2015 (12) TMI 51 - HC - VAT and Sales Tax

Whether a transporter can be held liable to pay tax and penalty in terms of Section 13A of the Tripura Sales Tax Act, 1976 and Section 77 of the Tripura Value Added Tax, 2004 - Held that - Revenue contends that State of Tripura has challenged the validity of judgment 2011 (3) TMI 1503 - GAUHATI HIGH COURT before the Apex Court. We had given various adjournments and the State was directed to produce stay order, if any, granted by the Apex Court. No such order has been produced. - Decision in the case of FREIGHT MOVERS followed - Petition disposed of.

Summary

Issues:
Transporter's liability for tax evasion and penalty under Tripura Sales Tax Act and Tripura Value Added Tax Act, constitutional validity of Sections 13A and 77 challenged.

Analysis:
The petitioners, transporters facilitating goods transport, are accused of aiding dealers in tax evasion, raising the issue of transporter liability for tax and penalty under Sections 13A and 77 of the Tripura Sales Tax Act and Tripura Value Added Tax Act. The constitutional validity of these provisions is also contested in the writ petitions.

The Division Bench of the Gauhati High Court previously addressed similar questions in a case, ruling that penalty can be imposed on a transporter involved in tax evasion, and tax can be levied on transporters by deeming them as dealers under specific circumstances or by creating legal presumptions. However, the Bench found the provisions of Section 13A of the TST Act, 1976, and Section 77 of the TVAT Act, 2004, allowing the imposition of tax on transporters, to be ultra vires Entry 54 of the List II of the Seventh Schedule to the Constitution of India. On the other hand, the Bench upheld the validity of the penalty provision to the extent of 150% of the tax involved.

The judgment further clarified that the statutory provisions do not nullify the Supreme Court's decision in Tripura Goods Transport Association v. State of Tripura (1999) 2 SCC 253, emphasizing that the provisions were not enacted to override the said decision. Consequently, the assessment orders and demand notices challenged in the writ petitions were set aside, directing the authorities to reexamine the imposition of penalties based on the legal obligations outlined in the judgment.

Although the State of Tripura contested the judgment in the Apex Court, failing to produce a stay order, the High Court disposed of the writ petitions in line with the earlier judgment by the Gauhati High Court. The High Court refrained from expressing opinions on other issues raised by the petitioners, choosing to adhere to the precedent set by the Gauhati High Court and leaving open the question of whether this Court is bound by judgments from the Gauhati High Court.