Service Tax on Works Contracts Valid Under Section 65: Parliament Can Tax Services While States Tax Sales

HC upheld constitutional validity of service tax provisions under Finance Act 1994 sub-clauses (zzzzv) & (zzzzw) of clause 105, Sec. 65. Parliament's authority to levy service tax derives from Entry 97 List I (residuary powers) of Constitution. Court confirmed distinct taxable events can exist within single transaction - service tax under federal jurisdiction and sales tax under state powers (Entry 54 List II) are mutually exclusive with different tax incidences. Multiple taxes permissible when imposed under different statutes with distinct aspects. State's power to levy sales tax does not conflict with federal authority to impose service tax as they target separate components of transaction. Appeal challenging constitutional validity dismissed. .....

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