Decided on June 30,1958

M.L.DALMIA AND CO., LTD. Appellant
STATE OF ASSAM Respondents

Cited Judgements :-



SARJOO PROSAD, J. - (1.)THE petitioner is a limited company and carries on the business of a building contractor. It has moved for a writ of mandamus or certiorari quashing the orders of the Sales Tax Officer directing the petitioner to get itself registered under the Sales Tax Act and requiring it to pay sales tax on its out-turn.
(2.)IT was served with a notice under section 10 of the Assam Sales Tax Act (Act XVII of 1947) and required to get itself registered as a dealer under the Act. By another notice it was also called upon to produce its accounts beginning from 1st April, 1950, to 31st March, 1954, with reference to its aforesaid business. The petitioner was thereafter also served with a notice under section 19 of the Act, under which the Sales Tax Officer is empowered to assess a dealer in case of his failure to get himself registered and if the officer has information in his possession that the dealer was evading payment of tax. The petitioner objected to the notices in question and denied its liability to pay sales tax or to get itself registered under the Act. It is submitted that it was not doing any business of selling or supply goods, it was simply a building contractor and undertook contracts for construction of buildings in which the petitioner also supplied the materials that were requisite for the purpose and for the whole of which contract it received payment in a lump sum. The Sales Tax Authorities however insisted on the registration of the petitioner as a dealer under the Act and claimed that it was liable to be assessed for the business which it carried on. The question therefore which arose for consideration is whether a building contractor as such was liable to pay sales tax and get itself registered under the law in respect of the materials supplied for such building when there was no separate agreement for the price of these materials, except for the building as a whole. When the matter came up to us at an earlier stage, we considered it desirable, in view of the sharp conflict of judicial opinion on the point, to make a reference to this Full Bench.
The petitioner has strongly relied upon the decision in Gannon Dunkerley and Co. (Madras) Ltd. v. State of Madras ([1954] 5 S.T.C. 216). The department, on the contrary, refers to other decisions which take the opposite view in favour of the department and particularly relies upon the definition of the words "sale" and "sale price" under the Assam Sales Tax Act. The word "sale" as defined in section 2(12) of the Act, inter alia, "includes a transfer or property in goods involved in the execution of a contract." The word "contract" has been defined in sub-section (2) of that section as meaning any "agreement for carrying out for cash or deferred payment or other valuable consideration", amongst others, the construction of any building or other immovable property. Therefore according to the contention of the department the business carried on by the petitioner in execution of a contract is also included within the definition of "sale" as given in the Assam Sales Tax Act and as such its turnover is liable to assessment. Reference is also made to the word "sale price" as defined in sub-section (13) of section 2 in the said Act, where also under clause (b) it says that "sale price" means

"the amount payable to a dealer as valuable consideration for the carrying out of any contract, less such fraction of such amount as represents the prescribed proposition of the cost of labour used in carrying out such contract."

(3.)THE above provisions of the Sales Tax Act are challenged by the petitioner as ultra vires the Government of India Act, 1935. The decisions in Pandit Banarsi Das v. State of Madhya Pradesh ([1955] 6 S.T.C. 93) and Bhuramal v. State of Rajasthan ([1957] 8 S.T.C. 463) favour the view of the department.

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