TaxTMI 
TaxTMI 
2004 (5) TMI 296
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontract. Before the authorities below, it was the appellants' contention that since the goods were brought for purpose of works contract and they have been subjected to sales tax under the Sales Tax Act, the appellants were not liable to pay the entry tax on goods. The appellants had unsuccessfully challenged the assessment of tax before the Appellate Deputy Commissioner of Sales Tax and the Board of Revenue and thereupon appellants preferred Misc. Petition No. 3960 of 1991 before the High Court of Madhya Pradesh. 2.. The appellants contended that by virtue of the definition of sale as defined under article 366(29A) of the Constitution, the activity involved was a transfer of goods in works contract, it amounted to a "sale" and as such the goods are not exigible to the entry tax. The High Court vide judgment dated September 18, 1996, did not accept this contention and dismissed their prayer. Hence these appeals by special leave. In view of the High Court's judgment the Madhya Pradesh Builders Association has also joined the present petitions for special leave to appeal as the judgment affects the entire community of contractors. 3.. The questions that arise for consideration here....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct was under challenge in the case of Bhagatram Rajeev Kumar v. Commissioner of Sales Tax, M.P. [1995] 96 STC 654 (SC). (1995) Supp. 1 SCC 673. A three-Judge Bench of this Court, found that the levy of tax under the M.P. Entry Tax Act, 1976 was constitutional, since the nature of revenue earned was compensatory, as it was handed over to the local bodies to compensate them for the loss caused. 10. In the present case too, the respondents have reiterated that the tax being imposed is compensatory in nature as the revenue earned therefrom passes over to the local bodies to compensate them for the loss incurred due to abolition of octroi. 11.. Augmentation of their finance would enable them to promote municipal services more efficiently helping in the free-flow of trade and commerce. 12.. The Act being compensatory in nature it is not open to challenge under article 301 and there is no need to venture into the argument based on article 304(b). Accordingly, the constitutionality of the Act is upheld. 13.. In the case of Jindal Stripe Ltd. v. State of Haryana [2004] 134 STC 303 (SC). (2003) 8 SCC 60, a division Bench of this Court, raised doubts over the legal proposition laid down i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r incidental goods or as packing material or in the execution of works contracts but not for sale therein..........." (emphasis supplied) 16.. The relevant portion of article 366 of the Constitution is as follows: "Article 366: In this Constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say- .............. (29A) 'tax on the sale or purchase of goods' includes- (a).............. (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract." 17.. Accordingly, the appellant contends that section 3(1)(b) of the M.P. Entry Tax Act, 1976, no longer permits levy of entry tax on goods consumed or used in works contract as these amount to "sale" by virtue of article 366(29A). 18.. The question that arises for consideration is whether the definition of "tax on the sale or purchase of goods" as provided by the 46th Amendment through article 366(29A) applies to the M.P. Entry Tax Act. 19.. It is evident from the section 3(1)(b) of the M.P. Entry Tax Act, 1976, that if a dealer effects the entry of goods specified in Sche....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ales Tax Act shall have the meanings assigned to them in that Act." (Emphasis supplied) 26.. The exclusion is justifiable considering the fact that the M.P. Entry Tax Act, 1976 has been enacted by virtue of entry 52 of List II of the Seventh Schedule. It need not be circumscribed by the definition provided in article 366(29A). 27.. Article 366(29A) does not define the term "sale", but enlarges its scope by including transfer of goods in the execution of works contract within this definition of sale. Therefore, "sale" as it appears in article 366(29A) is with reference to the Sales Tax Act. The M.P. Sales Tax Act indeed adopts the same. However, section 2(2) of the M.P. Entry Tax Act has expressly not imported the definition of "sale" from the Sales Tax Act. Therefore, the intention of the Legislature in excluding "execution of works contract" from the definition of "sale" is manifest and this reflects clearly in the letter of the law. 28.. Further, the contention that the term "sale" utilised in entry 52 of List II and entry 54 of List II are the same concept deriving from the expression "tax on the sale or purchase of goods" as defined in article 366(29A) seems to be incorrect....