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TMI Blog1986 (11) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... sence of the Act passed by Parliament pursuant to article 286(3)(b) of the Constitution and appropriate amendments in the Sales Tax Act. In the counter-affidavit filed by the Assistant Commissioner (CT), it is stated that the sales of materials used in the execution of indivisible works contract are not exigible to levy of sales tax in view of the decision of the Supreme Court in Gannon Dunkerley's case [1958] 9 STC 353 and other cases and with a view to obviate these aspects, the Parliament enacted the Forty-sixth Amendment of the Constitution whereby the sale of goods is enlarged to enable the levy of sales tax on materials used in works contract. Article 286(3)(b) empowers the Parliament to place restrictions upon the levy of tax and the enactment in this behalf is not a condition precedent for levy of tax by the State. Further suitable amendments to definitions of "sale" and "turnover" have been made in conformity with the amended definition of "tax" on sale or purchase of goods under clause (29A) of article 366 of the Constitution and as such the levy of tax is justified. The learned counsel for the petitioners, Sri S. Dasaratharama Reddi, raised twofold contention, viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made." This amended definition absorbed in entry 54 adds significant dimension to entry 54 of List II. By inclusive process formulated in the definition, the complexion of concept of tax on the sale or purchase of goods is changed and the sale under entry 54 hitherto considered as sale within the meaning of the Sale of Goods Act is given a broad sweep comprising mainly the transfer of goods involved in the works contract, a tax on the delivery of goods on hirepurchase, a tax on the transfer of right to use goods and a tax on the supply by way of or part of any service of goods being food or any other article for hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase takes place(a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. ................................. (2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,- (a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29A) of article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." Clause (1) is concerned with an absolute embargo on the State to make law seeking to levy tax on the sale or purchase of goods outside the State or in the course of import into or export out of India. Clause (2) enables the Parliament to formulate principles regarding the situs of sale or purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or purchase of goods pursuant to clause (29A) of article 366 coupled with suitable amendments brought by Act 18 of 1985 the materials or goods comprised in works contract or pertaining to hire-purchase and lease transactions are exigible to levy of sales tax in the same manner as already provided in the Sales Tax Act. The taxable event, levy point and rate of tax have already been prescribed under the Act for all the components or materials in the transactions and separate or fresh rules are not called for and the enlarged definitions of "sale", "turnover" and "dealer" muster up the provisions already in vogue. The learned counsel sought to highlight certain inconsistencies, incongruities and infirmities in the course of levy of tax in certain situations, namely, the necessity of making suitable law or provision by the Parliament with reference to section 8(3)(b) of the Central Sales Tax Act when the materials in the works contract are purchased from outside the State and the possibility of interest element being embedded in the hire-purchase transaction and other problems that may crop up during the assessment proceedings. The learned counsel referred to the decision in Govind S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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