HSL ASIA LIMITED Vs. STATE OF TRIPURA

JUDGEMENT

(1.) This writ petition, made under Article 226 of the Constitution of India, has put to challenge the constitutional validity of certain provisions of the Tripura Sales Tax Act, 1976, (in short, 'the TST Act, 1976') to the extent that the same permits imposition of tax on the transfer of right to use goods. The prominent challenges, in the present writ petition, are to the constitutional validity of Section 2(b), which defines the term 'dealer', Section 2(d), which defines the term 'sale' and Section 3 of the TST Act, 1976, which contains the charging provisions.

(2.) The material facts, which have led to the institution of the present writ petition, may, first, be noted. In response to the NIT, floated by preformed Respondent No. 4, namely, Oil & Natural Gas Corporation Ltd., AD Nagar, West Tripura, Agartala, (in short, 'the ONGC'), for the work well logging, perforating and other wire line services for its Oil & Natural Gas Exploration and Exploitation to be carried out On land in the States of Gujarat, Tamil Nadu, Andhra Pradesh, Pondicherry, Madhya Pradesh, Rajasthan, Assam, Nagaland, Tripura, etc, under the jurisdiction of the Union of India, the Petitioner submitted its tender for obtaining the work. In course of time, the contract was awarded and an agreement was entered into, in this regard, on 05.09.2003, the period of contract, in question, being for a period of three years from 28.01.2002 to27.01.2005 for the Central Region. The Petitioner raised his bills for payment from time to time. By letter, dated 18/20th December, 2004, Respondent No. 3, namely, Superintendent of Taxes, Government of Tripura, Charge No. V, Agartala, informed the Respondent No. 4 that Respondent No. 4, , namely, Oil & Natural Gas Corporation Ltd., AD Nagar, West Tripura, Agartala, ought to have realized by making deduction, at source, of sales tax @4% from the Petitioner's bills as sales tax since August, 2001, treating the said contract as contract constituting transfer of rights to use goods, but no deduction, at source, from the bills of the Petitioner had been made by the Respondent No. 4. By its letter, dated 18/20th December, 2004, aforementioned, Respondent No. 3 further directed the Respondent No. 4 to recover the amount, which ought to have been deducted from the bills of the Petitioner. This communication was followed by another communication, dated 11/12/01/2005, to the Respondent No. 4 by Respondent No. 3. By yet another communication, dated 26.02.2005, Respondent No. 3 complained to the Deputy General Manager (Finance), ONGC, Tripura Asset, that no tax had been deposited by the ONGC by making deduction at source as was required under the law in respect of the Petitioner's contract with the ONGC . Thereafter, the Petitioner made a representation to the Respondent No. 4 explaining that the contract, in question, did not amount to transfer of right to use goods and was, therefore, not eligible to sales tax under the TST Act, 1976, and no deduction, at source, could have been legally made. The Petitioner made a representation, dated 17.02.2005, in this regard, to the Respondent No. 3 too explaining the nature of contract claiming that the contract is a contract for service and not for transfer of right to use goods and was, therefore, not eligible to sales tax. As the demands for deduction, at source, raised by the Respondent No. 3 has not discontinued and the demand of the Respondent No. 3 has apparently support of the revenue, the Petitioner has filed this writ petition impugning the demands so made seeking to get set aside and quashed the impugned communications, dated 18/20th March, 2004, 11/12th January, 2005 whereby Respondent No. 3 directed the Respondent No. 4 to deduct sales tax @4% from the bills of the Petitioner.

(3.) Before we answer the questions, which have been raised in this writ petition, it is necessary to take note of the bare minimum facts, which led to the making of 'transfer of the right to use any goods' a subject of the State's power to impose sales tax. Before introduction of the 46th amendment of the Constitution of India, composite contracts, such as, 'works contract', 'hire-purchase contract' and 'catering contracts', etc, were not assessable, as contracts, for 'sale' of goods inasmuch as the contracts, which were indivisible, could not have become subject of levy.