Distinguishing Equipment Hire from Deemed Sales: Effective Control Test Under MVAT Act

sketch of the Bombay High Court
Case
SHARMA HEAVY LIFTER v. STATE OF MAHARASHTRA (Bombay High Court, 22-09-2026)
Law
Central Sales Tax Act, Finance Act, Maharashtra Value Added Tax Act.

Highlights of the Judgment:

  • Detailed interpretation of 'transfer of the right to use goods' under Section 2(24)(b)(iv) of the Maharashtra Value Added Tax Act, 2002.
  • Application of the doctrine of effective and substantive control in distinguishing between a deemed sale and a service contract.
  • Examination of Supreme Court precedents, particularly the five-fold attributes laid down in Bharat Sanchar Nigam Ltd.
  • Analysis of contractual clauses regarding equipment hiring, maintenance, insurance, replacement rights, and operational control.
  • Distinction between a license to use goods and a complete transfer of the right to use amounting to a taxable sale.