Deepak Gupta, J. - (1.) BY means of these petitions, the petitioners have challenged constitutional validity of certain provisions of the Tripura Value Added Tax Act, 2004 ("the TVAT Act") and certain rules framed under the Act. The main ground of challenge is that the said provisions which are applicable in respect of Works contract are beyond the legislative competence of the State of Tripura. It is contended that these provisions of the TVAT Act and the rules are contrary to the constitutional provisions inasmuch as they impose tax on inter -State transfer of goods and also impose tax on goods which are imported from outside India. It is also contended that the Act is not in consonance with the principles laid down by the apex court in Gannon Dunkerley & Co. v. State of Rajasthan : [1993] 88 STC 204 (SC) : [1993] 1 SCC 364. To appreciate the rival contentions of the parties, first it would be appropriate to set out the various constitutional and statutory provisions which are relevant for decision of this case.
(2.) ARTICLE 269 of the Constitution of India deals with taxes levied and collected by the Union but assigned to the States and reads as follows: 269. Taxes levied and collected by the Union but assigned to the States. - -(1) Taxes on the sales or purchase of goods and taxes on the consignment of goods shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the States on or after the 1st day of April, 1996 in the matter provided in clause (2). Explanation. - -For the purposes of this clause, - - (a) the expression 'taxes on the sale or purchase of goods' shall mean taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter -State trade or commerce; (b) the expression 'taxes on the consignment of goods' shall mean taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter -State trade or commerce. (2) The net proceeds in any financial year of any such tax, except insofar as those proceeds represent proceeds attributable to Union territories, shall not form part of the Consolidated Fund of India, but shall be assigned to the States within which that tax is leviable in that year, and shall be distributed among those States in accordance with such principles of distribution as may be formulated by Parliament by law. (3) Parliament may by law formulate principles for determining when a sale or purchase of, or consignment of, goods takes place in the course of inter -State trade or commerce. By the 46th Amendment to the Constitution of India, clause (29A) was inserted and this defines tax on the sale or purchase of goods. Clause (29A) reads as follows: (29A) 'tax on the sale or purchase of goods' includes - - (a) a tax on the transfer, otherwise than in pursuance of a contract of property in any goods 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 the execution of a works contract; (c) a tax on the delivery of goods on hire -purchase or any system of payment by installments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made.
(3.) BY virtue of this amendment works contracts were treated to be deemed sale and made exigible to tax.;