BALIA, J. - (1.) THESE two appeals raise a common question about the consti- tutional validity of Explanation II to Sec. 2 (38) of the Rajasthan Sales Tax Act 1994 (here- inafter called the Act of 1994) on the envil that it is ultra vires the legislative competence of the State Legislature to enact a law by providing that `notwithstanding the agreement for works Contract has been wholly on in part entered into outside the State or the goods have been wholly or in part moved outside the State, still it shall be deemed to be sale inside the State if the goods are in the State at the time of their use, application or incorporation in the execution of works contract as it impinges on Item 92a of the Union list of Schedule VII and the provisions of Article 286 of the Constitution of India.
(2.) WE may notice the facts in brief giving rise to these two appeals separately. Appeal No. 1538/99 arises out of dismissal of writ petition No. 4983/99. The assessee, which is a company covered under the Companies and having its registered office at Okhla Industrial area, Phase I New Delhi entered into a turn key contract with M/s Sriganganagar Sugar Mills for design, manufacture, supply, transport, erection and supervision and undertook to construct one cane mud falter and one cane juice clari- fied and for execution of this contract during the relevant period 1. 4. 98 to 31. 12. 98 bro- ught various items directly purchased by its Head Office at Delhi from various places in the country in the course of inter-state trade by transfer fo documents and such goods which were purchased by it during the course of execution of said work and were used for execution of the work contract within the State of Rajasthan. According to him no tax liability under RST or CST was attracted on transfer of property in such goods which resulted in movement of goods under the agreement under which works contract was being executed and was sold in the course of inter-state trade or comm- erce in which the goods have moved from outside State of Rajasthan to within State. That turnkey contract between the petitioner and M/s. Sriganganagar Sugar Mills was one indivisible contract. Considering the liability to be taxed on the value of goods involved in the execution of works contract the Assessing Officer by relying on Clause A of Explanation. It appended to Section 2 (38) of the Act of 1994 held that since the goods were involved in execution of works contract in the State at the time of use or application notwithstanding that the agreement for works contract has been wholly or in part entered into outside the State or the goods have been wholly or in part moved outside the State, it would be deemed to be sale inside the State and on that envil with reference to the aforesaid provision levied the tax under the Rajasthan Sales Tax Act by provisional assessment order dt. 18. 8. 99 for the assessment period 5. 7. 97 to 31. 3. 98. Aggrieved with that order, the assessee appealed before the Dy. Commissioner (Appeals) along with application for staying demands created by the Assessing Officer, but the Dy. Commissioner (Appeals) on 1. 11. 99 had stayed merely part of the payment and for rest, the same was rejected. Aggrieved with that order, the assessee preferred an appeal before the Rajasthan Tax Board, Ajmer which was dismissed vide order dated 29. 11. 99.
(3.) THE assessee in his writ petition initially has challenged the order of Rajasthan Tax Board. However no ground about validity of Explanation II Clause (a) of Section 2 (38) was raised in the writ petition. THE said writ petition came to be dismissed by the order under appeal dated 14. 12. 98 by the learned Single Judge keeping in view of the fact that the appeal filed against the provisional assessment order was still pending and the order was only refusal to interfere with the interim order passed by the Dy. Commissioner (Appeals) by which recovery of 50% has been stayed, but for rest, the stay application has been rejected. The show cause notices were issued on 17. 12. 99 staying encashment of Bank Guarantee furnished by the appellant during pendency of the appeal. The assessee moved an application for amending the writ petition to incorporate challenge to constitutional validity of aforesaid provision which was allowed by order dated 14. 3. 2000. During pendency of this appeal, final assessment order came to be made by the Assessing Officer in the same terms in which provisional assessment order was made and writ petition was amended to challenge the final assessment order also on the came grounds viz the validity of Explanation 11. APPEAL NO. 15/2000 ;