1989 (3) TMI 356 - SC - VAT and Sales Tax

Constitutional validity of the Constitution (Forty-sixth Amendment) Act, 1982 challenged by which the Legislatures of the States were empowered to levy sales tax on certain transactions described in sub-clauses (a) to (f) of clause (29-A) of article 366 of the Constitution

Whether the power of the State Legislature to levy tax on the transfer of property in goods involved in the execution of works contracts referred to in sub- clause (b) of clause (29-A) of article 366 of the Constitution is subject to the restrictions and conditions contained in article 286 of the Constitution?

Held that:- As declared that sales tax laws passed by the Legislatures of States 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 are subject to the restrictions and conditions mentioned in each clause or sub-clause of article 286 of the Constitution. We, however, make it clear that the cases argued before and considered by us relate to one specie of the generic concept of "works contracts". The case-book is full of the illustrations of the infinite variety of the manifestation of "works contracts". Whatever might be the situational differences of individual cases, the constitutional limitations on the taxing-power of 'the State as are applicable to "works contracts" represented by "building contracts" in the context of the expanded concept of "tax on the sale or purchase of goods" as constitutionally defined under article 366(29-A), would equally apply to other species of "works contracts" with the requisite situational modifications.

Thus civil appeals filed against the orders of the High Courts, however, shall be placed before the appropriate Bench hearing tax matters to decide the other questions raised in them including the validity of any statutory provision or rule in the light of this judgment.