BUILDERS ASSOCIATION OF INDIA Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) This appeal arises out of the judgment of the High Court of Karnataka dated July 27, 1990 whereby the High Court has dismissed the writ petition No. 8926 of 1986 filed by the appellant under Article 226 of the Constitution of India. In the said writ petition, the appellant had challenged the validity of various provisions of the Karnataka Sales Tax Act, 1957 as amended by Amending Act No. 27 of 1985 and the Karnataka Sales Tax Rules made thereunder.

(2.) The appellant is an association of contractors engaged in the work of construction. The provisions of the Karnataka Sales Tax Act which have been impugned by the appellant in writ petition were introduced in the said enactment after the Constitution (Forty-Sixth Amendment) Act, 1983 whereby Cl. (29-A) was introduced in Article 366 of the Constitution so as to enable State Legislature to impose tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. The validity of Forty-Sixth Amendment came up for consideration before this Court in Builders' Association of India v. Union of India, (1989) 2 SCR 320 , wherein the said amendment was upheld as valid and it was declared that sales tax laws passed by the Legislature of States levying taxes on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract are subject to the restrictions and conditions mentioned in each clause or sub-clause of Article 286 of the Constitution. This Court further declared that whatever might be the situational differences of individual cases, the constitutional limits on the taxing power of the State as are applicable to 'works contracts' represented by 'Building-Contracts' in the context of the expanded concept of 'tax on the sale or purchase of goods' as constitutionally defined under Art. 366(29-A), would equally apply to other species of 'works contracts' with the requisite situational modifications. In the light of the said decision, certain questions were raised before us which have been considered by us in our decision pronounced today in M/s. Gannon Dunkerley and Co. v. The State of Rajasthan (Civil Appeals arising out of SLP Nos. 3365-68 of 1992) and wherein it has been held as under:-

(3.) The impugned provisions of the Karnataka Sales Tax Act have to be considered in the light of the aforesaid principles.