Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6500 OF 2008
THE STATE OF TRIPURA & ANR. ..APPELLANT(S)
VERSUS
CHANDAN DEB & ORS. ..RESPONDENT(S)
WITH
CIVIL APPEAL NO. 6502/2008
WITH
CIVIL APPEAL NO.6501 OF 2008
WITH
CIVIL APPEAL NO.3985 OF 2009
WITH
CIVIL APPEAL NO.3984 OF 2009
WITH
CIVIL APPEAL NO.5877 OF 2022
J U D G M E N T
M. R. Shah, J.
1.
Feeling aggrieved and dissatisfied with the impugned
common judgment and order dated 29.08.2007 passed by
Signature Not Verified
Digitally signed by
Neetu Sachdeva
Date: 2023.03.24
16:35:14 IST
Reason:
the Gauhati High Court by which the Division Bench of the
High Court has dismissed the writ appeals preferred by the
1
State of Tripura which were against the judgment and
order passed by the learned 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
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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
memorandum in the year 1992 for deduction of 4% tax at
source under Section 3A of the TST Act.
2.2 Tender notices were issued by the ONGC, Gas Authority of
India Ltd., FCI for hiring vehicles. Work orders were issued
in favour of the original writ petitioners. Agreements were
entered into between the original writ petitioners and GAIL,
ONGC, FCI etc. respectively.
2.3
The original writ petitioners – suppliers of the vehicles filed
the writ petitions before the learned Single Judge
challenging the vires of Rule 3A(2) of the TST Rules and
also for refund of the amount so deducted on the ground
that there is no charging provision under the TST Act for
levy of sales tax on transfer of the right to use goods and,
hence, Rule 3A of the TST Rules, which makes it
mandatory for persons, responsible for making payment of
3
the bills of the transferer of the right to use goods, to
deduct, at source, sales tax at a flat rate of 4% is ultra vires
the TST Act. One another ground of challenge to Rule 3A
was that Rule 3A suffers from absence of delegation of
power and, hence the memorandum issued in the year
1992 is invalid and cannot be enforced.
2.4
All the writ petitions were resisted by the State contending
inter alia that the transactions involved amounted to ‘Sale’
within the meaning of 2(g)(ii) of the TST Act and that as per
the second proviso of Section 3(i) of the TST, Tax at 4% of
the valuable consideration, shall be payable on transfer of
the right to use any goods for any purpose and, hence, Rule
3A(2), prescribed merely a mode of recovery of sales tax
which is otherwise due and payable and thus Rule 3A(2) is
valid.
2.5 Learned Single Judge declared Rule 3A(2) as ultra vires the
TST Act. However, the learned Single Judge held that the
suppliers are liable to pay sales tax under Section 3AA of
the TST Act. Aggrieved by the judgment of learned Single
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Judge, the State preferred writ appeals before the Division
Bench of the High Court. The original writ petitioners –
suppliers also filed the writ appeals before the Division
Bench aggrieved by that part of the judgment of the learned
Single Judge where it was held that the original writ
petitioners – suppliers are liable to pay sales tax under
Section 3AA of the TST Act.
2.6
The Division Bench considered the following two issues:
(i)
Whether authority vests in the Revenue Dept. to
direct deduction at Source 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
5
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
Rules can be declared ultra vires being contrary
to the provisions of the ‘TST Act’, though there is
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express proviso in Section 3(1) for levy of 4%
Sales Tax on any transfer of the right to use any
goods for any purpose?”
3.
Ms. Madhavi Diwan, learned ASG and Shri Shuvodeep Roy,
learned counsel have appeared on behalf of the State of
Tripura, Shri Ahanthem Henry, learned counsel has
appeared for respondent no.1 in all the matters, Shri
Somiram Sharma, learned counsel has appeared on behalf
of the ONGC and Shri Abhay Kumar, learned counsel has
appeared on behalf of the FCI.
4.
Ms. Madhavi Diwan, learned ASG appearing on behalf of
the State has vehemently submitted that in the facts and
circumstances of the case and taking into consideration the
relevant provisions of the TST Act, the High Court has
committed a very serious error in declaring Rule 3A(2) of
the TST Rules as ultra vires to TST Act.
4.1 It is submitted that as such Rule 3A, which provides for the
tax deduction at source, is a machinery provision with
respect to tax leviable under the TST Act. Rule 3A(2)
provides for the manner of depositing tax in a sale
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transaction and does not change the person liable to be
taxed, i.e. the dealer under the TST Act or the tax liability
in any manner.
4.2 It is further submitted that the transaction of hiring of
vehicles by ONGC, GAIL and FCI falls within the definition
of Sale under Section 2(g) of the TST Act and is subject to
tax. It is submitted that TST Act provides for a deemed
sale where there is ‘transfer of right to use any goods for
any purpose”. It is submitted that in the subject
transaction, the right to use of car/vehicles is being
transferred and therefore, the transaction is a sale for the
purposes of TST Act. Reliance is placed on Section 2(g) of
the TST Act.
4.3
It is submitted that the supplier being the person making
the delivery or transfer within the meaning of Section 2(g)
(ii) falls within the definition of the term ‘Dealer’ as provided
under Section 2(b) of the TST Act. It is submitted that
therefore, the supplier – original writ petitioner would fall
within the definition of ‘Dealer’ as he is a person ‘selling’
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taxable goods in terms of the TST Act by transferring the
right to use the goods in question.
4.4 It is further submitted by Ms. Diwan, learned ASG that
Section 3(1) is the charging section under the TST Act,
which 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.
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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 submitted that therefore, the provisions relating to tax
deduction at source are machinery provisions. Being a
machinery provision, the same can be provided in rules.
4.9
It is submitted that even the tax deducted at source is
neither the final payment of tax nor assessment of tax. It is
submitted that in the present case, the payment and
assessment of tax continues to be of the dealer. Reliance is
placed upon the decision of this Court in the case of
PILCOM vs. CIT, (2020) 19 SCC 409 (paragraphs 36 to
10
38).
4.10
Ms. Madhavi Diwan, learned ASG has further submitted
that in the case of CIT vs. Eli Lilly & Co. (India) (P) Ltd.,
(2009) 15 SCC 1 , this Court has been pleased to consider
the issue whether provisions pertaining to deduction of tax
at source are independent of charging provisions on the
premise that the same is only a machinery provision.
4.11 Ms. Diwan, learned ASG has further submitted that in the
present case the TST Act and the Rules clearly fulfil all the
requirements for a valid taxing statute and provide for all
components required for a taxing statute. It is submitted
that as observed and held by this Court in the case of CCE
& Customs vs. Larsen & Toubro Ltd., (2016) 1 SCC 170
there shall be four components for a valid levy of tax
namely-
(i) character of the imposition known by its nature which
prescribed the taxable event attracting the levy;
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(ii) a clear indication of the person on whom the levy is
imposed and who is obliged to pay the tax;
(iii) the rate at which the tax is imposed and;
(iv)
the measure or value to which the rate will be applied
for computing the tax liability.
It is submitted that in the present case all those
components for a valid taxing statute are provided under
the TST Act and the TST Rules.
4.12 It is further submitted that there is no change in
chargeability of the Tax by introduction of Rule 3A(2) nor is
a new levy created and Rule 3A(2) only provides for the
mechanism of tax deduction at source and therefore, Rule
3A(2) cannot be said to be ultra vires to TST Act and TST
Rules as observed and held by the High Court.
Making above submissions it is prayed to allow the present
appeals.
12
5. All these appeals are opposed by learned counsel appearing
on behalf of the respective respondent no.1 – original writ
petitioners – suppliers. It is vehemently submitted that in
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
13
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 Division Bench of the High Court has rightly corrected
the view taken by the learned Single Judge on applicability
of Section 3AA of the TST Act.
5.2 It is further submitted by learned counsel appearing on
behalf of the respondents – suppliers that the Division
Bench of the High Court in the impugned judgment and
order has also rightly considered and held that the sales
tax can be levied on sale of taxable goods and that the
liability to pay the sales tax is of a registered dealer under
the Act and any person cannot be made liable to pay sales
tax as was done by the State Government under sub-rule 2
of Rule 3A of the TST Rules. It is submitted that in sub-
rule 2 the requirement is deduction of sales tax while
making payment to any person who has done transfer of
14
right to use any goods for any purpose but the provisions of
the TST Act provide for payment of sales tax by registered
dealer of taxable goods and even in case of any transfer of
the right of any goods for any purpose the sales tax can be
levied/deducted if the transfer of right to use is of taxable
goods and is done by a registered dealer under the Act.
5.3
It is further noticed and held by the Division Bench of the
High Court that for imposing sales tax on works contract
there is charging section in the TST Act which is not there
in case of persons involved in transfer of right to use any
goods for any purpose.
5.4
It is further submitted that the respondents herein –
suppliers who had given vehicles for use were not the
dealers and were not registered under the Sales Tax Act
and had not sold any goods in course of their work and
transfer of the right to use any goods for any purpose
having been done without being a dealer registered under
the TST Act and the transfer of goods being not that of any
taxable goods the deduction of sales tax amount at 4%
15
would not be made under the TST Act or under the Rules
and thus the deducted amount have rightly been refunded
by the State Government/Companies to most of the vehicle
suppliers during the pendency of present cases here.
5.5
It is further submitted by the learned counsel appearing on
behalf of the respondents – suppliers that during the
pendency of the present appeals and as there was no stay
against the impugned judgment and order passed by the
High Court, in many cases the State
Government/respective companies have refunded the
amount due and 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
16
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 of the TST
Rules can be declared ultra vires being contrary to
the provisions of the ‘TST Act’, though there is
express proviso in Section 3(1) for levy of 4% Sales
Tax on any transfer of the right to use any goods
for any purpose?”
17
8. The learned Single Judge while allowing the writ petitions
preferred by the suppliers/dealers held and declared Rule
3A(2) of the TST Rules ultra vires to TST Act and quashed
and set aside the memorandum issued by the Government
providing for requirement of deduction of sales tax at 4%
while making payment to any person who has done
transfer of any right to use any goods. However, the
learned Single Judge observed and 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. By the
impugned judgment and order the Division Bench of the
High Court has not only upheld the judgment and order
passed by the learned Single Judge declaring Rule 3A(2) of
the TST Rules ultra vires but has also set aside the findings
recorded by the learned Single Judge that the sales tax
liability of parties who had given vehicles on hire will
continue because of Section 3AA of the TST Act. Therefore,
the short question which is posed for consideration before
this Court and as per the question of law framed by this
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Court while granting leave to appeal would be whether sub-
rule 2 of Rule 3A of the TST Rules can be said to be ultra
vires to the provisions of the TST Act, though there is
express proviso in Section 3(1) for levy of 4% sales tax on
any transfer of the right to use any goods for any purpose?
8.1
While considering the aforesaid question the relevant
provisions of the TST Act and the TST Rules are required to
be referred to which are as under:
“ 2(b) "dealer" means any person who sells taxable
goods manufactured, made or processed by him in
Tripura or brought by him into Tripura from any
place outside Tripura for the purpose of sale of
Tripura 1 [and includes Government and any
person making a sale under section 3A;”
“2(g) "Sale" means any transfer of property, in
goods for cash or deferred payment or other
valuable consideration, and includes—
(i) any delivery of goods on hire-purchase or
any system of payment in instalments,
(ii) any transfer of the right to use any goods for
any purpose (whether or not for a specified
period) for 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
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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 any goods for any
purpose (whether or not for a specified period)
shall be 4%]”
“Section 3AA. Deduction of tax at the time of
payments : Any person responsible for paying any
sum to any person liable to pay tax under section
3A of the Act, shall at the time of credit of such
sum to the account of the person or at the time of
payment thereof in cash or by issue of a cheque or
draft or any other mode, such amount towards
sales tax as may be prescribed.”
xxx xxx xxx
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“Section 44. (1) The State Government may,
make rules for carrying out the purposes of this
Act.
(2) Without prejudice to the genererality of the
foregoing power, such rules may, in particular
prescribe---
(a) all matters required by this Act to be prescribed
;
(b) the clauses and duties of officers appointed for
the purposes of enforcing the provision of this Act;
(c) the procedure to be followed and the forms to
be adopted in proceedings under this Act ;
(d) the intervals at which, and the manner in
which, the tax under this Act shall be payable;
(e) the dates by which and the authority to which
returns shall be furnished ;
(f) the manner in which refunds shall be made ; (g)
the fees, if any, for petitions, certificates and
other;
(h) the nature of accounts to be maintained by a
dealer ; and
(i) For any other matter necessary for giving effect
to the purpose of this Act.
(3) Every rule made by the State Government
under this Act shall be laid as soon as may be
after it is made, before Legislative Assembly while
it is in session for a total period of not less than
fourteen days which may be comprised in one
session or in two or more successive sessions and
if, before expiry of the sessions, in which it is so
laid or the successive aforesaid the Legislative
Assembly agree in making any modification in the
rule or the Legislative Assembly agree that the rule
should not be made, the rule shall thereafter have
effect only in such modified from or be of no effect
as the case may be, so, however, that any such
21
modification or annulment shall be without
prejudice to the validity of anything previously
done under that rule.”
xxx xxx xxx
“Rule 3A (1) - Every person responsible for
making payment of any person (hereinafter in this
rule referred to as the contractor) for discharge 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 any person for discharge of any liability on
account of valuable consideration payable for any
transfer of the right to use any goods for any
purpose (whether or not for a specified period) for
cash or in any manner, shall at the time of making
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such payment, deduct an amount equal to four
percentum of such towards part or as the case
may be, full satisfaction of the tax payable under
the Act, on account of such transfer of right:
Provided no such deduction shall be made from
the bill(s) or invoice(s) of the transferrer -
(a) on account of such transfer where the transfer
of right to use goods was agreed to before first day
of January, 1989;
(b) The amounts received as penalty for defaults in
payment or as damages for any loss or damage
caused to the goods by the person to whom such
transfer was made; and
(c) The amount representing the valuable
consideration received for such transfer in respect
of goods exempt from tax under Sub-section (2)
and (3) of Section 3 of the Act."
8.2 In exercise of the powers under Section 44 of the TST Act
the State Government had enacted the TST Rules which
were placed before the Legislative Assembly. On fair
reading of Section 44 of the Act which is a rule making
power it can be seen that the rule making power under
Section 44 is inclusive and wide enough to cover the
procedure for recovery including tax deduction at source.
8.3 Section 3 of the TST Act can be said to be the charging
Section and the liability to pay the tax shall be as per
23
Section 3 of the TST Act. As per Section 3(1) of the TST Act
every dealer in taxable goods shall pay a tax on his
turnover at the rate specified in column (3) of the Schedule.
As per the proviso to Section 3(1) as inserted by Tripura
Sales Tax (Fourth Amendment) Act, 1987 w.e.f. 12.05.1987
the rate of tax on any transfer of the right to use any goods
for any purpose (whether or not for a specified period) shall
be 4%. The ‘Sale’ is defined under Section 2(g) and it
means any transfer of property, in goods for cash or
deferred payment or other valuable considerations, and
includes any transfer of the right to use any goods for any
purpose for 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 purchase of those
goods 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
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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. As observed
hereinabove the liability to pay the tax shall be on the
transferer who transfers the right to use any goods as per
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proviso to Section 3(1) read with Section 2(b) and 2(g) of the
TST Act.
9. Now next question which is posed for consideration before
this Court would be whether Rule 3A(2) of the TST Rules
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 is concerned, it appears
that the High Court has 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 therefore, the
Rule cannot go beyond the Act. The aforesaid view taken
by the High Court is absolutely fallacious. Rule 3A(2) can
be said to be a recovery machinery/mechanism. What Rule
3A(2) provides is 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 under Section 3(1) of the TST
Act read with Section 2(b) & 2(g) of the TST Act.
26
9.1 As observed hereinabove 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. At the cost of repetition, it is
observed and held that 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 fallen in error in
misinterpreting Rule 3A(2) of the TST Rules and has fallen
in error in declaring Rule 3A(2) of the TST Rules ultra vires
to TST Act and the High Court has materially erred in
quashing and setting aside the memorandum issued by the
State Government requiring the hirers namely the ONGC
27
and the GAIL to deduct an amount equivalent to 4% out of
the respective bills of the suppliers of the vehicles.
10.
In view of the above and for the reasons stated above,
present appeals succeed. 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 learned Single Judge declaring Rule 3A(2) of
the Tripura Sales Tax Rules, 1976 as ultra vires to the
Tripura Sales Tax Act, 1976 and quashing and setting
aside the memorandum of 1992 issued by the State
Government requiring the hirers to deduct an amount of
tax at 4% out of the respective bills of the suppliers of the
vehicles are hereby quashed and set aside. Necessary
consequences shall follow.
Present appeals are accordingly allowed. No costs.
…………………………………J.
(M. R. SHAH)
28
…………………………………J.
(KRISHNA MURARI)
New Delhi,
March 24, 2023
29