2001 (7) TMI 1258 - HC - VAT and Sales Tax

Expanded Definition of 'Dealer' Includes 'Works Contractor' under Sales Tax Act

VPR. Constructions Versus Superintending Engineer, Roads and Buildings Department, R&B Circle, Chittoor

VPR. Constructions Versus Superintending Engineer, Roads and Buildings Department, R&B Circle, Chittoor - [2001] 124 STC 186 (AP) Issues Involved:1. Inclusion of 'works contractor' in the definition of 'dealer' under section 2(1)(e) of the Andhra Pradesh General Sales Tax Act, 1957.2. Application of amended provisions of sections 5-F, 5-G, and 5-H of the Act to the petitioners.3. Legality and arbitrariness of the amended provisions.4. Refund of sales tax amounts collected from the petitioners.Issue-wise Detailed Analysis:1. Inclusion of 'works contractor' in the definition of 'dealer':The petitioners argued that the inclusion of 'works contractor' within the definition of 'dealer' is illegal and arbitrary. They contended that works contractors purchase materials for executing contracts and do not engage in any sale of goods, thus should not be liable for sales tax. The court referred to the amendment made to article 366 of the Constitution by the 46th Amendment, which broadened the scope of 'dealer' to include deemed sales involving materials used by works contractors. The Supreme Court in Builders Association of India v. Union of India upheld this constitutional amendment, thereby validating the inclusion of 'works contractor' in the definition of 'dealer' under section 2(1)(e) of the Act.2. Application of amended provisions of sections 5-F, 5-G, and 5-H:The petitioners sought a mandamus to prevent the application of these amended provisions, arguing that they do not effectuate any sale of materials used in executing works contracts. The court reiterated that the amended article 366(29-A) of the Constitution deems the transfer of property in goods involved in works contracts as a sale, thus justifying the application of the amended provisions. The court emphasized that the legislative intent was to tax the transfer of property in goods within works contracts, aligning with the constitutional amendment.3. Legality and arbitrariness of the amended provisions:The petitioners claimed the amendments were illegal and arbitrary without providing substantial arguments. The court highlighted that the amendments were in line with the constitutional provisions upheld by the Supreme Court. The court cited the Builders Association of India case, which clarified that the transfer of property in goods during the execution of a works contract is deemed a sale, thus legitimizing the amendments. The court concluded that there was no illegality or arbitrariness in incorporating 'works contractor' within the definition of 'dealer.'4. Refund of sales tax amounts collected:The petitioners requested a refund of sales tax amounts collected under the amended provisions. The court dismissed this claim, stating that the petitioners did not demonstrate that no transfer of property in goods was involved in their works contracts. The court emphasized that the liability to sales tax arises when there is a transfer of property in goods during the execution of works contracts, as per the constitutional amendment and the Act.Conclusion:The court dismissed the writ petitions, holding that the inclusion of 'works contractor' within the definition of 'dealer' and the application of the amended provisions were constitutional and justified. The court found no merit in the petitioners' claims of illegality or arbitrariness and denied the request for a refund of collected sales tax amounts.