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2011 (3) TMI 1505 - HC - VAT and Sales TaxWhether the definition of "dealer" as given in section 2(b) of the TST Act, 1976, is unconstitutional?
whether the definition of "sale", as appearing in section 2(g) of the TST Act, 1976, does not include thereunder a "deemed sale" within the meaning of section 3A of the TST Act, 1976? Whether that part of the contract, which amounts to transfer of property in goods, involved in the execution of the works contract, is taxable under the relevant statute? Whether definition of sale, as contained in section 2(b) of the TST Act, 1976, is intra vires? Held that:- The definition of "dealer", as given in section 2(b) of the TST Act, 1976, is not unconstitutional. Section 3A cannot be said to be bad in law, because of the fact that rate of tax has not been specified in column 3 of the Schedule to the TST Act, 1976, in respect of transfer of property in goods involved in the execution of works contract inasmuch as separate entries, in the Schedule, fixing rates of tax, in respect of various goods involved in the execution of works contract, is not, as a matter of law, necessary or imperative and cannot be said to be invalid, because it does not specifically allow deductions in respect of labour and other charges, which have been held allowable in Gannon Dunkerley’s case [1992 (11) TMI 254 - SUPREME COURT OF INDIA]. No tax can be assessed and recovered in respect of sale arising out of a works contract, by taking recourse to section 3A inasmuch as tax is leviable on turnover, but the manner of computation of turnover has not been provided for in the TST Act, 1976, in respect of works contract making thereby assessment and computation of tax inapplicable in respect of works contract. The State does not have power to impose tax on deemed sales in respect of sales, which take place in the course of inter-State trade or commerce or if the transactions constitutes a sale outside the State or if it is a sale in the course of import of goods into, or export of the goods out of, the Territory of India. The State Legislature is, however, not prevented from imposing tax on the goods, which are declared to be of special importance in terms of section 14 of the Central Sales Tax Act, 1956, and the State’s limitation, in this regard, is only with regard to the rate of tax inasmuch as rate of tax cannot exceed four per cent, inasmuch as section 15 of the Central Sales Tax Act, 1956, imposes restrictions on the State as regards rate of tax and not in respect of goods, which are declared to be of special importance by Central Government by section 14 thereof. The definition of sale, as contained in section 2(b) of the TST Act, 1976, is intra vires inasmuch as tax is imposed only on a sale, which takes place within the State of Tripura. Section 3AA of the TST Act, 1976 and rule 3A(1) of the TST Rules are bad in law inasmuch as section 3AA and rule 3A(1) permit deduction, at source, at a flat rate. Thus the respondents are hereby directed to refund the amounts deducted, at source, as sales tax from the bills of the petitioner, with interest, at the rate of six per cent per annum from the date(s) of the deduction(s) made until payment thereof to the petitioner.
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