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2007 DIGILAW 574 (GAU)

Sunil Chandra Dey v. Food Corporation of India

2007-08-28

A.B.PAL, I.A.ANSARI

body2007
JUDGMENT A.B. Pal, J. 1. We have heard learned Counsel for the parties. 2. These two groups of appeals, one by the private appellants and the other by the State appellants having arisen from the same judgment dated August 6, 2001 passed by a learned single judge of this court in W.P. (C) No. 237 of 1999 and 10 other similar cases, we propose to dispose of them by this common judgment. 3. The private appellants, who are carrying contractors by profession, were engaged in 1999 by the Food Corporation of India (for short, "the FCI") for transportation of foodgrains from Guwahati, Churaibari and Dharmanagar to its different godowns in the State of Tripura. By a communication dated January 16, 1999 followed by similar others, the Commissioner of Taxes, Tripura, directed the FCI to realise four per cent sales tax from the carrying contractor's bills presumably proceeding from the premises that in such transactions transfer of right to use goods occurs, which is a "deemed sale" falling in the tax net in the second proviso to Section 3 of the Tripura Sales Tax Act, 1976 (for short, "the Act"). The Commissioner derived the powers to give such direction from Rule 3A(2) of the Tripura Sales Tax Rules, 1976 (for short, "the Rules") which enjoins every person responsible for payment, on account of any transfer of right to use any goods, to deduct tax payable under the Act from the amount payable for such transfer. This direction of the Commissioner and the vires of Rule 3A(2) of the Rules came under challenge in several writ petitions instituted by the carrying contractors, the private appellants herein, raising the basic question whether in a transaction of mere transportation of goods from one place to another any transfer of right to use goods takes place at all within the meaning of "sale" defined in Section 2(g)(ii) of the Act. The other important question the court was called upon to decide is whether in the absence of any charging provision in the Act for realisation of tax on such "deemed sale" at source, Rule 3A(2) of the Rules providing for deduction at source is legally sustainable. 4. The other important question the court was called upon to decide is whether in the absence of any charging provision in the Act for realisation of tax on such "deemed sale" at source, Rule 3A(2) of the Rules providing for deduction at source is legally sustainable. 4. The learned single judge, after striking down Rule 3A(2) as ultra vires of the Act came to hold that carrying of foodgrains from one place to another within the State is a "deemed sale" as defined in Section 2(g)(ii) of the Act and, as such, consideration amount received or receivable is taxable at the rate of four per cent under the second proviso to Section 3(1) of the Act. Aggrieved, the private appellants have challenged the said decision in the present group of appeals on hand filed by them. 5. We would first decide the group of appeals of the private appellants. The only question raised in this group of appeals is whether mere transportation of goods from one place to another by carrying contractors can be said to be a "deemed sale" within the definition of Clause 2(g)(ii) of the Act. This question need not detain us in view of a decision precisely on this question by a Division Bench of this court in Writ Appeal No. 67 of 2002. It was decided in that appeal that "there is no transfer of any right to use property in any goods in a pure and simple carrying contract so as to bring the transaction within the purview of Section 2(g)(ii) of the Act." In the result, this court directed to refund the amount deducted as sales tax at the rate of four per cent from the bills of the petitioner-contractor along with the statutory interest at the rate of six per cent per annum from the date of reduction of the amount. 6. We entirely agree with the same and accordingly we allow this group of appeals of the private appellants setting aside and quashing the aforementioned decision of the learned single judge in the judgment impugned. 7. In the other group of appeals on hand preferred by the State-appellants, the challenge is to the following decisions of the learned single judge in the judgment impugned. 7. In the other group of appeals on hand preferred by the State-appellants, the challenge is to the following decisions of the learned single judge in the judgment impugned. (i) The provision of Rule 3A(2) of the Rules is ultra vires of the Act; (ii) Carrying of goods from Gauhati (Assam) to Agartala (Tripura) is to be termed as inter-State sale to which the provisions of the Act or the Rules do not apply. Consequently, such transaction cannot be a "deemed sale" within the meaning in Section 2(g)(ii) of the Act. 8. In yet another group of writ appeals by the State and the private appellants we are addressing the first challenge to the vires of Rule 3(2) of the Rules in a large canvas with reference to Section 44 of the Act relating to the extent of delegated legislation, along with other related question, whether second proviso to Section 3(1) of the Act imposing tax on transfer of right to use any goods is a charging provision at all. We, therefore, do not intend to dwell upon the same here again. 9. As regards the second challenge aforementioned, we have only to reiterate that transportation of foodgrains from Gauhati to Agartala or any other place in Tripura is not a "deemed sale" for the purpose of the Act, not because it is an inter-State sale to which State law does not apply, as held by the learned single judge, but because in a mere transportation of goods of another by a carrying contractor there is absolutely no transfer of any right to use goods, no matter whether such transportation is inter-State or intra-State. Consequently, no tax can be levied on such transactions. 10. Subject to our decisions and observations aforementioned all the above appeals stand disposed of. No cost.