In Brief

The Supreme Court held that Rule 3A(2) of the Tripura Sales Tax Rules, 1976, which mandates 4% deduction of sales tax at source when paying suppliers who transfer the right to use goods, is valid and not ultra vires to the Tripura Sales Tax Act. The Court found that the charging provision for such transfers exists in Section 3(1) of the Act, and persons transferring such rights are 'Dealers' liable to tax. Rule 3A(2) is a procedural recovery mechanism that does not alter the substantive tax liability and falls within the rule-making power under Section 44. The High Court's declaration of the rule as ultra vires was erroneous.

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