Transfer of right to use: analysis in a federal structure

By Kumar Visalaksh and Shailesh Gadre, Economic Laws Practice

The 46th amendment to the constitution of India, carried out in February 1983, was effected to overcome judgments that had disallowed the levy of sales tax by states on transactions which did not conform to the traditional concept of sale i.e. transactions in the nature of a works contract.

The legislature saw such positioning by the courts as restrictions on the state’s power to impose sales tax.

Kumar Visalaksh Manager Economic Laws Practice
Kumar Visalaksh
Economic Laws Practice

Consequently, article 366(29-A) was inserted by which six transactions which in common parlance would not be treated as sale were termed as “sale”. One of these circumstances was the “transfer of right to use any goods” as inserted by clause (d) of article 366(29-A) to the constitution.

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Economic Laws Practice is a full-service law firm headquartered in Mumbai and has offices in New Delhi, Pune and Ahmedabad. Kumar Visalaksh and Shailesh Gadre are associate managers with the firm in Mumbai. They can be reached at and


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