Venkataramaiya, C.J. - (1.)This is a batch of petitions filed under Article 226 of the Constitution of India in which the levy of sales tax on moneys realised for execution of certain contracts called "works contract" has been challenged. The petitioners are charged with liability for payment of the tax not on the total amount received by them but on the value of goods supplied by them for fulfilment of contracts entered into with others. The value has been fixed and the tax assessed in accordance with the provisions of the Mysore Sales Tax Act and the rules framed thereunder. The objections raised and arguments advanced being the same in all the petitions these may be conveniently disposed of by a single order.
(2.)The grievance of the petitioners is that the articles used by them for carrying out the works undertaken by them are treated as goods sold by them and that the value of these is determined not by the actual cost paid for but by the application of a formula. It is true that considering the object of the Act, the meaning attached to sale and the scheme of assessment provided for generally, there is reasons for the petitioners to complain of pecularity and arbitrariness in the principle and procedure applied to them. There is no dispute about the assessment being in conformity with what is provided for by the statute and the rules made by Government in exercise of the power conferred on it by the statute. What has to be considered therefore is whether these are unauthorised, unconstitutional or unwarranted by the facts admitted or proved.
(3.)Three decisions, one of the Madras High Court in Gannan Dunkerley v. State of Madras AIR1954 Mad 130 , another of the Nagpur High Court in Pandit Banarsi Das v. State of Madhya Pradesh ([1955] 6 S.T.C. 93) and the third of the Hyderabad High in Jubilee Engineering Co. Ltd. v. Sales Tax Officer, Hyderabad ([1956] 7 S.T.C. 423; A.I.R. 1956 Hyd. 79), were strongly relied upon in support of the objections to the Act and the levy of the tax. In each of these, assessments similar to these now in question under analogous enactments were quashed; but the reasons for this are not identical. In the Hyderabad case the Act which the Court had to consider was passed after the Constitution came into force and the view expressed by the Madras High Court has been adopted. The other two cases were concerned with the interpretation of the scope and spirit of Entry No. 48 in List II of the Government of India Act, 1935 - tax on sale of goods. Although the conclusion in both is against the levy of the tax, emphasis is laid in one on the tax offending legislative policy and in the other on its being arbitrary, standard of assessment being artificial. An appeal against the order in the case of the Madras High Court is said to be pending before the Supreme court and the result of this may set at rest doubts now felt about the taxability of "works contract" under the Act in Madras.
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