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TMI Blog1991 (9) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... hich amount to sale of goods are sales of iron and steel scraps, empty cement bags, etc., which cannot be utilised in connection with the execution of contracts. It is, therefore, registered as a dealer under the Bengal Finance (Sales Tax) Act, 1941. Its turnover resulting from works contracts is said to be not liable to tax under the 1941 Act. The respondent-State was contending that by virtue of amendments in 1984 effected in the 1941 Act, and particularly insertion of section 6D, which came into force on April 1, 1984, the applicant became liable to pay tax on the transfer of property in the goods involved in the execution of works contracts. This contention was challenged as illegal and unconstitutional. The applicant claimed that supply of materials by it for the execution of works contract did not amount to sale. Certain features of the applicant's works contracts were highlighted in the application, e.g., (i) materials supplied by contractee sometimes do not, according to the terms of the contract, enter into the contract price, (ii) in some cases, sub-contractors appointed by the applicant purchased materials, which were consumed in the course of execution of works by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by saying that sometimes goods are purchased from places outside the State of West Bengal, and brought into West Bengal for use in the execution of works contracts under pre-existing contracts. The sales between the applicant and the other contracting parties and consequent movement of goods from outside the State to the State of West Bengal are allegedly occasioned by the works contracts in West Bengal. Similarly, the applicant has mentioned imports of goods from outside the State for use in execution of works contracts in West Bengal under pre-existing contracts. Such sales are said to be sales in the course of import and should allegedly be outside the power of the State to be made exigible to tax. The further contention is that the goods supplied by the contractee remain his property and involves no sale within the meaning of section 2(g) of the 1941 Act. Rule 48B of the Bengal Sales Tax Rules, 1941, has been challenged as invalid as it makes the goods again taxable under the 1941 Act after it has already suffered tax under the 1954 Act. 4.. Respondents 1 to 3 filed an affidavit-in-opposition covering the original writ application and the supplementary affidavit. We now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of hearing Mr. Bhaskar Gupta, learned advocate for the applicant, fairly submitted that the constitutionality of the Constitution Fortysixth (Amendment) Act, 1982, and the consequential State Acts has been upheld and a few important questions relating to works contract have been decided by the Supreme Court in the case of Builders Association of India, reported in [1989] 73 STC 370 and some of the issues connected with taxability of works contracts have been decided and the constitutional validity of section 6D and relevant other provisions of the 1941 Act as well as rule 48B of the 1941 Rules has been upheld by the decision of this Tribunal dated April 26, 1990, in the cases of Nepal Chandra Banerjee and others, RN-30(T), etc. of 1989*. Mr. Gupta further submitted that since the questions answered and covered by those two decisions are concluded, he was not arguing those points. He confined his arguments to only the following points, which, according to him, were not decided in the said two cases: *Since reported in [1992] 86 STC 130 (WBTT). (i) Where the applicant engages a sub-contractor for a part of the works contract and the sub-contractor supplies materials in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted further that in cases other than those of agency, the question will depend on whether transfer of property in the same goods was taking place, when the applicant was, in his turn, using the goods in the execution of the overall works contract, or whether it was a distinct commercial commodity at that stage. Mr. Bhaskar Gupta explained in this respect that there was no question of agency, and further stated that there were usually two separate contracts. One contract was between the owner and the contractor for execution of the whole of the works contract. Another contract, subsequent thereto, was between the contractor and the sub-contractor for some specified jobs which are components of the entire works contract. He submitted that a deemed sale takes place when the subcontractor utilises the goods in the course of execution of his specified part of the works contract, generally fabrication jobs. Mr. Gupta raised the question whether a second deemed sale can take place, when the fabricated piece is transferred by the sub-contractor to the applicant (contractor). He obviously negatived the second deemed sale. Having regard to the circumstances of works contracts in gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of India, such import being occasioned by the deemed sale in the course of execution of the works contract in West Bengal, from a case of import by the contractor for himself without any nexus with the execution of the works contract in West Bengal and then supply of the imported goods in the course of the execution of the works contract in West Bengal. According to Mr. De, the second case will amount to a deemed sale under section 6D. We express no opinion on the problems mooted by either side. The statutory assessing authority and the appellate/revisional authorities will find answers to the actual problems, when they themselves are confronted with such issues. They are the competent quasi-judicial authorities to adjudicate such disputes. We should only point out that the Supreme Court in [1989] 73 STC 370 (Builders Association of India v. Union of India) has clearly laid down the law that the 46th amendment to the Constitution (which is the source of enactment of section 6D) does not remove the constitutional restrictions like that of article 286, from the exercise of the State's power to levy tax on deemed sales under entry 54 of List II of the Seventh Schedule to the Constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. Sen cannot be accepted, because of the explanation 2 to section 6D which has already been extracted. It lays down that notwithstanding anything contained in this Act or in the West Bengal Sales Tax Act, 1954..........tax shall be levied on such commodities under this section'. Mr. Sen, appearing for the applicant, contended that the above provision in the explanation 2 should mean that tax under section 6D will be exigible on commodities on which tax has not been paid on any prior sale within the State of West Bengal and it does not mean that tax under section 6D will be leviable on commodities governed by the 1954 Act even when tax has once been levied on a prior sale thereof. 9.. It may be noted that proviso (ia) to section 23 of the 1954 Act was inserted with effect from April 1, 1979. But section 6D of the 1941 Act was enacted with effect from April 1, 1984, i.e., five years after proviso (ia) to section 23 of the 1954 Act was inserted. Accordingly, in our opinion, section 6D being a provision much later in point of time and it having contained the overriding provision by means of the explanation 2, the correct interpretation is that the Legislature wanted to make secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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