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TMI Blog2007 (8) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation far more onerous than the TST Act and the Rules framed thereunder envisaged. In the result and for the reasons discussed above, these appeals fail and the same shall accordingly stand dismissed. - Writ Appeal Nos. 139, 141,142,148 of 2001 - - - Dated:- 29-8-2007 - ANSARI I.A. AND PAL A.B. , JJ. JUDGMENT:- The judgment of the court was delivered by I.A. ANSARI J. By this common judgment and order, we propose to dispose of these four writ appeals, which have arisen out of the judgment and order, dated August 3, 2001 whereby the Civil Rule Nos. 73 of 1996, 256 of 1997, 520 of 1997 and 77 of 1998 have been disposed of by quashing the impugned memoranda, dated January 24, 1994 and May 20, 1995, both the memoranda having been issued by the Department of Revenue, Government of Tripura. Let us, first, take note of the material facts and circumstances, which led to the quashing of the memoranda aforementioned: (i) By the two memoranda, dated January 24, 1994 and May 20, 1995, aforementioned, all the heads of departments were directed to continue to deduct, at source, while making payments of bills, an amount equivalent to four per cent of the total gross amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... da cannot be allowed to survive. While the contractors have not challenged the decision rendered in the writ petitions, whereby not only the vires of sections 3A and 3AA has been upheld, but also the Government's authority to direct deduction, at source, has been protected, the present appellants have challenged, as illegal, the directions, given in the said writ petitions, setting aside and quashing the two impugned memoranda and disallowing the present appellants from directing deduction, at source, of an amount equivalent to four per cent of each bill raised by a contractor for having executed works contract. The question, therefore, which falls for determination, in the present appeals, is this: Is it permissible for the sales tax authorities, under the TST Act, to direct deduction, at source, of an amount equivalent to four per cent from each bill of the contractor, who has executed a works contract, without taking into account the fact as to whether all the materials used in the execution of a given works contract were or were not exigible to local sales tax? We may hasten to add that we are not concerned, in the present set of appeals, with the question as to whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a cursory glance on the said Schedule shows that different rates of tax have been imposed by the statute on different taxable goods. In other words, the rate of tax on each of the taxable goods, under the Schedule, is not one and the same. Hence, when a contractor uses different goods, whether in the form of goods or in some other form, in execution of a works contract, he is not liable to pay a flat rate of tax on each of the items, which he may have utilised in the execution of the works contract. Bearing in mind what is indicated above, we, now, turn to section 3AA, which makes provisions for deduction of tax at the time of making of payments. Section 3AA reads as under: 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, deduct such amount towards sales tax as may be prescribed. When we turn to section 3AA, we find that section 3AA makes it mandatory for every person, who is responsible for making payment to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 such payment, deduct an amount equal to four per cent 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 transferor. (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 subsections (2) and (3) of section 3 of the Act. (3) The amount deducted under sub-rules (1) and (2) shall be deposited into the Government Treasury by challan in form XI by the person making such deduction within 7th day of the month following that in which the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date on which such amount was deductible to the date on which the amount is actually deposited. (12) Where the amount has not been deposited after deduction, such amount together with interest and penalty, if any, shall be recoverable from the person in default as an arrear of land revenue as per provision of sub-section (3) of section 26 of the Act. From a cautious and minute reading of the provisions contained in subrule (1) of rule 3A, what emerges is that it is the statutory obligation of every person, who is responsible for making payment to a contractor for execution of a works contract, to deduct sales tax payable by the contractor under the TST Act. The person, who is responsible for making payment, has, however, the discretion to refer to the Superintendent of Sales Tax, having jurisdiction over the area, for provisional computation of the net turnover and the amount of tax payable thereon by such a contractor for valuable consideration of the goods involved in the works contract. When a piece of legislation, delegated or otherwise, vests, in a person, some discretion, neither exercise of such discretion can be arbitrary nor can omission to exercise the discretio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U.P. reported in [2007] 5 SCC 85. What can also not be ignored is that under the impugned memoranda, even when a person, while executing a works contract, has not transferred property in goods, yet the person, responsible for making payment to such a contractor, has no other option, but to deduct sales tax at the flat rate of four per cent from the bills of such a contractor, though the transactions may not amount to sale even under the provisions of section 3A of the TST Act. See Brajendra Mishra v. State of Orissa reported in [1994] 92 STC 17 (Orissa). It is pertinent to point out that in every works contract, there may not be utilisation of taxable goods, for, utilisation of goods vary from one works contract to another. For instance, though earth cutting work, road-dressing work, re-claiming of jungles are, ordinarily, works contract, execution of such works contract does not involve transfer of property in goods and, hence, from the bills of a contractor, who does such works, where no transfer of property in goods takes place, no deduction can be made towards payment of sales tax at the flat rate of four per cent or at any other rate. The provisions for refund, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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