1989 (9) TMI 361 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the vires of the Constitution (Forty-sixth Amendment) Act, 1982 and provisions of the Bihar Finance Act, 1981 as amended in 1984. Interpretation of section 64-A of the Sale of Goods Act, 1930 regarding sales tax liability in works contracts.

Analysis:
The judgment involves three writ applications challenging the constitutional validity of the Constitution (Forty-sixth Amendment) Act, 1982, and the provisions of the Bihar Finance Act, 1981 as amended in 1984. The petitioners argued that no sales tax is payable on supplies made under works contracts entered into before April 1, 1984, and claimed protection under section 64-A of the Sale of Goods Act, 1930. The Court noted that the Supreme Court upheld the constitutional validity of the Forty-sixth Amendment Act and ruled on the ultra vires nature of certain provisions of the Bihar Finance Act in previous cases.

The Court emphasized that the liability to pay sales tax primarily rests upon the dealer, who can recover the tax from the buyer or principal unless there is a contract stating otherwise. Section 64-A of the Sale of Goods Act provides for reimbursement of tax paid on goods supplied, subject to the terms of the contract. The Court clarified that the enforcement of such reimbursement is a contractual matter and must be pursued through arbitration or legal action if the principal fails to fulfill their obligation.

The judgment highlighted that the petitioners cannot use writ jurisdiction to enforce their principals' tax liabilities under section 64-A of the Sale of Goods Act, as it involves disputed factual questions and contractual enforcement. The Court held that the writ applications were not maintainable for this purpose. The judgment dismissed the petitions with no order as to costs, concluding the legal proceedings on the issues raised in the writ applications.

In a concurring opinion, Justice B.P. Singh agreed with the dismissal of the petitions, affirming the decision of the Court. The judgment, delivered by Singh B.P. and Sinha S.B. JJ., concluded the legal proceedings related to the constitutional validity of the statutes and the interpretation of sales tax liability in works contracts under the Sale of Goods Act.