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1997 (9) TMI 571 - HC - VAT and Sales Tax
Issues Involved:
1. Constitutional validity of Rule 3A of the Tripura Sales Tax (9th Amendment) Rules, 1989. 2. Liability of the petitioner to pay sales tax on the price paid for hiring trucks for transportation of foodgrains. Issue-Wise Detailed Analysis: 1. Constitutional Validity of Rule 3A of the Tripura Sales Tax (9th Amendment) Rules, 1989 The petitioner challenged the constitutional validity of Rule 3A of the Tripura Sales Tax (9th Amendment) Rules, 1989, asserting that it is ultra vires the Constitution of India. The petitioner argued that the levy of sales tax on the bills submitted to the Food Corporation of India (FCI) cannot be deemed to be a sale under Article 366(29A) of the Constitution. The respondent countered that the 46th Amendment of the Constitution enlarged the definition of the expression "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." The Supreme Court's interpretation in Builders Association of India v. Union of India [1989] 73 STC 370 (SC); AIR 1989 SC 1371 was cited, affirming that Rule 3A is not ultra vires the Constitution. The court examined the provisions of Rule 3A and the proviso to Section 3 of the TST Act, 1987 (4th Amendment). The rule mandates that any person responsible for making payments for the transfer of property in goods in pursuance of a works contract must deduct an amount equal to the tax payable. The court referred to the 46th Amendment, which introduced clause (29A) in Article 366, expanding the definition of "tax on the sale or purchase of goods" to include various transactions like the transfer of the right to use goods. The Supreme Court's decisions in State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1958] 9 STC 353; AIR 1958 SC 560 and Builders Association of India v. Union of India [1989] 73 STC 370 (SC); AIR 1989 SC 1371 were pivotal in affirming that the State Legislature has the authority to levy sales tax on such transactions. The court concluded that the provisions of Rule 3A of the TST Rules are not violative of the Constitution. The State Legislature is empowered to levy taxes on goods involved in the execution of a works contract at the rate of 4 per cent per annum, as stipulated by the provision. The court held that the constitutional validity of Rule 3A stands affirmed. 2. Liability of the Petitioner to Pay Sales Tax on Hiring Charges for TrucksThe petitioner contended that as per the contract with FCI, there was no provision for the payment or realization of sales tax on the hiring charges of vehicles used for transporting foodgrains. However, the respondent argued that the trucks used for transportation were under the control of FCI during the period of carrying foodgrains, constituting a transfer of the right to use the property in the form of goods, which amounts to a sale as per the definition in Section 2(g) of the Tripura Sales Tax Act. The court referred to the Supreme Court's decision in Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204 (SC); (1993) 1 SCC 364, which held that transportation charges for the transport of goods to the place of works cannot be excluded from the value of the entire contract. The court observed that the contractor's position in relation to the transfer of property in goods in the execution of a works contract is similar to that of a dealer in goods liable to pay sales tax on the sale price charged from the customer. Based on these precedents, the court held that the petitioner is liable to pay sales tax on the hiring charges for the trucks used in the transportation of foodgrains from the FSD railway sidings to the FCI godown complex at Agartala. The court dismissed the writ petition, affirming the petitioner's liability to pay the tax. ConclusionThe writ petition was dismissed, and the court held that Rule 3A of the Tripura Sales Tax (9th Amendment) Rules, 1989, is constitutionally valid. The petitioner is liable to pay sales tax on the hiring charges for the trucks used in the transportation of foodgrains.
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