MEDIA COMMUNICATIONS Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) This batch of writ petitions challenges the constitutional validity of sections 5F, 5G and 5H of the Andhra Pradesh General Sales Tax Act, 1957 and the Rules thereunder. History of taxation of works contracts :

(2.) Entry No. 54 of List II of the Seventh Schedule of the Constitution of India reads as follows :

(3.) Thus, the State was enabled to tax the sale where the taxable event occurs inside the State whereas the Centre was entitled to tax the sale or purchase if it is in the course of inter-State trade or commerce. The question arose as to whether works contract could be taxed by the State by enlarging the definition of "sale" in the sales tax legislation. The Supreme Court held in the case of State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1958] 9 STC 353; AIR 1958 SC 560, that a works contract not being a sale within the meaning of the Sale of Goods Act, 1930, there is no sale or transfer of property in the goods as such, and therefore, a works contract is not eligible to sales tax. When the State Legislature expanded the definition of "sales" and declared that works contract shall be deemed to be sales, the Supreme Court held that the State Legislature has no power to tax transactions which are not sales merely by enacting that they shall be deemed sales. Consequently, the Constitution was amended by the 46th Amendment in 1982 by which clause (29A) was inserted in article 366, i.e.,