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TMI Blog1958 (4) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... of Delhi by a notification dated April 28, 1951. The impugned provisions of the Act may now be referred to. Section 2(d) of the Act defines "goods" as including "all materials, articles and commodities, whether or not to be used in the construction, fitting out, improvement or repair of immovable property ". "Sale" is defined in section 2(g) as including "any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of a contract.......". Section 2(b) defines "contract" as meaning, omitting what is not relevant, "any agreement for carrying out for cash or deferred payment or other valuable consideration-the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property." "Sale price" is defined in section 2(h)(ii) as meaning valuable consideration for "the carrying out of any contract, less such portion as may be prescribed of such amount, representing the usual proportion of the cost of labour to the cost of materials used in carrying out such contract". "Turnover" is defined in section 2(i), and is as follows: & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipts from building contracts and to deposit the taxes due thereon. In compliance with these notices, the petitioners were sending quarterly returns of their taxable turnover and assessment orders were also made in respect of their annual turn- over for the years 1951-1952 and 1952-1953, and the amounts due thereunder had also been paid. For the year 1953-1954, the quarterly returns had been submitted and the tax due thereon deposited, and proceedings were pending for assessment of tax for that year. This was the position when the Madras High Court pronounced its decision in Gannon Dunkerley & Co. v. State of Madras [1954] 5 S.T.C. 216., that the provisions of the Madras General Sales Tax Act, 1939, imposing tax on the supply of materials in construction works were ultra vires the powers of the Provincial Legislature under Entry 48 in List II, Schedule VII, to the Government of India Act, 1935. Basing themselves on this judgment, the petitioners who had been acting so far on the view that the provisions of the Bengal Finance (Sales Tax) Act, 1941, imposing tax on construction contracts were valid and had been paying tax in that belief, filed Civil Writs Nos. 244-D and 247 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts even by action. These contentions raised questions of considerable importance; but it is unnecessary to express our opinion thereon, as the petitioners also pray for a writ of mandamus directing the respondents to forbear from imposing sales tax in future, and it will be more satisfactory to decide the case on the merits. The contention of the petitioners based on the decision of the Madras High Court in Gannon Dunkerley & Co. v. State of Madras [1954] 5 S.T.C. 216 is that the State Legislatures acting under Entry 48 have no competence to enact laws imposing tax on the supply of materials in execution of works contract, as there is no sale of those materials by the contractor. The decision in Gannon Dunkerley & Co. v. State of Madras(1) was taken on appeal to this Court in Civil Appeal No. 210 of 1956, and by our judgment pronounced on April 1, 1958 [1958] 9 S.T.C. 353., we have affirmed it, and if the present case is governed by that judgment, the petitioners would clearly be entitled to succeed. But it is contended by the learned Solicitor-General that that decision has no application to the present petitions, because the impugned law was enacted not by a Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be exercised only by Parliament itself imposing a tax and not by its extending the operation of a taxa- tion law passed by the Legislature of a State; and that section 2 of the Part C States (Laws) Act must be held to be bad as being repugnant to Article 248(2) in so far as it conferred on the Government authority to extend a taxation law to Part C States. This argument proceeds on a misapprehension of the true scope of Article 248. That Article has reference to the distribution of legislative powers between the Centre and the States mentioned in Parts A and B under the three Lists in Schedule VII, and it provides that in respect of matters not enumerated in the Lists including taxation, it is Parliament that has power to enact laws. It has no application to Part C States, for which the governing provision is Article 246(4). Moreover, when a notification is issued by the appropriate Government extending the law of a Part A State to a Part C State, the law so extended derives its force in the State to which it is extended from section 2 of the Part C States (Laws) Act enacted by Parliament. The result of a notification issued under that section is that the provisions of the law wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as distinct from a statute which had been repealed and it cannot be interpreted as having reference to individual sections or provisions of a statute. But even if we accept the narrow construction contended for by the petitioners, that would not make any difference in the result, as the authority conferred by section 2 on the Government to extend enactments in force in Part A State includes a power to do so with restrictions and modifications, and it was within the competence of the Government acting on this provisions to incorporate on its own authority the impugned provisions by way of modification of the Bengal Finance (Sales Tax) Act, 1941. It is said that the notification does not, as a fact, purport to modify the Bengal Act, but merely extends the whole of it on a mistaken notion that it is all valid. But that does not affect the position. The notification intends that all the provisions of the Bengal Finance (Sales Tax) Act, 1941, should operate in the State of Delhi, and if that could be effectuated by recourse being had to any of the powers of the Legislature, that should be done and the legislation upheld as referable to that power. Utres magis valeat quam pereat. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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