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TMI Blog2001 (9) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... B was introduced in 1986, which was recast and substituted in the year 1993 by Act 25 of 1993 which amending Act also introduced section 7C into the State Act. 3.. The Constitution Bench of the Supreme Court in the case of Builders Association of India v. Union of India [1989] 73 STC 370 held that Constitution amendment enabling the States to levy tax on transfer of property in the goods involved in the execution of contract created a legal fiction dividing that contract into two, one of which dealt with transfer of property of the goods involved in the execution of the works contract. The constitutional amendment introducing clause (29A) in article 366, it was observed by the court, was made in order to overcome the effect of decision of the Supreme Court in the case of State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353 wherein it was held that a works contract was an indivisible contract and the turnover of the goods used in execution of the works contract would not be exigible to sales tax. 4.. The later Constitution Bench of the apex Court in the case of Gannon Dunkerley Co. v. State of Rajasthan [1993] 88 STC 204, held that measure of the tax leviab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract shall, on and from the 26th day of June 1986, be arrived at after deducting the following amounts from the total turnover of that dealer: (a) all amounts involved in respect of goods involved in the execution of works contract 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 or in the course of inter-State trade or commerce; (b) all amounts for which any goods, specified in the First Schedule or Second Schedule, are purchased from registered dealers liable to pay tax under this Act and used in the execution of works contract in the same form in which such goods were purchased; (c) all amounts relating to the sale of any goods involved in the execution of works contract which are specifically exempted from tax under any of the provisions of this Act; (d) all amounts paid to the sub-contractors as consideration for execution of works contract whether wholly or partly: Provided that no such deduction shall be allowed unless the dealer claiming deduction, produces proof that the sub-contractor is a registered dealer liable to pay tax under this Act and that the turnover of such amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) and shall pay the tax during the year in monthly instalments and for this purpose, he shall furnish such return within such period and in such manner as may be prescribed: Provided that the option under this sub-section for the financial years commencing on the 1st day of April, 1993 and the 1st day of April, 1994, shall be exercised on or before the 30th day of June 1994: Provided further that the option under this sub-section in respect of works contract other than civil works contract for the financial year commencing on the 1st day of April, 1999 shall be exercised on or before the 31st day of January, 2000. (3) Where a dealer has exercised his option under sub-section (1),- (a) in respect of each works contract, such option shall be final till the completion of such works contract; (b) in respect of all works contract, such option shall be final for that financial year. (4) A dealer, exercising option under sub-section (1) shall, so long as the option remains in force, not be required to maintain accounts of his business under this Act or the rules made thereunder except the records in originals of the works contract, extent of their execution and paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed." 12.. The Act does not anywhere provide that the total value of the works contract in respect of which a dealer has exercised the option to pay the prescribed percentage towards tax instead of paying in accordance with section 3-B, shall be deemed to be either the turnover of such dealer or the taxable turnover of such dealer in so far as the works contract in which he is engaged is concerned. 13.. It is in this background that the arguments advanced for the dealer that the Tamil Nadu Additional Sales Tax Act which imposes an additional tax on the tax payable under the TNGST Act with reference to taxable turnover of such dealer-a tax which cannot be passed on by the dealer to any other-is not attracted to the amounts paid by the dealer under section 7-C of the TNGST Act, 1959 is required to be considered. 14.. The Tamil Nadu Additional Sales Tax Act, 1970 provides for levy of additional tax on the sale or purchase of goods. Section 2 of that Act provides for the levy. Section 2(1)(aa) provides thus: Section 2: Levy of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the aggregate of value of sales effected or purchase effected by the dealer. The works contract not only involves the transfer of goods but also involves the rendering of several services which cannot be subjected to tax under the Sales Tax Act. The consent given by the dealer under section 7-C for the levy of percentage of total contract value towards the tax otherwise payable under section 3-B cannot be stretched to include the payment of additional sales tax under any other enactment by treating the contract value as taxable turnover for the payment of tax under the Additional Sales Tax Act. 18.. In the absence of any determination of the value of the goods transferred under the works contract in cases where a dealer has exercised an option under section 7-C, there is no determination of the taxable turnover as the dealer is not required to maintain books of accounts and is not called upon to render any account in relation to the actual value of the goods transferred under the works contract. There is no scope of determining the actual value of the goods transferred under such contract in cases where option has been exercised under section 7-C. 19.. While it may be conve ..... 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