Purchase tax on works contract inputs is treated as constitutionally valid, with rational classification and no direct trade restraint.

Section 6C of the Bengal Finance (Sales Tax) Act, 1941 is analysed as a valid levy on the purchase of goods for use in works contracts, with a rational classification of works contractors for tax purposes. The provision is also treated as not directly or immediately burdening free trade under articles 301 and 304(b), because it operates as a purchase tax rather than an economic barrier to movement of goods. On legislative competence, the text states that the levy targets the purchase event itself and is not a colourable attempt to tax the execution of an indivisible works contract; the constitutional challenge is therefore described as failing in entirety.

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Issues: (i) Whether section 6C of the Bengal Finance (Sales Tax) Act, 1941, was invalid for hostile discrimination or arbitrariness under articles 14 and 19(1)(g) of the Constitution of India. (ii) Whether section 6C offended articles 301 and 304(b) of the Constitution of India by imposing a burden on free trade, commerce and intercourse. (iii) Whether the State Legislature had legislative competence to enact section 6C and whether the provision was colourable legislation in relation to works contracts.

Issue (i): Whether section 6C of the Bengal Finance (Sales Tax) Act, 1941, was invalid for hostile discrimination or arbitrariness under articles 14 and 19(1)(g) of the Constitution of India.

Analysis: The classification of works contractors as a separate class of dealers was held to be permissible in a taxing statute if the class had a common feature and the classification had a rational nexus with the object of the levy. Section 6C was enacted to raise revenue by imposing purchase tax on goods bought for use in works contracts. The denial of the concessional rate available to other dealers did not destroy the validity of the classification, because the class selected for the levy was directly connected with the object of the provision.

Conclusion: The challenge under articles 14 and 19(1)(g) failed and section 6C was upheld on this ground in favour of Revenue.

Issue (ii): Whether section 6C offended articles 301 and 304(b) of the Constitution of India by imposing a burden on free trade, commerce and intercourse.

Analysis: A restriction under article 301 must be direct and immediate. The levy under section 6C was a purchase tax on goods acquired for use in works contracts and did not create any economic barrier or directly impede the movement of trade within or outside the State. No factual basis was shown to establish that the levy operated as a prohibited restraint on free trade.

Conclusion: The challenge under articles 301 and 304(b) was rejected and section 6C was held not to violate those provisions.

Issue (iii): Whether the State Legislature had legislative competence to enact section 6C and whether the provision was colourable legislation in relation to works contracts.

Analysis: The taxable event under section 6C was the purchase of goods for use in works contracts, not the transfer of property in goods in the execution of an indivisible works contract. Even before the constitutional amendment that enlarged legislative power over works contracts, the State had competence to tax purchases as such. After the amended article 366(29A)(b) came into force, the position was stronger still for the later period. Since section 6C operated on purchase of goods and not on the transfer in the course of execution of the contract, it could not be struck down as an indirect attempt to tax an incompetent subject.

Conclusion: Section 6C was within legislative competence and was not a colourable legislation; the challenge on this ground failed in favour of Revenue.

Final Conclusion: The constitutional challenge to section 6C failed in entirety, and the writ petition was dismissed with the interim arrangement directed to be adjusted against the tax liability.

Ratio Decidendi: In a taxing statute, a separate classification of dealers is valid if it is rationally connected with the object of the levy, and a tax on the purchase of goods for use in works contracts is a tax on the purchase event itself, not on the execution of the works contract.

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