JAMSHEDPUR CONTRACTORS ASSOCIATION Vs. STATE OF BIHAR

JUDGEMENT

(1.) IN all these cases, besides other reliefs, prayer was made for declaring the Constitution (Forty-sixth Amendment) Act, 1982 by which clause (29a) was introduced in article 366 of the Constitution, as illegal, unconstitutional and void. Consequential prayer was made for declaring that the amendment in the Bihar Finance Act, 1981 in so far as it seeks to impose sales tax on works contract was illegal and void. In view of the judgment of the Supreme Court in Builders Association of India v. Union of India [1989] 78 STC 370; 1989 BLT 151 these points were no more available.

(2.) THE points which survived were the validity of rule 13-A which was introduced in the Bihar Sales Tax Rules, 1983, by notification dated 8th October, 1986 and how far the petitioners were liable to pay sales tax on works contract entered into by and between them and the persons in whose benefit building, factory, etc. , were being constructed (hereinafter to be referred to as "the employer" ).

(3.) THE submissions made on behalf of the petitioners are as follows : In view of the judgment of the Supreme Court in Builders Association [1989] 73 STC 370, the contractors shall be liable to pay tax only in case there was sale of goods while executing a works contract and no tax was payable on the value of the labour involved in its execution. Rule 13-A was ultra vires as it provides for deduction of a certain percentage of cost incurred on labour and not the whole of the amount so incurred. The respondents were bound to give effect to the provisions of the Central Sales Tax Act, 1956 if the goods used in execution of the job were declared articles and also if the sale took place during the course of inter-State trade. In works contract, the contractors shall be liable to pay tax if the goods for execution of the works contract, viz. , cement, bricks, iron and steel are supplied by them, but no tax shall be payable if these goods are supplied by the employer and are used for execution of the job.