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TMI Blog1989 (9) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... otices dated 22nd December, 1988 and 23rd January, 1989 (annexures 6 and 7) requiring the petitioner to produce its books of accounts for the purpose of hearing under sections 13(5)(ii), 17, 18(i) and 22(3) of the Bihar Finance Act, 1981. 2.. At the hearing of this writ application, Dr. Debi Pal, appearing for the petitioner, did not challenge the vires of the Constitution (Fortysixth Amendment) Act, 1982 and the Bihar Finance Act, 1981 in so far as it seeks to impose sales tax on works contract. He, however, submitted that having regard to the nature of services rendered by the petitionercompany, there being no sale of goods, the provisions relating to works contract did not apply and the petitioner-company was not liable to pay any sales tax having regard to the nature of services rendered. 3.. According to the petitioner, it is a company engaged in the business of rendering services such as anti-termite treatment, rodent control, general pest control, household disinfection, etc. For this purpose, the petitioner-company has been engaged by M/s. Tata Iron Steel Co. Ltd. for treating the existing building including wooden and other furniture with pest control and anti-termite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for doing the work at predetermined rates; (2) the work involved chemical process for the purpose of making a place free of pests such as, white ants and other insects; (3) since in the process of doing such works, chemicals are used and only by use of such chemicals any place is rendered free of pests, it is clear that in executing this type of work, chemicals are used; (4) without use of chemicals, the job cannot be accomplished. He further held that the work was done enhancing the speciality and usefulness of a particular place and this was being done by use of machines which vapourised the chemical substances so that they may treat all places where required, for which payment is made according to specified rates, and the job was done by use of chemicals which destroyed the pests. In these circumstances, the contract was in the nature of a works contract which was not free from levy of sales tax under the Bihar Finance Act. He, therefore, held that such a contract amounted to a works contract and that the petitioner-company was liable to pay sales tax under the Bihar Finance Act for which necessary action should be initiated. 6. Pursuant to the aforesaid order (annexure 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be treated as a transaction of sale or purchase but for the inclusive definition provided by the Constitution (Forty-sixth Amendment) Act. The legislature was aware of the clever devices resorted to by interested parties which resulted in large scale avoidance of sales tax by making the transaction appear as one which did not come within the definition of "sale or purchase of goods" even though they really involved transfer of property in goods. The Supreme Court has referred to these transactions which necessitated the passing of the Constitution (Forty-sixth Amendment) Act, 1982. So far as sub-clause (b) of clause (29-A) of article 366 of the Constitution is concerned, the court observed as follows: "Article 366 is the definition clause of the Constitution. It says that in the Constitution unless the context otherwise requires, the expressions defined in that article have the meanings respectively assigned to them in that article. The expression 'goods' is defined in clause (12) of article 366 of the Constitution as including all materials, commodities and articles. It is true that in State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353; [1959] SCR 379 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the meaning of this clause. Explanation II.-Materials, commodities and articles sold or supplied as such or in some other form in execution of works contract shall be deemed to be goods within the meaning of this clause." 12.. From the plain reading of sub-clause (b) of clause (29-A) of article 366 of the Constitution of India it appears that there must be a transfer of property in goods whether as goods or in some other form involved in the execution of a works contract. Clause (12) of article 366 and section 2(h) of the Bihar Finance Act, 1981 give some indication as to what is meant by "goods". The inclusive definition in the Constitution as well as in the Bihar Finance Act refers to materials, commodities and articles or all kinds of movable property, all materials, commodities and articles, as such or in some other form. Before a tax can be levied on a works contract, it must be established that there is transfer of property in goods involved in the execution of a works contract. The goods may have undergone a change of form. But in whatever form, there must be transfer of property in goods. This presupposes that the goods existed and that either in its original form ..... X X X X Extracts X X X X X X X X Extracts X X X X
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