service within the meaning of Section 65(105) (zzzzj) of the Finance Act after the said provision came into force.” 15. It would be also relevant at this juncture to refer to the relevant general conditions and rules & regulations of the contract entered between the respondent and the farmers’, which reads as under: “ General Conditions c) The applicant has no right to seek compensation from the Corporation if he feels that the work is not being executed as per the memo. e) While executing the work, if any trees, boundaries, survey stones, closing of water sources or trespass of the village roads, the applicant himself should obtain permission from the required authorities and only after obtaining such permission, the Corporation commences the work. The applicant has to give an undertaking to corporation stating that for executing the above works, if any loss is incurred the corporation do not have any responsibility. Rules & Regulations 4) On satisfying the above conditions and on receipt of the advance, though the date of commencement of work is not specified by the Corporation, the Corporation would take all steps for executing the work. The Corporation is not responsible for the delay in executing the works. The Corporation has got full authority to withdraw the men and machinery after executing the work and before concluding the work. In such circumstances, the applicant has got a right to receive the balance amount from the Corporation. The applicant has no authority to seek compensation. 5) If the execution of the works by machine is halted for any reason on account of the applicant, the amounts payable to the Corporation are to be paid by the applicant according to the price list. 6) The Corporation is not responsible for results in the execution of works. The applicant do not have any right to seek refund of the amount paid to the Corporation on account of lack of results. 7) The Corporation machinery and the personnel are left free for the reasons attributed to the applicant. 6) The Corporation is not responsible for results in the execution of works. The applicant do not have any right to seek refund of the amount paid to the Corporation on account of lack of results. 7) The Corporation machinery and the personnel are left free for the reasons attributed to the applicant. Such costs would be levied on the applicant. For calculating the rent for such stoppage of work, eight hours would be constituted as work for one day. 8) Though the Corporation personnel would be present at the place of execution of the work, the security of the machinery being used is only on the applicant.” 16. The Bench is of the opinion that upon scrutiny of the terms and conditions governing the agreement between the respondent corporation and the farmers, it becomes evident that the essential ingredients required to constitute a transfer of right to use goods are conspicuously absent in the present case. The Hon’ble Supreme Court in the case of BSNL (supra) laid down five essential attributes that must be cumulatively present for a transaction to qualify as transfer of right to use goods. In the instant case, none of these essential attributes are satisfied. The bulldozers remained under the complete control and possession of the respondent corporation at all times with the corporation's own personnel operating the machinery. The applicant (farmers’) neither acquire physical possession of the equipment nor obtain any legal right to independently use, control or operate the bulldozers. What is contracted for is not the use of machinery, but rather the execution of specific land development work by the respondent using its machinery and manpower. Therefore, this transaction is essentially a works contract for land development rather than a lease or transfer of equipment. 17. What is contracted for is not the use of machinery, but rather the execution of specific land development work by the respondent using its machinery and manpower. Therefore, this transaction is essentially a works contract for land development rather than a lease or transfer of equipment. 17. Further, what is to be considered is that, the State before concluding whether the contract between the company and the farmers in the transaction of bulldozer constitutes a transfer of right to use goods under Section 5(E) of APGST Act, the following grounds need to be taken into consideration: the contracts executed by the respondent are for rendering of service and they are performance contracts; the intention of respondent and their clients is to render and receive the service; the clients are neither interested in acquiring any interest in the bulldozer nor do they actually acquire any interest in the bulldozer; the possession and control of the bulldozer are always with the respondent and the bulldozer operators are the employees of the respondent; there was no delivery of bulldozer at any point of time to clients; there is absolutely no transfer of right to use the bulldozer; even during the period covered by the contract the road taxes, tolls and other imposts are paid by the respondent and licenses are in the name of the respondent; even during the period covered by the contract the insurance is paid by the respondent; even during the period covered by contract the road-risk is borne by the respondent; during the contract period the fuel and maintenance expenses are borne by the respondent; and lastly the respondent is paid on hourly basis for the period bulldozer work. 18. The amendments to the statute and the judicial precedents cited by the State deal with the situations where there is actual transfer of possession, control and legal right to use the goods to the transferee, which is fundamentally different from the present case where the respondent retains complete dominion over the machinery throughout the transaction. The fact that security responsibility is placed on the applicant (farmers’) or that amounts remain payable even if work is halted for reasons attributable to the applicant does not alter the basic character of the transaction as a works contract. The fact that security responsibility is placed on the applicant (farmers’) or that amounts remain payable even if work is halted for reasons attributable to the applicant does not alter the basic character of the transaction as a works contract. These contractual stipulations merely protect the respondent's commercial interests and ensure payment for the work undertaken, but do not evidence any transfer of right to use the bulldozers. The previous assessment orders for earlier years treating similar transactions as service charges rather than transfer of right to use goods further support the respondent's contention and establish a consistent administrative interpretation of such transactions. 19. In light of the foregoing discussion and analysis, the Bench is of the considered opinion that there is no merit in the Tax Revision Case filed by the State. The STAT has correctly appreciated the facts and law in concluding that the bulldozer hire charges collected by the respondent corporation do not constitute taxable turnover under Section 5(E) of the APGST Act. The transaction in question is a composite works contract for land development services and does not involve any transfer of right to use goods as contemplated under the statutory provisions. 20. For all the aforesaid reasons, we are of the considered opinion that the instant Tax Revision Case being devoid of merit deserves to be and is accordingly dismissed. The order dated 05.09.2008, in T.A.No.556 of 2008, passed by the STAT is hereby upheld. The question of law framed above stands answered in favour of the respondent and against the State holding that transactions involving bulldozer hire charges collected by the respondent does not constitute a transfer of right to use goods under Section 5(E) of the APGST Act. 21. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs.