TMI Blog1988 (5) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... ho shall find facts to determine whether the transactions are exigible to tax. 3.. Under article 265 of the Constitution, no tax shall be levied or collected without authority of law. Prior to the Constitution, provisions of the Government of India Act, 1935, were regulating the levy and collection of taxes. Under the said Act provincial legislatures were authorised to make law for levy and collection of tax on sale and purchase of goods. Pursuant to such authority various provincial legislatures including Orissa made law and the Act was enacted in the year 1947. Under the scheme of the Act a person, who carries on the business of sale of goods was made liable to pay tax under section 4 of the Act. "Sale" was defined to mean "any transfer of property in goods for consideration including the transfer of property in such goods involved in the execution of contract". "Goods" was defined to mean "all kinds of movable property which includes all materials, articles and commodities whether or not to be used in construction, fitting out, improvement and repair of immovable property" and "contract" was defined to mean "any agreement for carrying out for consideration the construction, fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as follows: "(29A) 'tax on the sale or purchase of goods' includes- (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) 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; (c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted by an Act of the Legislature. Accordingly, Orissa Ordinance No. 4 of 1986 was promulgated on 7th October, 1986 which is the subject-matter of consideration in these writ applications. In the said Ordinance relevant portions of the definitions of "dealer" and "goods" read as follows: "2. Definition- (a) ................... (b) .................. (c) 'Dealer' means any person who carries on the business of purchasing, selling, supplying or distributing goods (including goods used or involved in the execution of works contract, whether as goods or in some other form), directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration and includes,(i) to (v) .................. (vi) a person who transfers property in goods (whether as goods or in some other form) involved in the execution of a works contract; (vii) to (ix) ............... (d) 'Goods' means all kinds of movable property other than actionable claims stock, share or securities, and includes goods used or involved in the execution of works contract whether as goods or in some other form, all growing crops, grass and things attached to or formin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Naidu (in C.A. No. 2463 of 1969)], in AIR 1968 SC 1138 (Udai Ram Sharma v. Union of India) and in [1970] 3 SCR 745 (Janapada Sabha, Chhindwara v. Central Provinces Syndicate Ltd.) in support of the submission. We fail to appreciate the submission of Mr. Banerjee. In [1958] 9 STC 353 (SC) [State of Madras v. Gannon Dunkerley Co. (Madras) Ltd.] question for consideration was the taxability of the goods involved in an indivisible works contract. In the said decision, the Supreme Court made it clear that so far as divisible works contract is concerned, there would be no difficulty in levying tax on the sale of goods. In respect of indivisible works contract, it, was held that in the absence of definition of "sale", the meaning as is understood under the Sale of Goods Act would govern the field and at no point of time goods as such having been transferred for consideration, the State Legislature has no power for levy of tax under the law enacted for the purpose under entry 54 of List II of the Seventh Schedule of the Constitution. From that time onwards goods involved in works contract were not exigible to tax under the Act. Deficiency in the power to make laws for levy of tax on sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Mr. Banerjee submitted that the 46th Amendment to the Constitution is a Central Act and such a Central Act is not competent to tamper with List II of the Seventh Schedule of the Constitution. He relies upon articles 245 and 246 of the Constitution in support of his submission. It is now well-settled that the Constitution can be amended by the Parliament by enactment so long as it does not destroy the basic structure of the same. In that view of the matter, Mr. Banerjee's submission has no force. 8.. Mr. Banerjee submitted that the same procedure as followed while incorporating entry 92A in List I of the Constitution after the decision of the Supreme Court in [1955] 6 STC 446; AIR 1955 SC 661 (Bengal Immunity Co. Ltd. v. State of Bihar) should have been followed and unless List II was amended, the 46th Amendment would not be valid by addition of a definition as in clause (29A) to article 366. In clause (29A) the term "tax on sale and purchase of goods" has been defined. Wherever such term is used, the meaning as in clause (29A) would be attracted. Therefore, entry 54 of List II of the Seventh Schedule was not required to be amended. The submission of Mr. Banerjee, therefore, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h goods as far as permissible under the law exigible to sales tax. If that be so, the legislature while providing the definition of "taxable turnover" in section 5(2)(AA)(i) intended that the taxable turnover in a works contract is the value of the goods exigible to tax under the Orissa Sales Tax Act involved in a works contract. In large number of cases, taxable turnover would be the gross value received or receivable for the contract less the amount of labour charges and service charges incurred for the execution of the contract. No doubt, the definition was provided as an easy and convenient mode of determining the taxable turnover but in cases where the goods involved in a works contract are not exigible to tax, the value thereof has to be excluded. The legislature by providing the deeming provision by way of a definition of "taxable turnover", therefore, intended that where the dealer fails to satisfy the assessing authority or where there are no materials before as to the value of the goods involved in works contract which are exigible to Orissa sales tax, the deeming provision should be resorted to with a view to determining the taxable turnover. So understood, the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(2)(AA)(i) includes the said transactions only. Transfer of goods which did not come within the meaning of sale under the Sale of Goods Act was intended by the Parliament to be declared as sale and purchase of goods. Thus, the value of the work is to be determined by excluding those goods which are not involved in the execution of contract when brought to the notice of the taxing authority. Before every assessment, the principle of natural justice is followed. Therefore, on the offchance of a taxing authority not applying its mind to the claim of the dealer, the law cannot be held to be bad. If the assessee does not bring any material to the notice of the assessing authority, best judgment assessment is to be made keeping section 5(2)(AA)(i) as the guideline for assessment of the taxable turnover. 13.. It is submitted that goods which have suffered taxation in a series of sales are excluded from further taxation and the plain meaning of section 5(2)(AA)(i) does not envisage such exclusion. Section 5(2)(AA)(i) is also subject to section 8. When claimed before the assessing authority, it is to determine if the goods involved in works contract were subject to taxation in a series o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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