Tripura High Court

M/S. Thermax Limited vs The State Of Tripura on 14 March, 2022

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                           HIGH COURT OF TRIPURA
                                 AGARTALA
                              WP(C) No.1355/2016
M/s. Thermax Limited, Having its registered office at D-13, MIDC,
Industrial Area, R.D. Aga Road, Chinchwad, Pune.
                                                  -----Petitioner(s)
                                    Versus

1. The State of Tripura, Represented by the Chief Secretary, Agartala,
Capital Complex, Tripura, PIN: 799010.
2. The Secretary Revenue, Government of Tripura, Agartala, Capital
Complex, Tripura, PIN: 799010.
3. The Commissioner of Taxes, Kar Bhawan, Palace Compound, Agartala,
Tripura.
4. Superintendent of Taxes, Charge-VIII, Kar Bhawan, Palace Compound,
Agartala, Tripura (west).
                                                     -----Respondent(s)

For Petitioner(s)                  : Mr. P. Sharma, Advocate.
For Respondent(s)                  : Mr. Mangal Debbarma, Addl. G.A.

HON'BLE THE CHIEF JUSTICE MR. INDRAJIT MAHANTY HON'BLE MR. JUSTICE S.G. CHATTOPADHYAY

Date of hearing & judgment : 14th March, 2022.

       Whether fit for reporting         : YES.

                      JUDGMENT & ORDER (ORAL)

(Indrajit Mahanty, C.J.)

Heard learned counsel Mr. P. Sharma appearing for the

petitioner-company as well as learned Addl. Government Advocate Mr.

Mangal Debbarma appearing on behalf of the State respondents.

2. Prayers made in the writ petition are as follows:

"In the premise aforesaid it is prayed that your Lordship may be pleased to issue RULE NISI calling upon the respondents to show cause as to why:

a) a writ of certiorari or any other writ, direction, order should not be issued for quashing the order of assessment dated 23.11.2016 (Annexure P-13) passed by the Superintendent of Taxes, Agartala as the same suffers from an inherent jurisdictional error;

AND

b) issue a writ of mandamus or any other writ and/or order should not be issued directing the respondents not to levy VAT tax on goods reckoned in the impugned order which have already suffered the Central Sales Tax;

AND

c) pass such other further order as this Hon‟ble Court may deem fit and proper in the facts and circumstances of the present case.

AND the petitioner as in duty bound shall ever pray."

3. Learned counsel appearing for the petitioner placed reliance

on a judgment of the Gauhati High Court (Agartala Bench) in the case of

Projects and Services Centre and Another vrs. State of Tripura and Others

reported in (1991) 82 STC 89 (Gau) whereby a Division Bench of this Court

in pari materia similar circumstances that have arisen for consideration in

the present case had allowed the prayer of the petitioner therein on a finding

that the decision of the Supreme Court in Builders Association of India vrs.

Union of India reported in (1989) 73 STC 370 had repelled similar

contention raised by the State and it was declared that sales tax laws passed

by the legislatures of the State levying taxes on the transfer of property in

goods (whether as goods or in some other form) involved in the execution of

a works contract were subject to the restrictions and conditions mentioned in

each clause or sub-clause of Article 286 of the Constitution. This Court

further directed that in view of the aforesaid pronouncement of the Hon‟ble

Supreme Court, it is not necessary to discuss this aspect of the matter and

held that "the principles for determining when a sale takes place in the

course of inter-State trade or commerce laid down in Section 3 of the

Central Sales Tax Act would apply equally to transfer of property in goods

involved in execution of works contract."

4. The reply of the State as reflected in the counter affidavit in

paragraph-7 was as follows:

"7. That with regard to the statements made in paragraph-2 of the petition, the deponent denies the same. The deponent begs to state that the tax which has been levied is within the jurisdiction of the Assessing Authority, as VAT is levied on works contract as per procedure of law. No tax has been levied only on the tax paid goods which were purchased in the course of interstate sale and as projected by the petitioner. The Assessing Authority is within its jurisdiction to levy tax on

„deemed sales‟ under Section 4 of the Tripura Value Added Tax Act, 2004 which is a tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract. It is stated that as per Explanation given to Section 4(1) of the Tripura Value Added Tax Act, 2004 „property in goods‟ has been explained to mean the aggregate of the goods for which amounts have been received or is receivable by a dealer during such period as a valuable consideration whether or not such amount has been separately shown in the works contract. This shall also include value of goods purchased, manufactured, processed, cost of freight incurred by a dealer. As such even the goods which are sold/purchased in the course of inter-state trade and commerce and thereafter incorporated in execution of works contract can be taxed under VAT as „deemed sales‟.

The deponent further begs to state that the Judgment relied upon by the petitioner is not applicable to the present facts and circumstances of the case as the said Judgment was passed considering the provisions of the Central Sales Tax Act, 1956 as well as the Tripura Sales Tax Act, 1976, as it stood at the relevant point of time. However, with the introduction of Value Added Tax by enacting the Tripura Value Added Tax Act, 2004, the provision of levy of tax on works contract was changed to a great extent. The provisions of the Central Sales Tax Act, 1956 was also amended and even the goods on which tax were paid in the course of interstate sale where further made liable to tax under the State VAT Act."

The aforesaid stand is clearly not in consonance with the

judgment rendered by the Division Bench of the Gauhati High Court

(Agartala Bench) nor in consonance with the judgment rendered by the

Apex Court in Builders Association case (supra).

5. It is well settled in law as noted hereinabove that transactions

under the CST Act „C‟ forms which were provided by the purchaser

(NEEPCO) ought to be deleted from the taxable turnover under the TVAT

Act. In other words, all transactions under the CST Act ought to have been

deleted apart from deletion as directed by the Hon‟ble Supreme Court in the

Builders Association case (supra). Therefore, this Court is of the considered

view that there is no further necessity to go into the arguments advanced by

the learned counsel of both sides and accordingly, quash the assessment