2026-VIL-1084-AP
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VAT High Court Cases

Andhra Pradesh Value Added Tax Act, 2005 - Taxability of bus hire transactions under Section 4(8) of APVAT Act, 2005 – Petitioner operated buses under hire agreements with State Transport Corporation for specified periods with fixed charges – Whether transactions constitute "deemed sale" liable to tax at stipulated rate – HELD – The terms of hire agreements clearly evidenced that buses were given on hire, not sold. Owner's retention of exclusive physical control and operational responsibility negated any transfer of right to use. Mere permission to use goods during hire period does not amount to transfer of right to use as contemplated by Section 4(8) - Transactions do not constitute deemed sale as required transfer of right to use was absent. The buses remained exclusively under Petitioner's physical control, possession, and operation throughout the hire period. Petitioner retained full responsibility for plying buses, manning same, bearing statutory obligations including wages and vehicle maintenance. The agreements were structured merely as licenses to use goods for fixed periods with specified terms, not transfers of possession or control. The distinction between transfer of right to use goods and mere license to use is critical for determining deemed sale status. No transfer of possession, control, or liberty to utilize buses as owner wished was granted to the State Transport Corporation. The Notification exempting services by way of giving vehicles on hire to State Transport undertakings provided additional protection - The Assessment Orders passed against the petitioners are quashed - The writ petitions are allowed
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