9911796707
TMI Blog2012 (3) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted bills to the Food Corporation of India. The Food Corporation of India made deduction from the bills of the petitioner under the head of VAT at four per cent as per mandate of the rules in pursuance of the letter of the Principal Secretary, Government of Tripura, dated June 25/30, 2005, drawing attention to section 4(3) of the Tripura Value Added Tax Act, 2004 and rule 7(1) of the Tripura Value Added Tax Rules, 2005, providing for tax deduction at source. Aggrieved thereby, the petitioner has moved this writ petition on the ground, inter alia, that the provisions for deduction from the bills of the petitioner, without reference to the tax liability was beyond the legislative competence of the State. It has further been submitted that the provision for deduction of tax at source had to have nexus with the tax due or likely to be due. Though the petitioner has also challenged the amendment of entry 54 of List II of the Seventh Schedule to the Constitution, by the Constitution (Sixth Amendment) Act, 1956, on the ground that the State of Tripura became State only in the year 1972 but at the time of hearing, learned counsel for the petitioner has not pressed the said issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of import. There is, in our view, therefore, no doubt that the provisions of section 13AA are beyond the powers of the State Legislature for the State Legislature may make no law levying sales tax on inter-State sales, outside sales or sales in the course of import. ... 15. It was then contended by learned counsel for the State that the preamble of the Orissa Sales Tax Act took account of the fact that that statute was limited to the sale or purchase of goods in Orissa. Unfortunately, it would appear that the State Legislature overlooked its limitations, even as contained in the preamble, when enacting section 13AA. It was also contended that the deduction that was required to be made under section 13AA(1) was of four per cent of the amount credited or paid by the owner to the contractor, whereas the sales tax liability of the contractor thereon was eight per cent. It was contended that this requirement proceeded on the assumption that half of the amount was not liable to tax being in respect of inter-State sales, outside sales and export sales. No such assumption based on the rate of tax at any given point of time can be made. Section 13AA should have been precisely drafted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of this court in Steel Authority of India Ltd. [2000] 118 STC 297 (SC); AIR 2000 SC 946, it is wholly unnecessary to refer to the same. Following the decision in Steel Authority of India Ltd. case [2000] 118 STC 297 (SC); AIR 2000 SC 946, we allow this appeal and set aside the order made by the High Court by allowing the writ petition and quashing the aforesaid provisions as being beyond the purview of the Himachal Pradesh State Legislature. Such amount as has been collected from the appellant under the provisions of section 12A read with rule 31A shall forthwith be refunded by the State. If any amount has been deposited in any bank pursuant to orders passed by this court or the High court, it shall be refunded to the appellant with interest accruing thereon. In the circumstances of the case, there shall be no orders as to costs." Apart from the above two judgments, the following judgments may also be taken into consideration in support of the said view: (i) Rapti Commission Agency v. State of U.P [2006] 147 STC 566 (SC); [2006] 6 SCC 522 Holding that section 8E of the U.P. Trade Tax Act, 1948 which was identical to the impugned provision should be held to be subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability to pay VAT or other non-taxable turnover, such as sale in course of import or export or in the course of inter-State purchase and it was held that such provision for deduction of tax being ultra vires, entry 54 of List II of the Seventh Schedule to the Constitution, the State was under obligation to lay down an appropriate mechanism for computing the amount of deduction from the bill of the contractor. Pending such mechanism, the authority giving the contract could make deduction only limited taxable turnover as tentatively determined with reference to the declaration by the contractee, subject to final order of the assessing authority under the statutory provisions to make assessment. The operative part of the said judgment is as under (pages 439 and 440 in 37 VST): "15. Argument on behalf of the petitioner is that in the case of State of Haryana, clarification does not take care of excluding service component of the turnover and mere clarification is not sufficient unless appropriate amendment is made in absence of which this court may either declare the impugned provisions ultra vires or may declare the rights of the petitioner in consonance with the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing provisions in the Rules: "7. (1) Every person responsible for making payment to any person (hereinafter in this rule referred to as the contractor) for discharge of any liability on account of valuable consideration payable for the transfer of property in goods (whether in goods or in any other form) in pursuance of the works contract shall at the time of making such payment to the contractor either in cash or in any manner, deduct four per cent of the gross amount of the bill towards tax payable in respect of all types of works under section 4(3) of the Act on account of such works contract. (2) Every person responsible for making payment to any person for discharge of any liability on account of valuable consideration payable for any transfer of the right to use any goods other than the goods in exempted list of the Act for any purpose (whether or not for a specified period) for cash or in any manner, shall at the time of making such payment deduct an amount equal to four percentum of the payment on account of such transfer of right." Reference to the above will show that the deduction of four per cent from the bills is referable to tax liability and not de hors thereof. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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