HINDUSTAN CONSTRUCTION CO LTD Vs. ASSESSING AUTHORITY

JUDGEMENT

(1.) THIS is an application for quashing the order of assessment passed by the Assessing Authority under the Jammu & Kashmir General Sales Tax Act, 1962 (hereinafter to be referred to as the Act) as upheld by the Sales Tax Commr. which is the final authority under the Act. The application arises in the following circumstances.

(2.) THE petitioners are a public limited company incorporated under the Indian Companies Act with their registered office at Bombay. The petitioners are a firm of Engineers and Contractors and on receiving tender notices for lumpsum contracts for construction of brigdes in the State, the State accepted the petitioners tender and a Contract was entered into between the petitioners and the State through the Grovernor for execution of the contract. The petitioners submitted that the contract was an indivisible works contract on a lumsum basis. The contract extended to the construction of a bridge over Chenab at Bardari near Reasi, two bridges on Reasi -Rajouri road and a road bridge on Suina Nallah. The date of the contract is 29 -7 -65 and the date of the completion of the contract variesfrom 18 -6 -66 to 13 -6 -67 which has been extended from time to time. The petitioners contend that in the execution of their contract the firm had to undertake sale of various articles directly or through their contractors used in the building of bridges and for which the State Government had to be charged under the terms of the agreement. It is therefore not disputed before us that the present contract is a lumpsum works contract and amounts to an indivisible contract of sale. The sales tax authorities have held that the petitioners are liable to pay sales tax on the various sales incurred by them in connection with the execution of the works contract. The petitioners contend that the contract of the petitioners being an indivisible one, any transaction of sale which takes for the purpose of executing the contract is not cover -ed by the provisions of the Act and therefore the sales tax authorities had no jurisdiction to tax the turn -ever of the petitioners.

(3.) MR . Mehta appearing  £or the petitioners submitted two points before us. In the first place he argued that the State legislature was not competent to pass any law in order to levy tax on any indivisible contract which fell within the competence of the Parliament under Art. 246 of the Constitution of India or at any rate which was beyond the ambit of the State List. Secondly it was contended that even if the State legislature had ! the power to levy tax on an indivisible contract of sale, the provisions of the Act did not effectively express an intention to do so and therefore the Assessing Authorities had no jurisdiction to levy tax on the petitioners.