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of <h1>Kerala High Court Upholds Sales Tax Levy on 'Works Contracts' Post-Agreement Expiry</h1> The Kerala High Court ruled in favor of the Tax Revision Cases, allowing the resumption of the right to levy sales tax on 'works contracts' after the ... - Issues:Interpretation of Article 277 of the Constitution regarding the levy of sales tax on 'works contracts.'Impact of the agreement dated February 25, 1950, between the President of India and the Rajpramukh of the State of Travancore-Cochin on the right to levy sales tax.Resumption of the right to levy sales tax on 'works contracts' post the expiry of the agreement period.Continuation of the levy of sales tax on 'works contracts' after the commencement of the Constitution.Effect of the suspension period on the right to levy sales tax on 'works contracts.'Detailed Analysis:The judgment by the Kerala High Court pertains to the assessment year 1959-60 and 1960-61 concerning sales tax on 'works contracts.' The court refers to the Supreme Court decision in South India Corporation (P.) Ltd. v. Secretary, Board of Revenue, which established that the State did not have the power to levy sales tax on 'works contracts' during the agreement period until January 26, 1960. The primary issue revolves around whether the right to levy sales tax on 'works contracts' could be revived post the agreement's expiry on January 26, 1960 (Para 2).The court analyzes Article 277 of the Constitution, which allows taxes lawfully levied before the Constitution to continue until altered by Parliament. The court concludes that the ten-year period under the agreement was a suspension, and the right to levy sales tax on 'works contracts' revived on January 26, 1960, subject to any contrary provision by Parliament (Para 4).A contention raised regarding the interpretation of Article 277 is addressed, emphasizing the distinction between taxes lawfully levied before the Constitution and those imposed after. The court clarifies that the Supreme Court's statement in a previous case does not constitute an opinion but rather a part of the appellant's contention (Para 5).The judgment delves into the interaction of Articles 277, 278, and 372 of the Constitution, highlighting that the Supreme Court's focus was on the impact of these articles on the 1950 agreement. It is established that during the agreement period, the States lacked the power to impose tax on 'works contracts.' The court refrains from expressing opinions on other contentions raised, aligning with the Supreme Court's stance (Para 7).Referring to a previous case, the court reiterates that the right to levy sales tax on 'works contracts' can continue post the Constitution's commencement if lawfully levied before. The disruption caused by the 1950 agreement is viewed as a suspension rather than permanent extinguishment of the right (Para 9).Ultimately, the court rules in favor of the Tax Revision Cases concerning the assessment of sales tax on 'works contracts' before January 26, 1960, while dismissing other contentions. No costs are awarded in the given circumstances (Para 11).
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