TMI Blog2023 (6) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act which is a rule making power it can be seen that the rule making power under Section 44 is inclusive and wide enough to cover the procedure for recovery including tax deduction at source. Section 3 of the TST Act can be said to be the charging Section and the liability to pay the tax shall be as per Section 3 of the TST Act. As per Section 3(1) of the TST Act every dealer in taxable goods shall pay a tax on his turnover at the rate specified in column (3) of the Schedule. As per the proviso to Section 3(1) as inserted by Tripura Sales Tax (Fourth Amendment) Act, 1987 w.e.f. 12.05.1987 the rate of tax on any transfer of the right to use any goods for any purpose (whether or not for a specified period) shall be 4%. The Sale is defined under Section 2(g) and it means any transfer of property, in goods for cash or deferred payment or other valuable considerations, and includes any transfer of the right to use any goods for any purpose for cash, deferred payment or other valuable consideration, and such delivery or transfer of any goods shall be deemed to be a sale of those goods by the person making the delivery or transfer and purchase of those goods by the person to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irers namely the ONGC and the GAIL to deduct an amount equivalent to 4% out of the respective bills of the suppliers of the vehicles. The order passed by the learned Single Judge declaring Rule 3A(2) of the Tripura Sales Tax Rules, 1976 as ultra vires to the Tripura Sales Tax Act, 1976 and quashing and setting aside the memorandum of 1992 issued by the State Government requiring the hirers to deduct an amount of tax at 4% out of the respective bills of the suppliers of the vehicles are hereby quashed and set aside - appeal allowed. - M. R. SHAH And KRISHNA MURARI , JJ. For the Appellant : Mr. Shuvodeep Roy, AOR Mr. Deepayan Dutta, Adv.Mr. Sai Shashank, Adv. For the Respondent : Mr. Ahanthem Henry, Adv. Mr. Vivek Kumar, Adv. Mr. Rajiv Mehta, AOR Mr. T. V. Ratnam, AOR Mr. Abhay Kumar, AOR Mr. Rajat Khattry, Adv. Mr. Shagun Ruhil, Adv. Ms. Neetu Jain Gautam, Adv. Ms. Kusum Pandey, Adv. Mr. Somiran Sharma, AOR JUDGMENT M. R. Shah, J. 1. Feeling aggrieved and dissatisfied with the impugned common judgment and order dated 29.08.2007 passed by the Gauhati High Court by which the Division Bench of the High Court has dismissed the writ appeals preferred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd cannot be enforced. 2.4 All the writ petitions were resisted by the State contending inter alia that the transactions involved amounted to Sale within the meaning of 2(g)(ii) of the TST Act and that as per the second proviso of Section 3(i) of the TST, Tax at 4% of the valuable consideration, shall be payable on transfer of the right to use any goods for any purpose and, hence, Rule 3A(2), prescribed merely a mode of recovery of sales tax which is otherwise due and payable and thus Rule 3A(2) is valid. 2.5 Learned Single Judge declared Rule 3A(2) as ultra vires the TST Act. However, the learned Single Judge held that the suppliers are liable to pay sales tax under Section 3AA of the TST Act. Aggrieved by the judgment of learned Single Judge, the State preferred writ appeals before the Division Bench of the High Court. The original writ petitioners suppliers also filed the writ appeals before the Division Bench aggrieved by that part of the judgment of the learned Single Judge where it was held that the original writ petitioners suppliers are liable to pay sales tax under Section 3AA of the TST Act. 2.6 The Division Bench considered the following two issues: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le transaction and does not change the person liable to be taxed, i.e. the dealer under the TST Act or the tax liability in any manner. 4.2 It is further submitted that the transaction of hiring of vehicles by ONGC, GAIL and FCI falls within the definition of Sale under Section 2(g) of the TST Act and is subject to tax. It is submitted that TST Act provides for a deemed sale where there is transfer of right to use any goods for any purpose . It is submitted that in the subject transaction, the right to use of car/vehicles is being transferred and therefore, the transaction is a sale for the purposes of TST Act. Reliance is placed on Section 2(g) of the TST Act. 4.3 It is submitted that the supplier being the person making the delivery or transfer within the meaning of Section 2(g) (ii) falls within the definition of the term Dealer as provided under Section 2(b) of the TST Act. It is submitted that therefore, the supplier original writ petitioner would fall within the definition of Dealer as he is a person selling taxable goods in terms of the TST Act by transferring the right to use the goods in question. 4.4 It is further submitted by Ms. Diwan, learned ASG that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in the case of CCE Customs vs. Larsen Toubro Ltd., (2016) 1 SCC 170 there shall be four components for a valid levy of tax namely- (i) character of the imposition known by its nature which prescribed the taxable event attracting the levy; (ii) a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax; (iii) the rate at which the tax is imposed and; (iv) the measure or value to which the rate will be applied for computing the tax liability. It is submitted that in the present case all those components for a valid taxing statute are provided under the TST Act and the TST Rules. 4.12 It is further submitted that there is no change in chargeability of the Tax by introduction of Rule 3A(2) nor is a new levy created and Rule 3A(2) only provides for the mechanism of tax deduction at source and therefore, Rule 3A(2) cannot be said to be ultra vires to TST Act and TST Rules as observed and held by the High Court. Making above submissions it is prayed to allow the present appeals. 5. All these appeals are opposed by learned counsel appearing on behalf of the respective respondent no.1 original writ petitioners suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the Division Bench of the High Court that for imposing sales tax on works contract there is charging section in the TST Act which is not there in case of persons involved in transfer of right to use any goods for any purpose. 5.4 It is further submitted that the respondents herein suppliers who had given vehicles for use were not the dealers and were not registered under the Sales Tax Act and had not sold any goods in course of their work and transfer of the right to use any goods for any purpose having been done without being a dealer registered under the TST Act and the transfer of goods being not that of any taxable goods the deduction of sales tax amount at 4% would not be made under the TST Act or under the Rules and thus the deducted amount have rightly been refunded by the State Government/Companies to most of the vehicle suppliers during the pendency of present cases here. 5.5 It is further submitted by the learned counsel appearing on behalf of the respondents suppliers that during the pendency of the present appeals and as there was no stay against the impugned judgment and order passed by the High Court, in many cases the State Government/respective co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 3AA of the TST Act. Therefore, the short question which is posed for consideration before this Court and as per the question of law framed by this Court while granting leave to appeal would be whether subrule 2 of Rule 3A of the TST Rules can be said to be ultra vires to the provisions of the TST Act, though there is express proviso in Section 3(1) for levy of 4% sales tax on any transfer of the right to use any goods for any purpose? 8.1 While considering the aforesaid question the relevant provisions of the TST Act and the TST Rules are required to be referred to which are as under: 2(b) dealer means any person who sells taxable goods manufactured, made or processed by him in Tripura or brought by him into Tripura from any place outside Tripura for the purpose of sale of Tripura 1 [and includes Government and any person making a sale under section 3A; 2(g) Sale means any transfer of property, in goods for cash or deferred payment or other valuable consideration, and includes (i) any delivery of goods on hire-purchase or any system of payment in instalments, (ii) any transfer of the right to use any goods for any purpose (whether or not for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall be made ; (g) the fees, if any, for petitions, certificates and other; (h) the nature of accounts to be maintained by a dealer ; and (i) For any other matter necessary for giving effect to the purpose of this Act. (3) Every rule made by the State Government under this Act shall be laid as soon as may be after it is made, before Legislative Assembly while it is in session for a total period of not less than fourteen days which may be comprised in one session or in two or more successive sessions and if, before expiry of the sessions, in which it is so laid or the successive aforesaid the Legislative Assembly agree in making any modification in the rule or the Legislative Assembly agree that the rule should not be made, the rule shall thereafter have effect only in such modified from or be of no effect as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule. xxx xxx xxx Rule 3A (1) - Every person responsible for making payment of any person (hereinafter in this rule referred to as the contractor) for discharge of any liability on account of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er it can be seen that the rule making power under Section 44 is inclusive and wide enough to cover the procedure for recovery including tax deduction at source. 8.3 Section 3 of the TST Act can be said to be the charging Section and the liability to pay the tax shall be as per Section 3 of the TST Act. As per Section 3(1) of the TST Act every dealer in taxable goods shall pay a tax on his turnover at the rate specified in column (3) of the Schedule. As per the proviso to Section 3(1) as inserted by Tripura Sales Tax (Fourth Amendment) Act, 1987 w.e.f. 12.05.1987 the rate of tax on any transfer of the right to use any goods for any purpose (whether or not for a specified period) shall be 4%. The Sale is defined under Section 2(g) and it means any transfer of property, in goods for cash or deferred payment or other valuable considerations, and includes any transfer of the right to use any goods for any purpose for cash, deferred payment or other valuable consideration, and such delivery or transfer of any goods shall be deemed to be a sale of those goods by the person making the delivery or transfer and purchase of those goods by the person to whom such delivery or transfer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making power under Section 44 of the Act and in that view of the matter and as the liability to pay the tax on transfer of right to use the goods shall still be continued under proviso to Section 3(1), mere providing for mode of recovery and/or providing for machinery/mechanism to recover the tax to be paid by the transferer/supplier from the person buying the goods deducting the tax at source and depositing the same with the Revenue cannot be said to be ultra vires to TST Act and the Rules as observed and held by the High Court. At the cost of repetition, it is observed and held that Rule 3A(2) does not in any manner change the chargeability of the tax or liability to pay the tax. Therefore, the High Court has fallen in error in misinterpreting Rule 3A(2) of the TST Rules and has fallen in error in declaring Rule 3A(2) of the TST Rules ultra vires to TST Act and the High Court has materially erred in quashing and setting aside the memorandum issued by the State Government requiring the hirers namely the ONGC and the GAIL to deduct an amount equivalent to 4% out of the respective bills of the suppliers of the vehicles. 10. In view of the above and for the reasons stated above, p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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