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TMI Blog1994 (6) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... It was thus that the cases have reached us. 2.. The impugned provisions as such were brought into the Act by means of amendments carried out from April 1, 1984 to July 1, 1987. We make it clear that the challenge is confined to these provisions which remained on the statute book as on July 1, 1987. We state this because some further amendments to the same and other provisions have been brought about subsequently through Acts 23 of 1991 and 8 of 1992, etc. Such amendments have also been challenged in other original petitions, and we are told that a learned single Judge (Mr. Justice T.L. Viswanatha lyer) has disposed of such original petitions. We make it again clear that this Full Bench is not concerned with such amendments made after July 1, 1987. As on the said date, the impugned provisions remained as follows: "Section 2(viii): 'Dealer' means any person who carries on the business of buying, selling, supplying or distributing goods, executing works contract, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealer for the transfer of goods (whether as goods or in some other form) involved in the execution of such contract. The aggregate amount is the amount received for the transfer of goods and not for carrying out the contract." "Section 2(xxvi): 'Total turnover' means the aggregate turnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax, including the turnover of purchase or sale in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into the territory of India: Explanation.-Notwithstanding anything contained in any other provision of this Act, in the case of goods which are taxable at the point of last purchase in the State by a dealer liable to tax under section 5, and which are held as closing stock on the last day of any financial year, the amount for which such goods were purchased by the dealer shall be deemed also to be a part of his total turnover for the subsequent year or each of the subsequent years until such goods are either sold by him in the State or such purchase a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of inter-State trade or commerce." By the same amendment entry 54 in List II was substituted as follows: "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92-A of List I." Under article 269 of the Constitution "taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce" could be levied and collected by the Central Government. Under article 286 of the Constitution, it was enjoined that no law of a State shall impose or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place outside the State or in the course of import of the goods into or export of the goods out of the territory of India. At the same time, Parliament was empowered to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in the amendment. There was much controversy on the question whether cost of goods supplied by a building contractor in the course of construction of building could be subjected to payment of sales tax. The controversy was resolved by the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down the following propositions: "(1) In exercise of its legislative power to impose tax on sale or purchase of goods under entry 54 of the State List read with article 366(29-A)(b), the State Legislature, while imposing a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract is not competent to impose a tax on such a transfer (deemed sale) which constitutes a sale in the course of inter-State trade or commerce or a sale outside the State or a sale in the course of import or export. (2) The provisions of sections 3, 4, 5 and sections 14 and 15 of the Central Sales Tax Act, 1956, are applicable to a transfer of property in goods involved in the execution of a works contract covered by article 366(29-A)(b). (3) While defining the expression 'sale' in the sales tax legislation it is open to the State Legislature to fix the situs of a deemed sale resulting from a transfer falling within the ambit of article 366(29-A)(b) but it is not permissible for the State Legislature to define the expression 'sale' in a way as to bring within the ambit of the taxing power a sale in the course of inter-State trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of labour and services for various types of works contract. (8) While fixing the rate of tax it is permissible to fix a uniform rate of tax for the various goods involved in the execution of a works contract which rate may be different from the rates of tax fixed in respect of sales or purchase of those goods as a separate article." 8.. In view of the aforesaid propositions, the Supreme Court struck down some of the impugned provisions of the State Sales Tax Acts and considered the validity of the Karnataka Sales Tax Act in the second Builders' Association case [1993] 88 STC 248. 9.. Shri T.R.G. Warrier, senior learned counsel, who appeared for some of the petitioners addressed the main arguments in these original petitions. He took us through the entire decisions in the second Gannon Dunkerley case [1993] 88 STC 204 (SC) as well as in the second Builders' Association case [1993] 88 STC 248 (SC); besides taking us through the other relevant decisions and contended that in view of the propositions laid down by the Supreme Court, the provisions impugned in these original petitions cannot be supported and consequently the assessments and/or various other steps resorted to by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out existence of a rule prescribing for deductions for arriving at the taxable turnover as provided in section 2(xxv), no taxable turnover can be determined by any authority under the Act. The corollary is that so long as Government will not make assessments or levy tax on the strength of rule 8(4) of the Rules as it stood prior to the amendment effected by S.R.O. No. 92/91 dated January 19, 1991, the impugned provisions will remain in the statute book unenforced. None of the petitioners will be affected by any action taken pursuant to the formulation of rule 8(4) of the Rules as it stood then. In such a situation, it is not necessary for us to decide the question whether the impugned provisions are unconstitutional. We are not interested in making any academic or advisory exercise regarding the constitutionality of any provision. We may examine the constitutionality of a provision when it is absolutely necessary for protecting the rights and interest of the persons approaching the court. 13.. Learned Government Pleader requested us to make it clear that it is open to the State to bring forth the provisions in consonance with the parameters evolved by the Supreme Court in second ..... X X X X Extracts X X X X X X X X Extracts X X X X
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