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2020 (6) TMI 328 - HC - VAT and Sales TaxTransfer of property in goods involved in the execution of the works contract - Taxability - consumable goods - purchase of ink for printing polythene rolls - exemption under Section 3-B(2)(e) of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT:- The judgment in State of Tamil Nadu Vs. Premier Litho Works and another, [2009 (7) TMI 1159 - MADRAS HIGH COURT], examined the question whether a particular transaction is an inter-state sale or a works contract. In the instant case, there is no quarrel that the appellants are involved in works contract. The judgment is distinguishable on facts and on law and reliance placed by the appellant on the said judgment is totally misconceived. The 46th Amendment to the Constitution of India and the insertion of Clause 29-A in Article 366 and Section 3-B(2)(e) of the Tamil Nadu General Sales Tax, 1959, were not brought to the attention of the Division Bench, since the issue involved was entirely different. The correct position of law as repeatedly and consistently pointed out by the Hon'ble Supreme Court, finally in STATE OF KARNATAKA ETC. VERSUS M/S PRO LAB & ORS. ETC. [2015 (2) TMI 388 - SUPREME COURT] is “to sum up, it follows from the reading of the aforesaid judgment that after insertion of clause 29-A in Article 366, the Works Contract which was indivisible one by legal fiction, altered into a contract, is permitted to be bifurcated into two: one for "sale of goods" and other for "services", thereby making goods component of the contract exigible to sales tax. Further, while going into this exercise of divisibility, dominant intention behind such a contract, namely, whether it was for sale of goods or for services, is rendered otiose or immaterial. It follows, as a sequitur, that by virtue of clause 29-A of Article 366, the State Legislature is now empowered to segregate the goods part of the Works Contract and impose sales tax thereupon. It may be noted that Entry 54, List II of the Constitution of India empowers the State Legislature to enact a law taxing sale of goods. Sales tax, being a subject-matter into the State List, the State Legislature has the competency to legislate over the subject. Since the question of law has been resolved on the basis of authoritative pronouncements of the Hon'ble Supreme Court, it would be a fruitless exercise to refer the Writ Appeal once again to the Division Bench. Appeal dismissed.
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