ARUNODOI CONSTRUCTION CO P LTD Vs. STATE OF ASSAM

JUDGEMENT

(1.) IN this batch of 486 writ petitions, the petitioners have challenged the validity of section 27 of the Assam General Sales Tax Act, 1993, (hereinafter, referred to as "the Act" ).

(2.) WE have heard Mr. G. K. Joshi, learned Senior Advocate, Mr. D. P. Chaliha, Senior Advocate, Mr. G. N. Sahewalla, Senior Advocate, Dr. B. P. Todi, Senior Advocate, Dr. Ashok Saraf, Senior Advocate, Mr. K. N. Choudhury, Senior Advocate for the petitioners. We have heard Mr. A. K. Phukan, learned Advocate-General, Assam, and Mr. B. J. Talukdar, learned Government Advocate, Assam, on behalf of the respondent-State of Assam. Section 27 of the Act reads as follows :

(3.) IN some of the writ petitions, petitioners have also stated that provisions of section 8 (1) (c) and section 8 (3) (iv) are ultra vires, illegal and violative of article 286 of the Constitution of India as the above provisions do not provide for deduction of the value of the goods used in execution of the works contract supplied in course of inter-State trade or commerce which falls under sections 3, 4 and 5 of the Central Sales Tax Act, 1956. Before proceeding further it may be beneficial to recapitulate the history and the judicial decisions concerning the impugned provisions of law. In the case of State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd. reported in [1958] 9 STC 353, the apex Court held that a works contract is an indivisible contract and the turnover of the goods used in execution of the works contract could not therefore become exigible to sales tax. Parliament amended article 366 of the Constitution by introducing sub-clause (b) of clause (29-A) to enlarge the scope of "tax on the sale or purchase of goods" so that it may include the transfer of goods referred to in sub-clause (b) of clause (29a) of article 366 which is deemed to be sale of goods. Thus, in view of the forty-sixth amendment, the works contract by a legal fiction altered into a contract which is divisible, that is, one for sale of goods and the other for supply of labour and services. It thus enables the State to levy sales tax on the value of goods involved in a works contract in the same way in which the sales tax was leviable on the price of goods and materials supplied in a building contract which had been entered into in two distinct and separate parts. The Constitutional validity of the forty-sixth amendment was challenged before the apex Court in the case of Builders Association of India v. Union of India reported in [1989] 73 STC 370; (1989) 2 SCC 645, wherein the apex Court held :