Tripura Sales Tax Act, 1976 : ss. 3A, 3AA – Tripura Sales Tax Rules, 1976 – r. 3A(2) – Sub-rule (2) of the r. 3A, if ultra vires to the provisions of the TST Act – On facts, issuance of work order for hiring vehicles by ONGC, GAIL, FCI in favour of writ petitionerssuppliers of the vehicle – Writ petitioners challenging vires of r. 3A(2) and for refund of the amount so deducted as sales tax on transfer of the right to use goods – Single Judge held r.3A(2) as ultra vires the TST Act which was upheld by the Division Bench – Single Bench also held that suppliers are liable to pay sales tax u/s. 3AA but the same was set aside by the Division Bench – On appeal, held: On combine reading of s. 3 r/w s.2(b) & 2(g), 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 thus, liable to pay the tax at the rate of 4% on any transfer of the right to use any goods as per proviso to s. 3(1) – Liability to pay the tax at the rate of 4% on any transfer of right to use any goods shall be u/s. 3(1) – r. 3A(2) provides only for a machinery/mechanism where the person buying the goods is required to deduct the tax at source and deposits the same with the Revenue – It does not in any manner change the chargeability of the tax or liability of the tax which is u/s. 3(1) r/w s. 2(b) & 2(g) – Thus, High Court erred in declaring r. 3A(2) ultra vires to TST Act and in quashing and setting aside the memorandum issued in 1992 by the State Government requiring the hirers-ONGC and GAIL to deduct 4% tax at source u/s. 3A out of the respective bills of the suppliers of the vehicles.
Allowing the appeals, the Court
HELD: 1.1 On combine reading of Section 3 read with Section 2(b) & 2(g) of the Tripura Sales Tax 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. The liability to pay the tax shall be on the transferer who transfers the right to use any goods as per proviso to Section 3(1) read with Section 2(b) and 2(g) of the TST Act. [Para 8.3][1148-A-D]
1.2. As regards, the question whether Rule 3A(2) and the memorandum issued by the Government to deduct the tax at 4% and the bills to be paid to the transferers can be said to be ultra vires to TST Act, it appears that the High Court held the said provision as ultra vires by observing that there is no such provision for tax deduction at source under the TST Act and thus, the Rule cannot go beyond the Act. The said view taken by the High Court is absolutely fallacious. Rule 3A(2) can be said to be a recovery machinery/mechanism. Rule 3A(2) provide only for a machinery/mechanism where the person buying the goods is required to deduct the tax at source and deposits the same with the Revenue. It does not in any manner change the chargeability of the tax or liability of the tax which is u/s.3(1) read with s.2(b) & 2(g) of the Act. [Para 9][1148-E-G]
1.3. The rules are framed in exercise of Rule-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. 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 erred in misinterpreting Rule 3A(2) of the TST Rules and in declaring Rule 3A(2) of the TST Rules ultra vires to TST Act. 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. Thus, the impugned common judgment and order passed by the Division Bench of the High Court and that of the common judgment and order passed by the Single Judge declaring rule 3A(2) as utra vires to the Tripura Sales Tax Act, 1976 and quashing and setting aside the memorandum of 1992 are quashed and set aside. [Para 10][1148-H; 1149-A-E] PILCOM vs. CIT, (2020) 19 SCC 409; CIT vs. Eli Lilly & Co. (India) (P) Ltd., (2009) 15 SCC 1 : [2009] 5 SCR 20; CCE & Customs vs. Larsen & Toubro Ltd., (2016) 1 SCC 170 : [2015] 8 SCR 1046 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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