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IN THE HIGH COURT OF GAUHATI
Iqbal Ahmed Ansari and A.B. Pal, JJ.
Smti Namita Paul - Appellants
Vs.
Food Corporation of India and Ors. - Respondent
Decided On: 29.08.2007
sales tax - transfer of the right to use goods - Tripura Sales Tax Act, 1976 - Section 3, Section 3A, Section 3AA - Rule 3A of the Tripura Sales Tax Rules, 1976 - The judgment discusses the levy of sales tax on the transfer of the right to use goods and the validity of Rule 3A(2) mandating deduction of sales tax at source. The court held that the transfer of the right to use goods for any purpose is taxable at four per cent under the TST Act. However, it emphasized that a person can only be liable to pay sales tax if they fall within the definition of a 'dealer' under the Act. The court found that Rule 3A(2) was ultra vires the TST Act as it imposed an obligation to make deductions at source from the bills of the transferor of the right to use goods, even though the statute itself did not impose such a liability.
Fact of the Case:
The Oil and Natural Gas Commission (ONGC) and the Gas Authority of India Ltd. (GAIL) issued tenders for hiring vehicles for their officers and staff. The Revenue Department of Tripura issued a memorandum requiring the ONGC and GAIL to deduct four per cent of the bills of the suppliers of the vehicles as sales tax. The suppliers challenged the vires of Rule 3A, arguing that there was no charging provision under the TST Act for levy of sales tax on the transfer of the right to use goods and that Rule 3A suffers from absence of delegation of power.
Finding of the Court:
The court held that the transfer of the right to use goods for any purpose is taxable at four per cent under the TST Act. However, it emphasized that a person can only be liable to pay sales tax if they fall within the definition of a 'dealer' under the Act. The court found that Rule 3A(2) was ultra vires the TST Act as it imposed an obligation to make deductions at source from the bills of the transferor of the right to use goods, even though the statute itself did not impose such a liability.
Issues: The main issues were whether the transfer of the right to use goods for any purpose is subject to levy of sales tax under the TST Act, and the validity of Rule 3A(2) mandating deduction of sales tax at source.
Ratio Decidendi: The court emphasized that a person can only be liable to pay sales tax if they fall within the definition of a 'dealer' under the Act. It held that Rule 3A(2) was ultra vires the TST Act as it imposed an obligation to make deductions at source from the bills of the transferor of the right to use goods, even though the statute itself did not impose such a liability.
Final Decision: The appeals by the State Government were dismissed, and the appeals by the writ petitioners were allowed. The court held that Rule 3A(2) was ultra vires the TST Act, and no authority vested in the Department of Revenue, Government of Tripura, to direct payment of, or deduction at source for the purpose of payment of sales tax from the bills of any person who transfers the right to use any goods for any purpose.
1. Is the 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, subject to levy of sales tax under the Tripura Sales Tax Act, 1976 (in short, "the TST Act") and if so, who is liable to pay such a tax, are two important questions raised in this series of appeals.
2. Yet another question, raised in the present set of appeals, is as to whether Sub-rule (2) of Rule 3A of the Tripura Sales Tax Rules, 1976 (in short, "the TST Rules"), can be treated to be a valid piece of delegated legislation, when it mandates every person, responsible for making payment to the transferor of the right to use any goods for any purpose (whether or not for a specified period), to deduct an amount equal to four per centum of the dues of such a transferor towards part or full satisfaction of the sales tax payable, under the TST Act, on account of such transfer of the right.
3. Before we make endeavour to answer the questions posed above, it is imperative that some material facts, which have given rise to the present appeals, are taken note of. These facts are, in brief, set out as under:
(i) Being in need of hiring a large number of vehicles of different types for the purpose of smooth running of their work, the Oil and Natural Gas Commission (in short, "the ONGC") and the Gas Authority of India Ltd. (in short, "the GAIL") issued notices inviting tender asking interested parties/transporters to submit tenders for lending vehicles, on hire, for a specified period, to be used by the ONGC and the GAIL for their officers and staffs. Pursuant to the tender, so floated, some persons submitted their tenders and their offers having been accepted, the ONGC and the GAIL entered into agreements with the selected tenderers for hiring different types of vehicles at different rates and accordingly issued work orders. Relevant extracts of the work orders, so issued by the ONGC and the GAIL, are reproduced hereinbelow as specimen:
To
M/s Swapan Kr. Paul,
B.K. Road, Agartala.
Tripura West.
Dear Sir,
Subject to the terms and conditions contained in tender/contract No. AGT/IBG/TPT/CARS/7/97-98 and in continuation to the L.O.I. dated March 23, 1998 you are requested to supply a diesel driven tourist Ambassador car of model not earlier than 1996 for 12 hours duty on the following rates:
For 12 hours duty
Fixed Charge : Rs. 410 per day
(Rupees four hundred ten ohly).
Running charge : Rs. 3.90 Per Km.
(Rupees three and paisa ninety only).
Over time charge : Rs. 35 Per hour.
Beyond 12 hours duty (Rupees thirty-five only)
Outstation charge : Rs. 125 Per day.
(Rupees one hundred twenty-five only)
Yours faithfully,
Sd/-
Chief Manager (Logistics)
ONGC, Agartala.
To
M/s Chandan Deb,
Near Circuit House : Kunjaban,
P.O. Abhoynagar : Agartala – 799005,
Tripura West.
Sub. : Providing 05 Nos. Commander jeep on 12 hours basis Against Tender No. GAIL/AGT/VEH/98-99/01.
Dear Sir,
With reference to your offer against our NIT No. GAL/AGT/VEH/98-99/01 published in various dailies of Agartala and Calcutta dated January 13, 1999 and January 14, 1999 and subsequently your letter dated May 27, 1999, we are pleased to award the work to you at your quoted rates and laid down terms and conditions mentioned in the tender document for 05 Nos. of Commander jeep (Model 1998 onwards) on 12 hours basis immediately.
You are, therefore, requested to provide 05 Nos. Commander Jeep on 12 hours basis immediately.
Failure to provide the vehicles requisitioned above within 15 days from the receipt of this letter as mentioned in your letter dated May 27, 1999, would amount to not acceptance of the offer by you and this letter will stand cancelled.
An amount of Rs. 18,000 (Rupees one eight zero zero zero only) for each vehicle is to be deposited with GAIL, Agartala, in the form of Bank Draft/Bank Guarantee/Cheque of any Nationalised Bank in favour of Gas Authority of India Limited, Agartala, towards sec
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