TMI Blog1995 (2) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... which are heard along with these writ appeals is also the same. As the points involved in the writ appeals and the writ petitions are common, they are disposed of by this common judgment. 2.. The relevant portion of section 3-B of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act"), inserted by the provision of Tamil Nadu Act No. 25 of 1993 which is challenged in the writ petitions out of which these writ appeals arise and in the writ petitions is as follows: "3-B. Levy of tax on the transfer of goods involved in works contract.(1) Notwithstanding anything contained in sub-sections (2-A), (2-B), (3), (4), (7) and (8) of section 3, or section 7-A, but subject to the other provisions of this Act including the provisions of sub-section (1) of section 3, every dealer referred to in item (vi) of clause (g) of section 2 shall pay, for each year, a tax on his taxable turnover of transfer of property in goods involved in the execution of works contract at the rates mentioned in sub-section (2) of section 3 or, as the case may be, in section 4. Explanation.-Where any works contract involves more than one item of work, the rate of tax shall be determined s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sections 14 and 15 of the Central Act. (2) Reasonable profit margin of the contractor on declared goods involving in the execution of a works contract should also go in deduction from the 'total turnover' for arriving at 'taxable turnover'. (3) The extent of cost of establishment of the contractor as relatable to the supply of 'labour and services' and 'reasonable profit margin on labour', besides 'cost of consumables in the execution of works contract' should also go in deduction from the 'total turnover' for arriving at the 'taxable turnover'." As already stated these writ appeals are directed against the said common orders of the learned single Judge dated June 13, 1994* and July 27, 1994. Reported as Kamatchi Lamination (P) Ltd. v. State of Tamil Nadu [1994] 95 STC 378 (Mad.). 4.. Mr. C. Natarajan, learned counsel for the appellants in Writ Appeal No. 982 of 1994 contended in the first place that by reason of the restrictions imposed by section 15 of the Central Sales Tax Act, 1956, the conditions imposed by section 3-B(2)(b) of the Act that in order to claim deductions from the total turnover in respect of the goods specified in the First Schedule or Second Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviding services involving professional skill from the stage of designing, supervising and execution of the project has to be excluded. The further submission of Mr. C. Natarajan, learned counsel for the appellants is that the Legislature cannot tax the professional income of the contractor by allowing only the actually incurred expenses under section 3-B(2)(e) of the Act. Mr. V. Ramachandran, learned Senior Counsel appearing for the appellants in W.A. No. 1093 of 1994 and Mr. K.J. Chandran, learned counsel for the appellant in W.A. No. 1467 of 1994 and petitioner in W.P. No. 16680 of 1994 contended that in the case of works contract relating to dyeing and printing, the dye or ink as the case may be, used in such works contract are consumed in the execution of the works contract and that there is no transfer of property in the goods and therefore, the cost of the consumables are includible in the expression "labour charges and other like charges", as deduction under section 3-B(2)(e) of the Act, in computing the taxable turnover of the contractor. 5.. Mrs. Chitra Venkataraman, learned Additional Government Pleader (Taxes), countered the contentions of the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l turnover in respect of the amounts for which the goods specified in the First or Second Schedule are purchased, such goods must be purchased from registered dealers liable to pay tax under the Act, will result in levying tax at more than one stage and on that ground whether section 3-B of the Act is liable to be struck down? (3) Whether section 3-B is invalid because sub-section (2)(b) of sec- tion 3-B provides that only the amount for which the goods specified in the First or Second Schedule are purchased, are to be deducted and does not provide for the deduction of the profit margin as well as the value at the time of transfer of such goods in computing the taxable turnover of the dealer? (4) Whether section 3-B of the Act is invalid because sub-section (2)(e) of section 3-B limits the expenses towards labour charges and other charges, equal to the actual charges incurred in connection with the execution of the works contract, without providing for exclusion of the profit margin of the contractor? (5) Whether the cost of consumables, not involving transfer of property in goods which go in the manufacture of goods involved in the execution of works contract, are includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dification that the words 'but excluding charcoal' shall be omitted; (ii) cotton, that is to say, all kinds of cotton (indigenous or imported) in its unmanufactured state, whether ginned or unginned, baled, pressed or otherwise, but not including cotton waste; (iia) cotton fabrics, as defined in item No. 65 of the First Schedule to the Central Excises and Salt Act, 1944 (Central Act 1 of 1944); (iib) cotton yarn, but not including cotton yarn waste; (iic) crude oil, that is to say, crude petroleum oils and crude oils obtained from bituminous minerals (such as shale, calcareous rock, sand), whatever their composition, whether obtained from normal or condensation oil-deposits or by the destructive distillation of bituminous minerals and whether or not subjected to all or any of the following processes: (1) decantation; (2) de-salting; (3) dehydration; (4) stabilisation in order to normalise the vapour pressure; (5) elimination of very light fractions with a view to returning them to the oil-deposits in order to improve the drainage and maintain the pressure; (6) the addition of only those hydrocarbons previously recovered by physical methods during the course of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Cotton seed (Gossypium Spp.); (iv) Soyabean (Glycine seja); (v) Rapeseed and Mustard- (1) Torta (Brassica campestris var toria); (2) Rai (Brassica juncea); (3) Jamba-Taramira (Eruca Satiya); (4) Sarson, yellow and brown (Brassica campestris var sarson); (5) Banarsi Rai or True Mustard (Brassica nigra); (vi) Linseed (Linum usitatissimum); (vii) Castor (Ricinus communis); (viii)Coconut (i.e., Copra excluding tender coconuts) (Cocos nucifera); (ix) Sunflower (Helianthus annus); (x) Nigar seed (Guizotia abyssinica); (xi) Neem, vepa (Azadirachta indica); (xii) Mahua, illupai, ippe (Madhuca Indica M. Latifolia, Bassia, Latifolia and Madhuca longifolia syn. M. Longifolia); (xiii)Karanja, Pongam, Honga (Pongamia pinnata syn P. Glabra); (xiv)Kusum (Schleichera oleosa, syn. S. Trijuga); (xv)Punna, Undi (Calophyllum, inophyllum); (xvi)Kokum (Carcinia indica); (xvii)Sal (Shorea robusta); (xviii)Tung (Aleurites fordii and A. Montana); (xix)Red palm (Elaeis guinensis); (xx)Safflower (Carthanus tinctorius); (via)pulses, that is to say,- (i) gram or gulab gram (Cicerarietinum L.); (ii) tur or arhar (Cajanus cajan.); (iii) moong or gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were purchased. As already pointed out, the submission of the learned counsel for the appellants is that the mandate of section 15(a) of the Central Sales Tax Act is that in the case of declared goods there cannot be levy of tax at more than one stage, that if the declared goods purchased by the dealer are used in the execution of the works contract not in the same form in which they are purchased, but used in some other form the dealer, in view of sub-section (2)(b) of section 3-B is not entitled to claim deduction from the total turnover in respect of those goods used in some other form, which will result in levy of tax at more than one stage and therefore, the said condition prescribed in sub-section (2)(b) of section 3-B that the goods must be used in the same form in which they are purchased, violates section 15(a) of the Central Sales Tax Act. However, we are unable to accept the above contention of the learned counsel for the appellant. The settled position of law is that whenever a commercial commodity which has suffered sales tax is transformed into another distinct commercial commodity, it becomes a separate and distinct commercial commodity for the purposes of levy of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above contention and held that each sub-item in entry No. (iv) under section 14 of the Central Sales Tax Act is a separate taxable commodity for the purposes of sales tax and each of them form a separate species for each series of sales although they may belong to the same genus that is iron and steel. Therefore, the apex Court held that the manufactured goods consisting of steel rounds, flats, plates, etc., or similar goods in other forms and shapes could be taxed again, even if the material out of which they were made had already been subjected to sales tax once as iron and steel scrap. In the said decision, the apex Court after referring to the various sub-items in item (iv) of section 14 of the Central Sales Tax Act, observed as follows: "It will be seen that 'iron and steel' is now divided into 16 categories which clearly embrace widely different commercial commodities, from mere scrap iron and leftovers of processes of manufacturing to 'wires' and 'wheels, tyres, axles and wheel sets'. Some of the enumerated items like 'melting scrap' or 'tool alloys' and 'special steels' could serve as raw material out of which other goods are made and others are definitely varieties of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be that the object of specification was to enumerate only those categories of items, each of which was to serve as a new starting point for a series of sales, which were to be classed as 'declared' goods. If one were to state the meaning in different words, it would seem to us to be: 'iron and steel goods of various types enumerated below'. What we have inferred above also appears to us to be the significance and effect of the use of the words 'that is to say' in accordance with their normal connotation and effect. Thus, in Stroud's Judicial Dictionary, 4th Edition, Volume 5, at page 2753, we find: 'That is to say.-(1) "That is to say" is the commencement of an ancillary clause which explains the meaning of the principal clause. It has the following properties: (1) it must not be contrary to the principal clause; (2) it must neither increase nor deminish it; (3) but where the principal clause is general in terms it may restrict it: see this explained with many examples, Stukeley v. Butler, Hob. 171.' The quotation, given above, from Stroud's Judicial Dictionary shows that, ordinarily, the expression 'that is to say' is employed to make clear and fix the meaning of what is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the entry could have been: 'Goods of iron and steel'. Perhaps even this would not have been clear enough. The entry, to clearly have that meaning, would have to be: 'Iron and steel irrespective of change of form or shape or character of goods made out of them'. This is the very unusual meaning which the respondents would like us to adopt. If that was the meaning, sales tax law itself would undergo a change from being a law which normally taxes sales of 'goods' to a law which taxes sales of substances out of which goods are made. We, however, prefer the more natural and normal interpretation which follows plainly from the fact of separate specification and numbering of each item. This means that each item so specified forms a separate species for each series of sales although they may all belong to the genus: 'iron and steel'. Hence, if iron and steel 'plates' are melted and converted into 'wire' and then sold in the market, such wire would only be taxable once so long as it retains its identity as commercial goods belonging to the category 'wire' made of either iron or steel. The mere fact that the substance or raw material out of which it is made has also been taxed in some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case [1966] 17 STC 313 (SC) to the decision of cases now before us, which turns really on a correct interpretation of section 14 of the Central Act. On the question now before us, we approve of the reasoning adopted by a Division Bench of the Punjab High Court in Devgun Iron and Steel Rolling Mills v. State of Punjab [1961] 12 STC 590." 8.. In Telangana Steel Industries v. State of Andhra Pradesh [1994] 93 STC 187 (SC), the specific question decided by the apex Court is whether wire rods and wires occurring in section 14(iv)(xv) of the Central Sales Tax Act are different commercial commodities. The appellant in that case relying on Pyare Lal Malhotra's case [1976] 37 STC 319 (SC), contended that inasmuch as wire rod and wire are mentioned in one sub-item of section 14 of the Central Sales Tax Act, they have to be treated as one goods and not two different goods. The apex Court accepted the above contention and held that under sub-item (xv) of item (iv) of section 14 of the Central Sales Tax Act, wires were thought of as an integral part of rods and not distinct from rods, because the sub-item speaks about wires "rolled, drawn, galvanised, aluminised, tinned or coated" which sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts were also declared goods, and so, an argument was advanced that the iron scrap from which the goods had been manufactured having suffered sales tax, tax could not be realised once again from the sale of plates, flats, rounds, etc. This Court did not accept the contention but the reason given for rejecting the contention is what is pressed into service by Shri Tarkunde, according to whom, the reason given therein establishes his contention conclusively. 9.. As we are concerned with the products of iron and steel, as was Pyare Lal's case [1976] 37 STC 319 (SC); [1976] 3 SCR 168, let the relevant part of section 14 of the Act dealing with it be noted: '14. Certain goods to be of special importance in inter-State trade or commerce.-It is hereby declared that the following goods are of special importance in inter-State trade or commerce: (iv) iron and steel, that is to say.......... (xv) wire rods and wires-rolled, drawn, galvanised, aluminised, tinned or coated such as by copper;........' 10.. In Pyare Lal's case [1976] 37 STC 319 (SC); [1976] 3 SCR 168, the contention on behalf of the assessee was that steel rounds, flats, plates, etc., were not different commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 of the Act and not wheat products. So this case has not departed from the view taken in Pyare Lal [1976] 37 STC 319 (SC); [1976] 3 SCR 168, which had been duly noted in this decision. 13.. At this stage, we may note the object behind interdicting multiple-point tax on declared goods which follows from the mandate contained in clause (a) of section 15 of the Act. According to us, the purpose behind this provision is to minimise the tax burden on declared goods because of the special importance of these goods in inter-State trade and commerce. 14.. When the attention of the Sales Tax Appellate Tribunal, against whose orders the present appeals have been filed, was drawn to Pyare Lal's case [1976] 37 STC 319 (SC); [1976] 3 SCR 168 and the argument noted above was advanced, it observed that the two goods being distinct, the argument was 'really a camouflaged attempt to by-pass the judgment'. According to us, the Tribunal did not properly understand the decision in Pyare Lal case [1976] 37 STC 319 (SC); [1976] 3 SCR 168, which indeed supports the appellants' case. This is for the reason that Pyare Lal's case [1976] 37 STC 319 (SC); [1976] 3 SCR 168 ought to be taken to have accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r realisation of sales tax once again, even if the material out of which they are made had already been subjected to sales tax. 11.. Having regard to the legal position stated above, we see no infirmity in sub-section (2)(b) of section 2-B which says that in computing the taxable turnover of a dealer of transfer of property involved in the execution of works contract he is entitled to deduct all the amounts for which any goods specified in the First or Second Schedule are purchased from registered dealers and used in the execution of works contract in the same form in which such goods were purchased. If the goods purchased by a dealer is a distinct commercial commodity falling under a particular sub-item of section 14 such commodity should be used in the execution of the works contract either in the form in which such goods were purchased or in some other form falling under the very same sub-item of section 14 as the goods purchased, to enable the dealer to get deduction from the total turnover under section 3-B(2)(b). In other words, if the declared goods purchased by the dealer falling under a particular sub-item of section 14 of the Central Sales Tax Act is converted into diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Act, while computing the taxable turnover of a dealer under sub-section (2)(b) of section 3-B of the Act in individual cases, are bound to bear in mind the above principles laid down by the Supreme Court in Pyare Lal's case [1976] 37 STC 319 and Telangana Steel Industries' case [1994] 93 STC 187 and what we have said in the preceding paras 10 and 11. For all the reasons stated above, we have no hesitation in holding that the condition prescribed by section 3-B(2)(b), that in order to claim deduction from the total turnover in respect of the amounts for which the goods specified under First or Second Schedule are purchased, such goods must be used in the execution of the works contract in the same form in which they were purchased, will not result in levying sales tax at more than one stage contravening section 15(a) of the Central Sales Tax Act and article 286(3) of the Constitution and on that ground section 3-B is not liable to be struck down. Point No. 1 is answered accordingly. Point No. 2: 13.. According to sub-section (2)(b) of section 3-B, of the Act in calculating the taxable turnover of a dealer of transfer of property involved in the execution of the works co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1). 19.. The submission of Mr. C. Natarajan, learned counsel for the appellants, is that the condition prescribed in sub-section (2)(b) that in order to claim deduction from the total turnover in respect of the amounts for which the goods specified in the First or Second Schedule are purchased, such goods must be purchased from the registered dealers liable to pay tax under the Act, will result in levying tax at more than one stage contravening section 15(a) of the Central Sales Tax Act and therefore section 3-B of the Act is invalid. However, we are unable to accept the above contention of the learned counsel for the appellant. We must point out that section 3-B(1) of the Act contains charging provision and it says every dealer referred to in item (vi) of clause (g) of section 2 shall pay for each year a tax on his taxable turnover of transfer of property in goods involved in the execution of works contract at the rates mentioned in sub-section (2) of section 3 or as the case may be in section 4. On the other hand, sub-section (2) of section 3-B is the machinery provision prescribing the mode of computation of taxable turnover for the purposes of works contract. Sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, it will well nigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the two-fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section. The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clause seek to avoid." 20.. Under sub-section (2)(b) of section 3-B, the requirement is that, in order to claim deduction under the said sub-section, the dealer must prove that the purchases made by him in respect of the goods specified in the First or Second Schedule are from registered dealers liable to pay tax. We are of the view that the failure to discharge the burden cast on the dealer under sub-section (2)(b) of section 3-B does not result in the point of taxation being shifted. It merely provides for collection of tax from the assessee. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above decision of the apex Court in Bhawani Cotton Mills case [1967] 20 STC 290 is clearly distinguishable. In Bhawani Cotton Mills case [1967] 20 STC 290, the Supreme Court was concerned with section 5(2)(a)(vi) of the Punjab General Sales Tax Act, which is charging section but not with a machinery provision as in the present case. In Sha Pannalal Pemraj Co. v. Commercial Tax Officer [1975] 35 STC 109, the Karnataka High Court after pointing out that the decision of the Supreme Court in Bhawani Cotton Mills case [1967] 20 STC 290 will not apply to a case where the court is concerned with a machinery provision, observed as follows: "........... It is no doubt true that ordinarily the burden of establishing the liability under a fiscal statute is on the revenue. It is however open to the Legislature in appropriate cases, in order to avoid evasion of the tax, to place the burden on the assessee himself. When once such a provision passes the test of constitutionality, then it would not be open to the assessee to contend that his liability should not be assessed on the basis of the rule of evidence laid down by the statute. It may be that in certain rare cases, there is a remote p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxation. [Vide [1982] 49 STC 147 (MP) (Commissioner of Sales Tax v. Bansal Brothers), [1987] 66 STC 358 (Mad.) (Vasu General Traders v. State of Tamil Nadu) and [1995] 96 STC 60 (Mad.) (Heat Transfer Developments v. State of Tamil Nadu). Under these circumstances, we are of the view that there is no shifting of the charge or taxing at more than one stage violating section 15 of the Central Sales Tax Act when sub-section (2)(b) of section 3-B insists proof of purchase of goods from registered dealers liable to pay tax. For all the reasons, stated above, we are of the view that the condition prescribed in sub-section (2)(b) of section 3-B that in order to claim deduction from the total turnover in respect of the amounts for which the goods specified in First or Second Schedule are purchased, such goods must be purchased from registered dealers liable to pay tax, will not result in levying tax at more than one stage, contravening section 15(a) of the Central Sales Tax Act. Point No. 2 is answered accordingly. Point Nos. 3 and 4: 23.. The contention of the learned counsel for the appellants is that subsection (2)(b) of section 3-B provides for the deduction only of the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng therefrom the charges towards labour and services which would cover among other things the profits earned by the contractor to the extent it is relatable to supply of labour and services. The Supreme Court in the decision referred to above, dealing with the above aspect of measure of tax has held as follows: Measure of tax: On behalf of the contractors, it has been urged that under a law imposing a tax on the transfer of property in goods involved in the execution of a works contract under entry 54 of the State List read with article 366(29-A)(b), the tax is imposed on the goods which are involved in the execution of a works contract and the measure for levying such a tax can only be the value of the goods so involved and the value of the works contract cannot be made the measure for levying the tax. The submission is further that the value of such goods would be the cost of acquisition of the goods by the contractor and, therefore, the measure for levy of tax can only be the cost at which the goods involved in the execution of a works contract were obtained by the contractor. On behalf of the States, it has been submitted that since the property in goods which are involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that a more convenient mode for such determination is to take the value of the works contract as a whole and deduct therefrom the cost of labour and services rendered by the contractor during the course of execution of the works contract. The submission of the learned counsel is that this mode would prevent evasion of tax. The learned counsel for the contractors have submitted that in that event the following deductions should be made from the value of the entire contract in order to arrive at the value of the goods involved in the execution of a works contract: (i) labour charges for execution of the works; (ii) amounts paid to a sub-contractor for labour and services; (iii) charges for planning, designing and architect's fees; (iv) charges for obtaining on hire the machinery and tools used in the execution of the works contract; (v) cost of consumables such as water, electricity, fuel, etc. (vi) transportation charges for transport of goods to the place of works; (vii) overhead expenses of the head office and branch office including rents, salary, electricity, telephone charges, etc., and interest charges to banks and financial institutions; (viii) profits expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... labour and services cannot be included in the value of the goods involved in the execution of a contract and the cost of establishment which is relatable to supply of material involved in the execution of the works contract only can be included in the value of the goods. Similar apportionment will have to be made in respect of item No. (viii) relating to profits. The profits which are relatable to the supply of materials can be included in the value of the goods and the profits which are relatable to supply of labour and services will have to be excluded. This means that in respect of charges mentioned in items Nos. (vii) and (viii), the cost of establishment of the contractor as well as the profit earned by him to the extent the same are relatable to supply of labour and services will have to be excluded. The amounts so deductible would have to be determined in the light of the facts of a particular case on the basis of the material produced by the contractor. The value of the goods involved in the execution of a works contract will, therefore, have to be determined by taking into account the value of the entire works contract and deducting therefrom the charges towards labour a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d may depend on the nature of the works contract. We find merit in this submission. In cases where the contractor does not maintain proper accounts or the accounts maintained by him are not found worthy of credence it would, in our view, be permissible for the State Legislature to prescribe a formula for determining the charges for labour and services by fixing a particular percentage of the value of the works contract and to allow deduction of the amount thus determined from the value of the works contract for the purpose of determining the value of the goods involved in the execution of the works contract. It must, however, be ensured that the amount deductible under the formula that is prescribed for deduction towards charges for labour and services does not differ appreciably from the expenses for labour and services that would be incurred in normal circumstances in respect of that particular type of works contract. Since the expenses for labour and services would depend on the nature of the works contract and would not be the same for all types of works contracts, it would be permissible, indeed necessary, to prescribe varying scales for deduction on account of cost of labour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or Second Schedule are purchased, that the value of the goods at the time of transfer is ignored resulting in the profit margin and the transfer value of the goods getting added to the taxable turnover and on that ground sub-section (2)(b) is invalid. Accordingly, we reject the said contention of the learned counsel for the appellants. 27.. The next question we have to examine is the question regarding the validity of sub-section (2)(e) of section 3-B of the Act. Sub-section (2)(e) says that in computing the taxable turnover of a dealer for the purpose of levy of tax under section 3-B(1), the dealer is entitled to get deduction in respect of all amounts towards labour charges and other like charges not involving in transfer of property in goods, actually incurred in connection with the execution of works contract. The apex Court in Gannon Dunkerley's case [1993] 88 STC 204 has held that the measure for levy of the tax contemplated by article 366(29-A) of the Constitution, is the value of the goods involved in the execution of works contract and the value of the goods involved in the execution of the works contract will have to be determined by taking into account the value of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provisions contained in section 3-B particularly, the deduction provisions contained in sub-section (2)(b) of section 3-B are quite in accordance with the principles laid down by the Supreme Court in Gannon Dunkerley's case [1993] 88 STC 204 and the Builders' Association case [1993] 88 STC 248. In these circumstances, we are of the view that the sub-sections (2)(b) and (2)(e) of section 3-B of the Act are perfectly valid and we reject the contention of the learned counsel for the appellant that section 3-B is invalid because sub-section (2)(e) limits the expenses towards labour charges and other like charges only to the actual charges incurred in connection with the execution of the works contract without providing for the inclusion of the profit margin of the contractor. Accordingly, the questions raised in points Nos. 3 and 4 are answered in the negative. Point No. 5: 30.. The contention of Mr. V. Ramachandran, learned senior counsel for the appellant in W.A. No. 1093 of 1994 is that the members of the appellantassociation in the said writ appeal are doing job-work in printing, that the ink used in the course of the printing work is consumed in the execution of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount the value of the entire works contract after deducting therefrom the charges towards labour and services which would cover among other things cost of consumables such as water, electricity and fuel, etc., used in the execution of the works contract, the property in which is not transferred in the course of execution of the works contract. In view of the above decision of the apex Court, it has to be held that the cost of the consumables used in the execution of works contract, the property in which is not transferred in the course of the execution of the works contract, will certainly come within the purview of "labour charges and other like charges" contemplated under sub-section (2)(e) of section 3-B of the Act. Therefore, such cost of consumables has to be excluded from the total turnover of a dealer in calculating the taxable turnover for the purposes of levy of tax under section 3-B(1) of the Act. 32.. The next question we have to examine is whether the ink used in the execution of the printing works contract or the dyes used in the execution of dyeing works contract are consumable items such as water, electricity, fuel, etc., used in the execution of works contract, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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