- (1.) We have heard Shri Kunwar Saksena, Shri N.C. Gupta, Shri Vishwajeet and Shri Yogesh Agarwal for the petitioners. Shri S.P. Kesarwani, Additional Chief Standing Counsel appears for the State respondents.
(2.) The petitioner no. 1, in Writ Tax No.1496, which is the leading writ petition in this bunch of cases, is an association of builders (Builders Association of India (U.P. Centre)) represented by Shri Dharmesh Chandra Awasthi. The petitioner no. 2 in this writ petition, and all other petitioners in the connected writ petitions are construction companies engaged in execution of civil works contracts. The petitioners execute civil works under contracts with the Government, Semi Government and other Public Sector Companies and Organizations. The works contract executed by them include construction and fabrications of buildings, roads and other civil structures.
(3.) The Constitution (Forty Sixth Amendment) Act, 1983 inserted vide Section-4, the Clause (29-A) in Article 366 of the Constitution so as to enable the State Legislatures to impose tax on sale or purchase of goods which includes the transfer of property in goods (whether as goods or in the some other form) involved in the execution of a works contract. The State Legislature can tax (a) on the transfer, or otherwise than in pursuance of a contract, of property in any good, for cash deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in execution of works contract; (c) a tax on the delivery of goods in hire-purchase; (d) a tax on the transfer of right to use any goods for any purpose (whether or not for a specified period); (e) a tax on the supply of goods by any unincorporated association or body of persons to a member; (f) a tax on the supply, by way of a part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drinks, (whether or not intoxicating), and such transfer delivery or supply shall be deemed to be sale of those goods. The validity of the Forty Sixth Amendment was upheld in Builders Association of India v. Union of India, 1989 2 SCC 645. The Supreme Court declared, that the sales tax laws passed by the Legislatures of State levying taxes on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract are subject to the restrictions and conditions mentioned in each clause or sub-clause of Article 286 of the Constitution. Whatever might be the situational differences of individual cases, the constitutional limits, on the taxing power of the State are applicable to works contract represented by building contracts, in the context of the expanded concept of tax on the 'sale or purchase of goods' as constitutionally defined under Article 366 (29-A) would apply to other species of works contract with the situational modification.;