Case Title | The state of tripura vs chandan deb |
Court | Supreme Court of India |
Judges | Justice M. R. Shah |
Citation | 2023 (03) GSTPanacea 94 SC CIVIL APPEAL NO.6500 OF 2008 |
Judgment Date | 24-March-2023 |
In a recent judgment, the Supreme Court has ruled that the Memorandum issued by the Government mandating a 4% Tax Deducted at Source (TDS) under the Tripura Sales Tax Act (TST Act) is not ultra vires to the said legislation. The court has clarified that the provision for deducting tax at source and ensuring the payment of bills to transferors at a reduced rate does not violate the TST Act.
The Memorandum, issued by the government, stipulated a 4% TDS on transactions covered by the TST Act. The court emphasized that such a provision does not exceed the legal authority granted by the TST Act. Specifically, the court highlighted that the Memorandum’s function is to establish a mechanism for the recovery of taxes by deducting them at the source and subsequently depositing the deducted amount with the Revenue.
The judgment emphasized that the Memorandum does not introduce new substantive provisions but rather provides a procedural framework for the effective enforcement of the TST Act. The court stated that the Memorandum is consistent with the Act and its associated rules, emphasizing that the recovery mechanism does not go beyond the scope of the legislative framework.
Furthermore, the court clarified that the provision merely establishes a mode of recovery and a mechanism for the deduction of taxes at source. This, according to the Supreme Court, aligns with the legislative intent of the TST Act and the accompanying rules. The court rejected any assertion that the Memorandum overstepped the boundaries set by the TST Act.
In summary, the Supreme Court has upheld the validity of the government’s Memorandum mandating a 4% TDS under the Tripura Sales Tax Act. The court emphasized that the provision is in line with the legislative framework, serving as a procedural mechanism for the recovery of taxes without violating the TST Act or its associated rules.
1. Feeling aggrieved and dissatisfied with the impugned common judgment and order dated 29.08.2007 passed by the Gauhati High Court by which the Division Bench of the High Court has dismissed the writ appeals preferred by the State of Tripura which were against the judgment and order passed by the learned Single Judge declaring Rule 3A(2) of the Tripura Sales Tax Rules, 1976 (hereinafter referred to as the ‘TST Rules’) as ultra vires to the Tripura Sales Tax Act, 1976 (hereinafter referred to as the ‘TST Act’) and partly allowing the appeals preferred by the original writ petitioners quashing and setting aside that part of the
judgment and order passed by the learned Single Judge by which it was held that the original writ petitioners were liable under Section 3AA of the TST Act, the State of Tripura has preferred the present appeals.
2. That the Tripura Sales Tax Act, 1976 was enacted in the year 1976 containing provisions for the levy of tax on sale on certain goods in Tripura. Section 3A provided for tax on transfer of property in goods involved in execution of works contract. Section 3AA provided for deduction of tax at the time of payment. Section 44 provided for power to make Rules. In exercise of the Rule making power under Section 44 of the TST Act, the Tripura Sales Tax Rules, 1976 came to be enacted. Rule 3A(2) provided for deduction of tax at source equal to 4% on transfer of rights to use goods.