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of <h1>Sales tax deduction on election vehicles deemed illegal; operators to be refunded with interest</h1> <h3>Tripura Bus Syndicate Versus State of Tripura and Others</h3> Tripura Bus Syndicate Versus State of Tripura and Others - [1997] 105 STC 409 (Gau) Issues Involved:1. Legality of the deduction of 4% sales tax from the hiring charges of vehicles requisitioned for election purposes.2. Applicability of the Tripura Sales Tax Act, 1976 and the Tripura Sales Tax Rules, 1989 to the transaction in question.Summary:1. Legality of the deduction of 4% sales tax from the hiring charges of vehicles requisitioned for election purposes:The petitioner, Tripura Bus Syndicate, challenged the deduction of 4% sales tax from the hiring charges of vehicles requisitioned during the 1989 Parliament election. The vehicles were requisitioned by the respondent No. 2 under section 160(1)(b) of the Representation of the People Act, 1951. The petitioner argued that the vehicles remained under their control and supervision through their drivers and that there was no transfer of the right to use the vehicles to the respondents. The vehicles were hired purely for election purposes, and the rate was fixed by the Chief Electoral Officer. The petitioner contended that the transaction was a simple hiring arrangement and did not involve any transfer of property or right to use the vehicles, thus making the deduction of sales tax under the Tripura Sales Tax Act, 1976, inapplicable.2. Applicability of the Tripura Sales Tax Act, 1976 and the Tripura Sales Tax Rules, 1989 to the transaction in question:The respondents, represented by Mr. U.B. Saha, argued that the requisition of the vehicles constituted a transfer of the right to use the vehicles, making the transaction subject to sales tax under section 3 of the Tripura Sales Tax Act, 1976, and rule 3(A)(2) of the Tripura Sales Tax Rules, 1989. They cited the constitutional provision under article 366(29-A)(d) and a decision of the Bombay High Court in [1989] 75 STC 217 (20th Century Finance Corporation Limited v. State of Maharashtra) to support their argument.However, the court found that the requisition of the vehicles did not involve any transfer of the right to use the vehicles. The vehicles were hired with drivers and fuel provided by the operators, and the control and supervision remained with the operators. The court held that the transaction was purely a hiring arrangement and did not fall under the purview of the Tripura Sales Tax Act, 1976, or the Tripura Sales Tax Rules, 1989. Consequently, the deduction of 4% sales tax was deemed illegal, wrongful, and mala fide.The court directed the respondents to refund the deducted amount along with interest at the rate of 18% per annum from the date of withholding until payment is made. The writ application was allowed, and the rule was made absolute with no order as to costs.
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