Transfer of right to use goods: deduction at source rule upheld as a valid recovery mechanism under the sales tax statute.

The transfer of the right to use goods is treated as a sale under the Tripura Sales Tax Act, 1976, and the transferor is a dealer; on that combined reading with the charging provision, tax at 4% is leviable on such transfers. Rule 3A(2) merely requires deduction at source as a recovery mechanism under the rule-making power in Section 44, and does not alter the chargeability of tax or shift the incidence of liability. The rule therefore falls within the statutory framework and is not repugnant to the Act; Rule 3A(2) is valid and not ultra vires.

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Issues: Whether Rule 3A(2) of the Tripura Sales Tax Rules, 1976 was ultra vires the Tripura Sales Tax Act, 1976 despite the proviso to Section 3(1) providing for 4% tax on transfer of the right to use goods.

Analysis: The transfer of the right to use goods is treated as a sale under Section 2(g) of the Act, and the transferor falls within the definition of dealer under Section 2(b). On that combined reading with Section 3(1), tax at 4% is leviable on such transfers, so the liability to tax exists under the charging provision itself. Section 44 confers wide rule-making power, including the manner of recovery and procedure for payment. Rule 3A(2) only requires deduction at source as a recovery mechanism and does not alter the chargeability of tax or shift the incidence of liability. The rule therefore operates within the statutory framework and is not repugnant to the Act.

Conclusion: Rule 3A(2) is valid and not ultra vires the Tripura Sales Tax Act, 1976. The State's appeals succeed and the contrary view of the High Court is set aside.

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