MYCON CONSTRUCTION LIMITEDG H REDDY AND ASSOCIATES Vs. STATE OF KARNATAKADEPUTY COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) IN Writ Petition No. 26445 of 1997, the petitioner has challenged the constitutional validity of sub-section (6) of section 17 of the Karnataka Sales Tax Act, 1957 as amended by Act No. 5 of 1996 and Act No. 7 of 1997 (hereinafter referred to as "the Act" ). In Writ Petition Nos. 30363 and 30364 of 1997, the petitioners, in addition to the challenge made to the constitutional validity of sub-section (6) of section 17 of the Act, have prayed for quashing of the orders of assessments made by the assessing authorities in exercise of the powers conferred on them under section 12 (3) read with section 17 (6) of the Act, for the assessment years 1993-94 and 1994-95. Copies of the said assessment orders dated April 14, 1997 and April 11, 1997 have been produced as annexures A and B respectively.

(2.) SINCE common questions of law are raised in these petitions, these petitions are taken up together and disposed of by this common order.

(3.) BEFORE referring to the contentions urged by the learned counsel for the petitioners and the learned Government Advocate, it is useful to refer to the genesis of the provisions of law, which will have a bearing for the disposal of these petitions. (a) By means of Constitution (46th Amendment) Act, 1982, clause (29a) was introduced to article 366 of the Constitution. Sub-clause (b) of clause (29a) of article 366 reads as under : " (29a) 'tax on the sale or purchase of goods' includes - (a ). . . . . . . . . . . . . . . . . (b) 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;" thereafter, section 5b of the Act came to be introduced to the Karnataka Sales Tax Act (hereinafter referred to as "the Act") by means of Act No. 27 of 1985 with effect from April 1, 1986. The said section reads as hereunder : "5b. Levy of tax on transfer of property in goods (whether as goods or in some other form)involved in the execution of works contracts.-Notwithstanding anything contained in sub-section (1) or sub-section (3) or sub-section (3-C) of section 5, but subject to sub-section (4), (5) or (6) of the said section, every dealer shall pay for each year, a tax under this Act on his taxable turnover of transfer of property in goods (whether as goods or in some other form)involved in the execution of works contract mentioned in column (2) of the Sixth Schedule at the rates specified in the corresponding entries in column (3) of the said Schedule. " by means of Act No. 14 of 1987, presumably with a view to simplify the assessment proceedings, the State introduced sub-section (6) of section 17 of the Act with effect from April 1, 1988, which reads as hereunder : "notwithstanding anything contained in sub-sections (1) to (3), subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a dealer liable to tax under section 5b so elects, accept in lieu of the amount of tax payable by him during any year, under this Act, in respect of works contracts falling under serial number 6 of the Sixth schedule, by way of composition, an amount at the rate of two per cent. of his total turnover in respect of transfer of property in goods (whether as goods or in some other form) involved in the execution of such works contracts. " thereafter, by means of Act No. 4 of 1992, sub-section (6) of section 17 of the Act came to be amended with effect from April 1, 1992. The said provision reads as hereunder : "notwithstanding anything contained in sub-sections (1) to (3), but subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a dealer liable to tax under section 5b in respect of the works contract specified in column (2) of the table below so elects, accept in lieu of the amount of tax payable by him during the year under this Act, by way of composition an amount at the rates specified in the corresponding entries in column (3) of the table on his total turnover relating to transfer of property in goods (whether as goods or in some other form) involved in the execution of such works contract. " again, sub-section (6) of section 17 of the Act was further amended by means of Act No. 5 of 1996 with effect from April 1, 1996. The said provision reads as follows : "notwithstanding anything contained in section 5b, but subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a dealer liable to tax under section 5b so elects, accept in lieu of the amount of tax payable by him during the year under this Act, by way of composition an amount on the total consideration for the works contracts executed by him in that year in the State in respect of works contract specified in column (2) of the Sixth Schedule at the rates specified in the corresponding entries in column (4)of the said Schedule. " thereafter, by means of Act No. 7 of 1997, sub-section (6) of section 17 of the Act came to be amended with effect from April 1, 1997. The amendment made to clause (i) of sub-section (6) of section 17 of the Act, reads as hereunder : " (a) for the words and brackets 'on his total turnover relating to transfer of property in goods (whether as goods or in some other form) involved in the execution of such works contract', the words 'on the total consideration received or receivable by him in respect of such works contract executed by him in that year in the State', shall be deemed to have been substituted with effect from the first day of April, 1988; (b) for the words, brackets and figure, 'at the rates specified in the corresponding entries in column (4) of the said Schedule', the words 'at the rate of four per cent. ', shall be substituted. " the said amendment provided for two matters. Firstly, it provided that at the end of section 17 (6) (i), the words "at the rate of 4 per cent. " were added for the words "at the rates specified in the corresponding entries in column (4) of the said Schedule". The said amendment was prospective in operation. Secondly, it provided that the words "total turnover relating to transfer of property in goods involved in the execution of such works contract" existing from April 1, 1988 up to March 31, 1996 were substituted by the words "the total consideration received or receivable by him in respect of such works contract executed in that year in the State". The said amendment was made retrospective in operation, i. e. , with effect from April 1, 1988. By this retrospective amendment, composition tax for the period from April 1, 1988 to March 31, 1996 became payable not on the total turnover of specified goods involved in a works contract, but on the total consideration received or receivable for the works contract.