‘Transfer’ implies exclusive possession to transferee :
What is taxable is ‘transfer of right to use’ and not ‘right to use’.
In Bharat Sanchar Nigam Ltd. v. UOI (2006) 3 SCC 1 = 152 Taxman 135 = 3 STT 245 = 146 STC 91 = 3 VST 95 = 282 ITR 273 = AIR 2006 SC 1383 = 2 STR 161 (SC 3 member bench), in concurring judgment (para 97 of SCC, para 87 of STT and Taxman, para 98 of STC), it was observed, ‘To constitute a
transaction for the transfer of the right to use the goods, the transaction must have following attributes – (a) there must be goods available for delivery (b) there must be a consensus ad idem as to the identity of goods (c) the transferee should have a legal right to use the goods – consequently all legal consequences of such use including any permissions or licences required therefor should be available to transferee (d) for the period
during which the transferee has such legal right, it has to be 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.
The transaction is taxable only when exclusive possession of goods and right to enjoy them freely for contracted period is given. If owner retains effective control with him, there is no ‘transfer of right to use goods’.