P.K.BALASUBRAMANYAN, C.J. - (1.) SECTION 25-A of the Bihar Finance Act, 1981 has been the subject-matter of controversy.
(2.) THE section provides for advance recovery of tax payable under that Act. Notwithstanding anything contained in section 26 of that Act, section 25-A provides that every person responsible for making any payment of sale price or any amount purporting to be the full or part payment of sale price or any payment in discharge of any liability on account of valuable consideration payable in respect of transfer of property in goods, whether as goods or in some other form, involved in the execution of a works contract has to deduct an amount, at a rate specified by the State Government, in a notification published in the official gazette purporting to be a part or full amount of tax payable on the sale of such goods from every bill or invoice raised by a works contractor engaged by him. The petitioner in this writ petition, M/s. Larsen and Toubro challenged the said provision, as it then stood, in the High Court of Patna in C.W.J.C. No. 878 of 1997. The argument on behalf of the petitioner was that the State was incompetent to impose any tax on a works contract and the State also did not have the power to impose tax on the sale of goods, if the sale is not an intra-State sale. The Patna High Court in the decision reported in [2000] 117 STC 41 (Larsen and Toubro Ltd. v. State of Bihar), upheld the challenge of the petitioner. Of course, the extent to which the challenge was upheld is one of the matters in controversy.
(3.) FOR the moment, it needs only to be noticed that the challenge was upheld to the extent of the division Bench holding that section 25-A of the Bihar Finance Act, to the extent it related to transfer of properties in goods taking place in the course of inter-State trade or commerce or a sale outside the State, or in the course of import within the ambit of sections 3, 4 and 5 of the Central Sales Tax Act or in "declared goods" within the meaning of sections 14 and 15 of the Central Sales Tax Act must be held to be ultra vires entry 54 of the State List read with entry 92A of the Union List and article 286 of the Constitution of India. It was also held that to the extent the section provided for deduction from payment made on account of labour charges and other services towards sales tax, the provision must be held to be ultra vires entry 54 of the State List read with article 366(29A)(b) of the Constitution of India. This decision was challenged in the Supreme Court by the State of Bihar without success.;