NAGARJUNA CONSTRUCTION CO LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THESE petitions are heard and disposed of together having regard to the fact that the issues involved are identical.

(2.) THE petitioners seek to challenge the constitutional validity of Section 4(1)(c) and Schedule VI, Item 23 of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as the 'KVAT Act', for brevity) and the Explanation appended to Rule 3(1) of the Karnataka Value Added Tax Rules, 2005 (hereinafter referred to as 'the KVAT Rules' for brevity).

(3.) IT is contended that the power of the States to levy value added tax on sales and purchases of goods is to be found only under Entry-54 of List-II under Schedule VII to the Constitution of India. In the case of State of Madras v. Gannon Dunkerley and Company (1958) 9 STC 353, the Supreme Court of India held that a building contract which is entire and indivisible did not involve any sale of goods and there fore it was not within the competence of the legislature to impose a tax on the supply of materials used in such a contract treating it as a sale. IT was observed by the Supreme Court as follows: