- (1.) THESE are seven applications tinder Article 226 of the Constitution for issue of a writ, direction or order in connection with the Sales Tax Act of Raj-asthan (hereinafter called the Act.) We propose to decide them by one order as the points raised in them are common.
(2.) THE applicants are building contractors and undertake building work for the public Works Department and other departments of the State. In connection with their contracts, they supply material as well as labour, and after their work is finished are paid by the State both for the material used by them in 'the building or road or any other work and for the labour supplied by them. In this connection, notices were issued to the applicants by the Sales Tax Officers of various places calling upon them to submit a return of their turnover with respect to their contracts, so that they might be assessed to sales-tax and made to pay it. In some cases, the applicants have already paid the tax. Their contention, is that, according to their contracts, they are paid either a lump sum for the work done by them, or according to a schedule of rates after the work done is measured. They, however, do not sell any materials used in the execution of the contract for a stipulated price to the Government. Their contention, therefore, is that there is no Sale of any goods, which is liable to be taxed under the Rajasthan Sales Tax act; but the Act has so defined the word "sale" in Section 2, Sub-section (o) of the act as to include the materials that they provide in carrying out their contracts as a sale of goods. The Act has also provided explanation (i) to Section 2, Sub-section (t) defining the word "turnover" for purposes of determining the value of the goods. Further Rule 7 of the Rajasthan Sales Tax Rules, 1955 (hereinafter called the Rules) has provided certain percentages which have to be deducted to represent the cost of labour to arrive at the value of the goods. In view of these provisions, the Sales Tax Officers concerned have given notices to the applicants for levy of Sales Tax and have also served ' notices under Section 16 which deals with offences, penalties and prosecutions. The applicants contend that the provisions contained in Sections 2 (e), 2 (f), 2 (h), 2 (o) and 2 (t), and Sections 3 and 5 of the Act and Rule 7 of the Rules are unconstitutional and ultra vires. The main grounds on which this is urged are these: (1) A building'contract, which includes a contract for labour as well as for material, is one and indivisible, and does not involve any element of sale of the materials, and is not a contract of sale of goods, and not covered by entry 54 of List II of Schedule VII of the Constitution; (2) that explanation (i) to Section 2 (t) of the Act, and rule 1 of the Rules are beyond the powers of the legislature inasmuch as they levy taxation on an artificial basis having no relevance to the price of the materials used by a building contractor in the execution of his contract; (3) that the Act is not applicable to the applicants, as they are neither dealers nor manufacturers within the meaning of Sections 2 (f) and 2 (k); (4) that sales tax could not be levied in any case on contracts which were entered into before the Act came into force, i. e. before the 1-41955. There are other grounds which appear in some of the applications, but they have not been urged, and we need not therefore refer to them. We may add that those grounds have no force either, and that is the reason why they were not urged before us.
(3.) NO reply has been filed on behalf of the State, as there was no dispute as to the facts. It has, however, been urged that there is no force in the points urged on behalf of the applicants, and these applications should be dismissed.;