KAYS CONSTRUCTION COMPANY Vs. JUDGE APPEALS SALES TAX

JUDGEMENT

(1.) This is a writ petition under Article 226 of the Constitution. The prayer contained in the petition is that a writ of certiorari may be issued quashing the order of the Sales Tax Officer dated 28th March, 1960, and of the Judge (Appeals) Sales Tax dated 27th July, 1961.

(2.) The facts giving rise to this writ petition are that the petitioner is a contractor who took a contract from the North Eastern Railway to build a certain number of passenger bogies for the railway. The underframes were to be supplied by the railway and the property in the frames was always to remain in the railway The superstructure over these underframes was to be constructed by the petitioner. The superstructure was to be raised according to certain specifications. The work was to be completed within a certain time and it was provided in the contract which is an annexure to the affidavit filed in support of the petition that the rate at which the contractor was to be paid for the work will be Rs. 50,200 for each bogie and an additional sum of Rs. 400 for extra work. The work to be done by the petitioner was to consist of "body construction including painting etc." It was provided that

(3.) For the assessment year 1955-56 under an assessment order made by the Sales Tax Officer the petitioner was assessed to a sales tax of Rs. 31,o66-43nP. on a turnover of Rs. 19,88,25o-75nP. I am informed by Shri H. N. Seth, learned counsel for the State, that this amount represents the total sum of money paid by the railway to the petitioner in respect of the work done by him at the rate of Rs. 50,200 plus possibly Rs. 400 extra for every coach. The petitioner went up in appeal against the assessment order and the Judge (Appeals) Sales Tax dismissed the appeal and affirmed the assessment order. The view taken by the authorities below was that even though in the case of State of Madras v. Gannon Dunkerley A.I.R. 1958 S.C. 560 the Supreme Court ruled that in the case of a building contract no "sale" was involved and the contract was one and indivisible and no sales tax could be charged in respect of the cost of materials which may have been supplied by the contractor and used in the construction work, the case related to the sale and supply of material which at that point of time when it could be deemed to have been supplied to the principal had partaken of the nature of immovable property. The sale and supply of such immovable property was clearly outside the legislative entry empowering the State Legislature to enact a sales tax law regarding "taxes on sales of goods", i.e., sale of movable property.