TMI Blog1989 (9) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved by the deduction made from its bills on the above basis, even in respect of goods supplied by the General Electric Company to the Damodar Valley Corporation in the U.S.A. against dollar payment. 2.. The facts of these cases lie in a very narrow compass. 3.. M/s. General Electric Company, the petitioner in C.W.J.C. No. 862 of 1989(R) entered into a contract on 7th April, 1987, with the Damodar Valley Corporation (hereinafter referred to as "the DVC" for short), a Corporation formed and incorporated under the provisions of the Damodar Valley Corporation Act, for supply, erection and commissioning of three gas turbine plants, including design, manufacturing, delivery, civil work, erection, along with all auxiliaries on a complete turnkey basis at its Maithon site. 4.. The said agreement is contained in annexure 3 to the writ application. Clause 5 of the said contract deals with the scope of the work, whereas clause 17 deals with the local portion of the contract work, that is the work which is to be performed in India to be carried out on assignment by the M/s. General Electric Technical Service Company (the petitioner in C.W.J.C. No. 1015 of 1989(R) (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods into India. The said letter is contained in annexure 7 to C.W.J.C. No. 1015 of 1989(R). 10.. According to the petitioner by a supplemental agreement being amendment No. 2 to the contract agreement dated 7th April, 1987, the DVC agreed to make payment relating to civil work, unloading, storage, erection, testing and commissioning, and supervision of operation and maintenance of the gas turbine plant for 12 months in U.S. dollars to the GETSCO. This letter dated 15th July, 1988, is contained in annexure 5 to both the writ applications. 11.. On 19th July, 1988, respondent No. 3 informed the DVC that he forwarded the contract documents to the Commissioner, Commercial Taxes for clarification with a request not to deduct any amount for two months. This letter dated 19th July, 1988, is contained in annexure 12 to C.W.J.C. No. 1015 of 1989(R). 12.. By virtue of a letter dated 9th December, 1988, the respondent No. 3 directed M/s. General Electric Company to produce the contract deed, invoices, copy of import and export papers. According to the petitioner, M/s. General Electric Company appeared before respondent No. 3 when he partially perused the papers and adjourned the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the ownership of the machinery would be transferred at the works site at Maithon in India after it started commercial production. 19. In the counter-affidavit filed on behalf of respondent No. 3 in C.W.J.C. No. 1015 of 1989(R) various clauses of the said contract have also been reiterated. 20.. Dr. Debi Pal, the learned counsel appearing on behalf of the petitioners in both these writ applications, submitted that there cannot be any doubt whatsoever that from a perusal of the aforesaid contract dated 7th April, 1987 (annexure 3), the agreement dated 4th August, 1987 (annexure 4), and the supplemental agreement dated 15th July, 1988 (annexure 5) to the writ application, that so far as the plant, machinery and equipment are concerned they were supplied and paid for in U.S.A. and as such the provisions of the Bihar Finance Act are not applicable in the instant case. 21.. As noticed hereinbefore, the parties entered into a contract for installation of 3 x 3OMW gas turbine plants along with all auxiliaries on a complete turnkey basis at Maithon site in the district of Dhanbad. 22.. From the counter-affidavit filed on behalf of the respondent it appears that the case of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto a contract which is divisible into one for sale of goods and the other for supply of labour and services. After the 46th Amendment, it has become possible for the States to levy sales tax on the value of goods involved in a works contract in the same way in which the sales tax was leviable on the price of the goods and materials supplied in a building contract which had been entered into in two distinct and separate parts as stated above. 'It could not have been the contention of the Revenue prior to the 46th Amendment that when the goods and materials had been supplied under a distinct and separate contract by the contractor for the purpose of construction of a building the assessment of sales tax could be made ignoring the restrictions and conditions incorporated in article 286 of the Constitution. If that was the position can the States contend after the 46th Amendment under which by a legal fiction the transfer of property in goods involved in a works contract was made liable to payment of sales tax that they are not governed by article 286 while levying sales tax on sale of goods involved in a works contract? They cannot do so. When the law creates a legal fiction such f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods (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 related 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(29A), would equally apply to other species of 'works contracts' with the requisite situational modifications." 28.. In view of the aforementioned authoritative pronouncement of the Supreme Court, there cannot be any doubt that the impugned orders are not in accordance with law. 29.. It may further be mentioned that a Division Bench of this Court in Jamshedpur Contractors' Association v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X
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