Transportation of Goods: Tax Ruling Clarified

Sunil Chandra Dey Versus Food Corporation of India and others (and other cases)

Sunil Chandra Dey Versus Food Corporation of India and others (and other cases) - [2008] 13 VST 467 (Gau) Issues:
1. Challenge to the direction of realizing sales tax from carrying contractors' bills.
2. Legality of rule 3A(2) of the Tripura Sales Tax Rules, 1976.
3. Determination of whether transportation of goods constitutes a "deemed sale."
4. Applicability of tax on transportation of goods from one state to another.
5. Vires of rule 3(2) of the Rules and the charging provision under the Act.

Analysis:
1. The judgment dealt with appeals arising from a single judgment passed by a learned single judge regarding the direction to realize sales tax from carrying contractors' bills. The private appellants, engaged by the Food Corporation of India for transportation of foodgrains, challenged the direction based on the premise of transfer of right to use goods in such transactions. The vires of rule 3A(2) of the Rules, empowering such direction, was also challenged in writ petitions. The court was tasked with determining whether a transaction of mere transportation of goods involves a transfer of right to use goods constituting a "deemed sale" under the Tripura Sales Tax Act, 1976.

2. The learned single judge declared rule 3A(2) as ultra vires of the Act and held that transportation of foodgrains within the State qualifies as a "deemed sale" under the Act, subject to a four percent tax rate. The private appellants appealed this decision, questioning whether transportation by carrying contractors can be considered a "deemed sale" as defined in the Act. A Division Bench decision was cited, stating that no transfer of right to use property occurs in a simple carrying contract, leading to a refund of deducted sales tax and statutory interest.

3. The appeals by the State-appellants challenged the decisions of the learned single judge, arguing the ultra vires nature of rule 3A(2) and contending that transportation of goods between states does not constitute a "deemed sale." The court clarified that transportation of goods by carrying contractors does not involve a transfer of right to use goods, regardless of whether it is an inter-state or intra-state transaction, thus negating the imposition of tax on such transactions.

4. An additional challenge addressed the vires of rule 3(2) of the Rules in the context of delegated legislation under section 44 of the Act. The court reiterated that transportation of goods from one state to another does not amount to a "deemed sale" under the Act due to the absence of any transfer of right to use goods in such transactions. The judgment concluded by disposing of all appeals in light of the decisions and observations made.

In summary, the judgment clarified the non-applicability of sales tax on transportation of goods by carrying contractors, emphasizing the absence of a transfer of right to use goods in such transactions, thereby setting aside the earlier decision and ruling in favor of the appellants.