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TMI Blog2007 (5) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... nd produce its books of account for the period March 31, 1997-March 31, 1999. On receipt of the said notice, the petitioner submitted its reply (annexure 3) dated March 28, 2000 denying any liability to pay tax under the provisions of the Act. Specifically, the petitioner had contended that though the business of tyre retreading has been enumerated as a works contract under the Act and included under item 23 of Schedule VI to the Act, the raw materials/basic goods used in the business of the petitioner are rubber and synthetic rubber products , falling under item 105 of Schedule II to the Act. According to the petitioner, it had procured the said basic goods by local purchase within the State of Assam and, on payment of tax, as applicable to the particular item under Schedule II to the Act. It was therefore, contended by the petitioner that as basic goods used by it in the business of tyre retreading had already been subjected to tax at the point of first sale under Schedule II, the said goods will not be exigible to any further tax even in case of a deemed sale arising in the course of the execution of the works contract by the petitioner. The reply of the petitioner did not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having already been subjected to tax at the point of first sale there can be no further tax levied on the same goods transferred as a consequence of the works contract performed by the petitioner. Any other view, according to Sri Agarwal, would be contrary to the constitutional scheme as interpreted by the apex court in Builders Association of India [1989] 73 STC 370; [1989] 2 SCC 645 as well as in Gannon Dunkerley Co. v. State of Rajasthan reported in [1993] 88 STC 204: [1993] 1 SCC 364. Furthermore, according to the learned counsel, such a view would also be plainly opposed to the scheme of taxation under the provisions of the Assam General Sales Tax Act, 1993. Controverting the submissions advanced on behalf of the petitioner, Sri R. Dubey, learned counsel for the respondents has, contended that the power to tax a transaction amounting to a works contract having been specifically conferred by section 8See at page 396 of [1989] 73 STC. (e) of the Act read with Schedule VI and, in the instant case, the business of the petitioner, i.e., tyre retreading, being squarely covered by item 23 of Schedule VI, the assessment made and the demand raised is authorised by the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any system of payment by instalments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment 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. The Constitution Amendment, as aforesaid, came to be challenged before the apex court in Builders Association of India v. Union of India reported in [1989] 73 STC 370; [1989] 2 SCC 645. Though the first ground of challenge to the constitutional validity of the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution so that it may include within its scope the transfer, delivery or supply of goods that may take place under any of the transactions referred to in sub-clauses (a) to (f) thereof wherever such transfer, delivery or supply becomes subject to levy of sales tax. So construed the expression 'tax on the sale or purchase of goods' in entry 54 of the State List, therefore, includes 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 also. The tax leviable by virtue of sub-clause (b) of clause (29A) of article 366 of the Constitution thus becomes subject to the same discipline to which any levy under entry 54 of the State List is made subject to under the Constitution. . . On the basis of the above view taken in Builders Association of India [1989] 73 STC 370 (SC); [1989] 2 SCC 645 and its further dilation as available in the text of the judgment, the apex court held that a deemed sale of goods involved in the execution of works contract, which has been made exigible to tax under the State sales tax laws, as may be framed, would be subject to the conditions as spelt out by the provisions contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (STC page 402; SCC page 674, para 40; SCR page 354) It must also be noticed at this stage that in the aforesaid judgment (paragraph 47See at page 234 of [1993] 88 STC.) the apex court laid down how the value of the goods involved in the execution of works contract is required to be determined. Thereafter in paragraph 48See at page 235 of [1993] 88 STC., the apex court laid down that apart from the deductions mentioned in paragraph 47See at page 234 of [1993] 88 STC. it will be necessary to exclude from the value of the works contract, inter alia, the value of the goods which are exempted from tax under the sales tax legislation of the State. The above discussions leave no room for doubt that if the goods that constitute the basic inputs in the execution of a works contract are exempted from payment of tax under the relevant State Act, the value of such goods has to be excluded from the value of the works contract along with other eligible components, for the purpose of determination of liability to tax. If under the State Act a particular item is made exigible to tax at a particular point of sale and tax has already been paid on the said item, naturally, if the particular i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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