Contract under sales tax exemption proviso means ordinary Contract Act meaning, not the deleted special definition.

The proviso to section 4(1) of the East Punjab General Sales Tax Act, 1948, uses the word "contract" in its ordinary legal sense under the Indian Contract Act, not in the restricted sense formerly contained in section 2(c). That special definition covered works relating to construction, fitting out, improvement, repair or installation, but it could not be sustained after the Supreme Court rulings in Gannon Dunkerley and Peare Lal Hari Singh and the later deletion of section 2(c) by amendment. The operative effect is that the exemption proviso is read by reference to the general law of contract.

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Issues: Whether the word "contract" in the proviso to section 4(1) of the East Punjab General Sales Tax Act, 1948, means a contract as defined in the Indian Contract Act or is confined to the special definition of "contract" in section 2(c) of the Act.

Analysis: The reference turned on the meaning of "contract" in the exemption proviso to section 4(1). The special definition in section 2(c) had created a restricted meaning for works relating to construction, fitting out, improvement, repair, or installation. The Court held that this special notion could not be sustained in view of the Supreme Court decisions in Gannon Dunkerley and Peare Lal Hari Singh and the subsequent deletion of section 2(c) by amendment. The proviso was therefore to be read according to the ordinary legal meaning of contract under the Indian Contract Act, and not by reference to the deleted special definition.

Conclusion: The word "contract" in the proviso to section 4(1) of the East Punjab General Sales Tax Act, 1948, means a contract as defined in the Indian Contract Act and is not limited by section 2(c) of the Act.

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