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2012 (11) TMI 978 - HC - VAT and Sales TaxDeemed sale – Writ Petition - constitutional validity of section 2(24) of the Maharashtra Value Added Tax Act - challenge of the petitioners is that by Amending the provisions of section 2(24) the State Legislature has brought within the ambit and purview of the expression "sale", an agreement for the building and construction of immovable property which is not a works contract – Held that:- The effect of the amendment to section 2(24) is to clarify the legislative intent that a transfer of property in goods involved in the execution of works contract including agreement for building and construction of immovable property would fall within the description of a "sale of goods" within the meaning of the provision. - In order to meet the description contained in clause (b), State legislation must provide for a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. Such a transfer shall be deemed to be a sale by a person making the transfer and a purchase of those goods by the person to whom the transfer is made. The amendment made by the State Legislature does not transgress the limitations which have been imposed by article 366(29A)(b) of the Constitution. The amended definition of the expression "sale" in clause (b)(ii) of the Explanation to section 2(24) brings, within the ambit of that expression transactions of that nature which are referable to article 366(29A)(b). The transactions which the Legislature had in mind involve works contracts. What the State Legislatures can tax under the expanded definition contained in clause (b) of article 366(29A) must meet the governing requirements of that clause. There must be a transfer of property in goods involved in the execution of a works contract. The relevant clause in section 2(24) is valid because it does not transgress the boundaries set out in article 366(29A). Whether there is a works contract in a given case is for assessing authorities to determine. As noted earlier, it is not possible to provide a comprehensive or all-encompassing list of what contracts constitute works contracts. Section 2(24) properly construed, even after its amendment, reaches out to those cases which-fall within the ambit of article 366(29A). Explanation (b)(ii) to section 2(24) in other words covers those transactions where there is a transfer of property in goods, whether as goods or in any other form, involved in the execution of a works contract. Regarding validity of composition scheme - held that:- A composition scheme is made available at the option of the registered dealer. There is no compulsion or obligation upon a registered dealer to settle. The court may in an extreme instance interfere in the exercise of its powers of judicial review only where the terms of a composition scheme are ex facie arbitrary and extraneous so as to be violative of article 14. That has not been established before the court in this case. There is no merit in the challenge to the Constitutional validity of the composition scheme. The definition of the expression "works contract" in section "2(ja) of the Central Sales Tax Act, 1956, which has been introduced by Act 18 of 2005 with effect from May 13, 2005 is only for the purposes of that Act. The State law in the present case does not infringe the provisions of clauses (a) and (b) of article 286(3), for the aforesaid reason. Constitution validity of levy of levy of VAT on transfer of goods involved in execution of building and construction of immovable property upheld.
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