TaxTMI 
TaxTMI 
2023 (6) TMI 990
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....ed Single Judge declaring Rule 3A(2) of the Tripura Sales Tax Rules, 1976 (hereinafter referred to as the 'TST Rules') as ultra vires to the Tripura Sales Tax Act, 1976 (hereinafter referred to as the 'TST Act') and partly allowing the appeals preferred by the original writ petitioners quashing and setting aside that part of the judgment and order passed by the learned Single Judge by which it was held that the original writ petitioners were liable under Section 3AA of the TST Act, the State of Tripura has preferred the present appeals. 2. That the Tripura Sales Tax Act, 1976 was enacted in the year 1976 containing provisions for the levy of tax on sale on certain goods in Tripura. Section 3A provided for tax on transfer of property in goods involved in execution of works contract. Section 3AA provided for deduction of tax at the time of payment. Section 44 provided for power to make Rules. In exercise of the Rule making power under Section 44 of the TST Act, the Tripura Sales Tax Rules, 1976 came to be enacted. Rule 3A(2) provided for deduction of tax at source equal to 4% on transfer of rights to use goods. 2.1 The Revenue Department of the State of Tripura issued memorandu....
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....rce for payment of Sales Tax from Bills of any person who transfers right to use any goods for any purpose? (ii) Whether Rule 3A(2) is a valid piece of delegated Legislation? 2.7 During the pendency of the writ appeals, the TST Act has been replaced by the Tripura VAT Act, 2004 w.e.f. 01.04.2004. Therefore, as such the dispute is for the period prior to 01.04.2004. 2.8 By the impugned common judgment and order the Division Bench of the High Court has dismissed the appeals of the State and has allowed the appeals of the original writ petitioners - suppliers and has held that Rule 3A(2) is ultra vires TST Rules and TST Act. The Division Bench of the High Court has also set aside that part of the judgment of the learned Single Judge where it was held that the supplier - original writ petitioners are liable under Section 3AA of the TST Act. 2.9 Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the Division Bench of the High Court, the State of Tripura has preferred the present appeals. 2.10 While granting the leave this Court has framed the following question of law: "Whether Sub-rule (2) of the Rule 3A of the TST Rul....
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....provides for imposition of tax and makes the dealer liable for payment of the same. 4.5 It is submitted that the TST Act provides for delegated legislation and rule making power is provided under Section 44 of the TST Rules. 4.6 It is submitted that Rule making power under Rule 44 is inclusive and wide enough to cover the procedure for recovery including tax deduction at source. It is submitted that therefore Rule 3A(2) which provides for tax deduction at source at the hands of the transferee of the right to use goods is a machinery provision which can be provided in the Rules. It is submitted that further, all rules framed in furtherance of Section 44 are placed before the state legislature. 4.7 It is further submitted that the impugned Rule 3A(2) does not in any manner change the liability to pay the tax from the dealer and the dealer continues to remain liable to pay the tax. 4.8 It is submitted that thus Rule 3A(2) provides is only for a machinery/mechanism where the person buying the goods deducts tax at source and deposits the same with the Revenue. It is submitted that it does not in any manner change the chargeability of tax or liability to pay the tax. It is su....
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....n the facts and circumstances of the case, the Division Bench of the High Court has not committed any error in declaring Rule 3A(2) of the TST Rules as ultra vires to TST Act and the TST Rules. 5.1 It is submitted that as such the learned Single Judge allowed the writ petitions and held sub-rule 2 of Section 3A providing for sales tax deduction @ 4% at source to be ultra vires to TST Act and set aside the memorandum issued by the State Government providing for deduction of sales tax while making payment of bill amounts of the suppliers of the vehicles by the companies. However, the learned Single Judge held that the sales tax liability of the parties who had given vehicles on hire will continue because of Section 3AA of the TST Act. It is submitted that the Division Bench of the High Court has rightly confirmed the judgment and order passed by the learned Single Judge declaring Rule 3A(2) of the TST Rules ultra vires, and has also rightly set aside the observations and the findings recorded by the learned Single Judge that still the sales tax liability of the parties who had given vehicles on hire will continue because of Section 3AA of the TST Act. It is submitted that the Divi....
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....d payable to the respondents herein - original suppliers and therefore now as the impugned judgment and order passed by the High Court has been implemented by the State Government/respective Companies the impugned judgment and order passed by the High Court may not be interfered with now. 5.6 It is submitted that in absence of any charging section in the Act for deduction/levy of sales tax on those who were giving vehicles on hire for use of staff of companies, the same could not have been provided under the Rules. It is submitted that as rightly observed and held by the High Court what cannot be done under the provisions of the Act for want of charging section in the Act cannot be done indirectly by taking help of Rules as the Rules cannot supersede the provisions of the Act. It is submitted that therefore sub-rule 2 of Rule 3A of the TST Rules is rightly held to be ultra vires of TST Act. 6. Heard learned counsel appearing on behalf of the respective parties at length. 7. At the outset, it is required to be noted that while granting the leave to appeal this Court has framed the following question of law which reads as under: "Whether Sub-rule (2) of the Rule 3A ....
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....r 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 a purchase of those goods by the person to whom such delivery or transfer is made but does not include a mortgage, hypothecation, charge or pledge;" xxx xxx xxx "3. (1) Every dealer in taxable goods shall pay a tax on his turnover at the rate specified in column (3) of the schedule attached to this Act : Provided that subject to the provisions of section 14 and 15 of the Central Sales Tax Act, 1956 the State Government may, from time to time by notification in the Official Gazette and subject to such conditions as it may impose, fix a higher rate of tax 3 [not exceeding forty percent or any lower rate of tax payable under this Act on account of the sale of any taxable goods or class of taxable goods specified in such notification ; and thereupon the Schedule shall be deemed to be amended accordingly: ................................................................................ Provided further that the rate of tax on any transfer of the right to use an....
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....ge 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 1.5% of the gross amount of the bill towards tax payable in case of r.c.c bridge and 4% of the gross amount of the bill towards tax payable in respect of other works under section 3A of the Act on account of such works contract: Provided that no such deduction shall be made from the bill(s) or invoice (s) of the contractor for execution of works contract on account of the contracts for which work order was issued prior to first January, 1989: Provided also that any person responsible to make deduction of any amount equal to the amount of tax as mentioned in this rule may refer the matter to the Superintendent of Taxes, having jurisdiction over the area, for provisional computation of the net turnover and the amount of tax payable thereof by such contractor for the valuable consideration of the goods involved in the works contract. (2) Every person responsible for making payment to an....
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....ds by the person to whom such delivery or transfer is made. Thus, any transfer of right to use any goods including the vehicles shall be deemed to be a 'sale' as defined under Section 2(g)(ii). The word 'Dealer' has been defined under Section 2(b) of the TST Act and it means any person who sales taxable goods. As observed hereinabove the sale of taxable goods shall be as per Section 2(g) of the TST Act. Therefore, on combine reading of Section 3 read with Section 2(b) & 2(g) of the TST Act any transfer of the right to use any goods (including the vehicles) shall be deemed to a 'sale' and the transferor of the right to use any goods/vehicles can be said to be a dealer and therefore liable to pay the tax at the rate of 4% on any transfer of the right to use any goods as per proviso to Section 3(1). Therefore, the liability to pay the tax at the rate of 4% on any transfer of right to use any goods shall be under Section 3(1). Therefore, the submissions on behalf of the respondents - suppliers/transferers that as there is no sale or transfer of the goods and that they are not registered with the TST Act and therefore, the liability to pay the tax at 4% does not arise cannot be accepted....