TMI Blog2009 (8) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... K J. In each of these three petitions, the petitioners challenge the constitutional validity of the Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contract (Re-enacted) Act, 1989 (for short, the Works Contract Act, 1989 ) and pray for a declaration that the Works Contract Act, 1989 is unconstitutional and ultra vires the provisions of articles 14 and 19(1)(g) as well as article 246(2) read with entry 54, List II in the Seventh Schedule read with article 366 of the Constitution of India. Mr. Anturkar, learned counsel appearing for the petitioners, submitted that the grounds of challenge in all the three petitions are common. He took us through the facts stated in Writ Petition No. 496 of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me statute on different grounds. Even otherwise, we are satisfied that no grounds exist to declare the Works Contract Act, 1989 to be constitutionally invalid for the reasons indicated below. In State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353; AIR 1958 SC 560, the Supreme Court examined the ambit of entry 48 of List II of the Seventh Schedule to the Government of India Act, 1935 and held that the expression sale of goods connotes essential ingredients being an agreement to sell movables for a price and property therein passing pursuant to that agreement. The Supreme Court further held that in a works contract, which is entire and indivisible, there is no sale of goods and no tax could be imposed on the supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived or receivable by a dealer in respect of any transfer of property in the goods involved in the execution of any works contract whether executed fully or partly during any period. Sale price has been defined under section 2(m) as follows: 2(m) 'Sale price' means. (i) the amount of purchase price of the goods or, as the case may be, the value of the goods, brought or transferred from a place outside the State where such goods are sold in the same form in which they were purchased, brought or transferred; and (ii) where the goods have been sold in the form other than the form in which they were purchased or, as the case may be, brought or transferred from a place outside the State, then the purchase price of the goods or, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the execution of a works contract. However, by seeking to tax the goods which are purchased by the petitioners outside the State of Maharashtra and which are transferred in execution of works contract in the State of Maharashtra on the basis of the purchase price paid outside the State, the Legislature of Maharashtra has exceeded its power by imposing tax on the purchases of the goods effected outside the State of Maharashtra. In its decision in Builders Association of India v. State of Maharashtra [1994] 95 STC 516, this court has upheld the constitutional validity of the Works Contract Act, 1989 and has held that the Legislature of Maharashtra has a power to impose tax on the value of goods which are transferred by a person to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er purchased within the State or outside the State and brought in the State, property in which is transferred to another in execution of a works contract within the State of Maharashtra. For the purpose of taxation, it matters not wherefrom the goods have been brought by the contractor/dealer and used in execution of a works contract. Section 2(p) read with section 2(m) of the Works Contract Act, 1989 only provides the mechanism of determining the value of the goods which have been purchased outside the State and used in a works contract in the State. By doing so, the Legislature has not taxed the sale transaction which has taken place outside the State, but has only provided a mechanism as to how the value of the goods, property in which i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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