1996 (2) TMI 483 - HC - VAT and Sales Tax

Summary

Issues:
Deduction of forest royalty and sales tax from bills of association members.

Analysis:
The petitioner, an association of contractors, sought relief from the deduction of forest royalty and sales tax from the bills of its members by filing a writ petition under Article 226 of the Constitution. The association contended that its members were not liable to pay forest royalty as they were not producers of materials used in construction work. Despite an initial agreement to stop the deduction of forest royalty, the respondents proceeded with the deduction, along with sales tax, without any written order. The petitioner argued that sales tax could not be realized from them as they were not dealers. The respondents filed an affidavit-in-opposition, and both parties were heard in court.

During the hearing, the petitioner's counsel did not press the issue of forest royalty deduction as the respondents had agreed to stop it. The main contention was regarding the deduction of sales tax at source without a prescribed manner by the authorities. The petitioner relied on a previous court decision which held that sales tax at source could only be deducted as per prescribed rates and manner. The current law had been amended to prescribe rates but not the manner. The respondent's counsel could not confirm if any manner had been prescribed for deduction. The court emphasized that when a power is given to do something in a certain way, it must be done in that manner. Referring to section 27(b) of the Assam General Sales Tax Act, the court noted that the Legislature intended for a prescribed manner for tax deduction. As no manner had been prescribed, the court ruled that sales tax could not be deducted at source in the present circumstances. The court set aside and quashed the action of respondents deducting sales tax at source but allowed them to do so after prescribing the manner.

In conclusion, the court allowed the petition, making no order as to costs. The judgment clarified that the authority could deduct tax at source after prescribing the manner, emphasizing the necessity for a prescribed manner for tax deduction.