1958 (4) TMI 42 - SC - VAT and Sales Tax

Whether the provisions of the Madras General Sales Tax Act are ultra vires, in so far as they seek to impose a tax on the supply of materials in execution of works contract treating it as a sale of goods by the contractor?

Held that:- A law therefore prohibiting any dealing in intoxicating liquor, whether by way of sale or barter or gift, will be intra vires the powers conferred by the opening words without resort to the words "sale and purchase". Entry 49 in List II is "Cesses on the entry of goods into a local area for consumption, use or sale therein". It is argued that the word "sale" here cannot be limited to transfers for money or for even consideration. The answer to this is that the words "for consumption, use or sale therein" are a composite expression meaning octroi duties, and have a precise legal connotation, and the use of the words "sale therein" can throw no light on the meaning of that word in Entry 48. We are of opinion that the provisions in the Government of India Act, 1935, relied on for the appellant are too inconclusive to support the inference that "sale" in Entry 48 was intended to be used in a sense different from that in the Sale of Goods Act.

"Sale" in Entry 48 must be con- strued as having the same meaning which it has in the Sale of Goods Act, 1930.

In a building contract, the agreement between the parties is that the contractor should construct a building according to the specifications contained in the agreement, and in consideration therefor receive payment as provided therein, and as will presently be shown there is in such an agreement neither a contract to sell the materials used in the construction, nor does property pass therein as movables. It is therefore impossible to maintain that there is implicit in a building contract a sale of materials as understood in law. Appeal dismissed.