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of <h1>Court Upholds Constitutionality of Sales Tax Act, Retroactive Application Valid</h1> The court upheld the constitutionality of Section 3-B of the Tamil Nadu General Sales Tax Act, 1959, noting its alignment with the Constitution. It ... - Issues Involved:1. Constitutionality of Section 3-B of the Tamil Nadu General Sales Tax Act, 1959.2. Validity of retrospective application of Section 3-B(2).3. Compliance with Article 286(3)(a) of the Constitution and Sections 14 and 15 of the Central Sales Tax Act.4. Inclusion of consumables in 'labour charges and other like charges.'5. Validity of Section 7-C under Article 14 of the Constitution.Summary:Issue 1: Constitutionality of Section 3-BThe court upheld the constitutional validity of Section 3-B of the Tamil Nadu General Sales Tax Act, 1959. It was determined that the section is not absolute in its overriding effect and is subject to other provisions of the Act. The court found that the definition of 'sale' in Section 2(n) encompasses all categories of transfer of property in goods, whether as goods or in some other form, aligning with the 46th Amendment to the Constitution.Issue 2: Validity of Retrospective ApplicationThe court affirmed the validity of the retrospective application of Section 3-B(2) from June 26, 1986. It was noted that the retrospective application of procedural provisions for computing taxable turnover is in line with legislative practice and does not infringe upon substantial rights.Issue 3: Compliance with Article 286(3)(a) and Sections 14 and 15 of the Central Sales Tax ActThe court concluded that Section 3-B, both prior to and after March 12, 1993, does not violate Article 286(3)(a) of the Constitution or Sections 14 and 15 of the Central Sales Tax Act. The court emphasized that reasonable profit margin on declared goods involved in the execution of a works contract should also be deducted from the 'total turnover' to arrive at the 'taxable turnover.'Issue 4: Inclusion of Consumables in 'Labour Charges and Other Like Charges'The court held that the expression 'labour charges and other like charges' in Section 3-B(2)(e) includes not only actual labour charges but also reasonable profit margin, cost of establishment related to supply of labour and services, and cost of consumables used in the execution of works contract. These should be deducted from the 'total turnover' to determine the 'taxable turnover.'Issue 5: Validity of Section 7-C under Article 14The court found that Section 7-C, which allows civil works contractors to pay tax at compounded rates, does not violate Article 14 of the Constitution. The classification of civil works contracts for special treatment is reasonable and does not suffer from the vice of arbitrariness.Conclusion:The court disposed of all writ petitions, affirming the constitutionality and validity of the challenged provisions, with no order as to costs.
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