Works contract sales tax levy upheld where prior precedent sustained the provisions and legislative competence challenge failed.

Sections 25B and 26 of the Haryana General Sales Tax Act, 1973, and the notifications issued under them, were treated as valid because an earlier Division Bench had already upheld them and no fresh ground was shown to depart from that view. The challenge that the levy on works contract turnover exceeded the State's legislative competence also failed, as the court held the Haryana provisions materially different from the Rajasthan scheme considered in Gannon Dunkerley and found the levy not invalid on the ground that the transactions involved deemed sales. The levy was sustained, subject to observations on filing and finalisation of returns and any consequential refund according to law.

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Issues: (i) Whether sections 25B and 26 of the Haryana General Sales Tax Act, 1973 and the notifications issued thereunder were ultra vires; (ii) Whether the levy under the impugned provisions was beyond the legislative competence of the State on the ground that works contract transactions included deemed sales falling within inter-State, outside, import or export sales.

Issue (i): Whether sections 25B and 26 of the Haryana General Sales Tax Act, 1973 and the notifications issued thereunder were ultra vires.

Analysis: The impugned provisions and notifications had already been upheld by an earlier Division Bench of the same Court, and no fresh ground was found to differ from that conclusion.

Conclusion: The challenge to the vires of sections 25B and 26 of the Haryana General Sales Tax Act, 1973 and the connected notifications failed.

Issue (ii): Whether the levy under the impugned provisions was beyond the legislative competence of the State on the ground that works contract transactions included deemed sales falling within inter-State, outside, import or export sales.

Analysis: The contention based on the Supreme Court decision in Gannon Dunkerley did not assist the petitioner because the relevant provisions of the Haryana Act were treated as materially different from the Rajasthan provisions considered in that case. The Court followed its earlier view that the Haryana levy was not invalid on the ground urged.

Conclusion: The State Legislature was held competent to enact and enforce the impugned levy, and the challenge on this ground was rejected.

Final Conclusion: The writ petition was rejected and the impugned levy under the Haryana General Sales Tax Act, 1973 was sustained, subject to the Court's observations regarding filing and finalisation of returns and any consequential refund in accordance with law.

Ratio Decidendi: A levy on works contract turnover under the Haryana General Sales Tax Act, 1973 was upheld where the impugned provisions had already been judicially sustained and the constitutional challenge based on deemed sales and legislative competence did not establish invalidity.

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