TaxTMI 
TaxTMI 
1994 (6) TMI 198
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....n sale of goods and on advertisements was conferred on the Provincial Legislatures. Under the Constitution, as adopted, the said power was divided between Parliament and State Legislature, under entry 92 in List I and entry 54 of List II of the Seventh Schedule to the Constitution of India (for short "the Constitution"). 4.. Parliament was empowered to impose taxes on the sale or purchase of newspapers and on advertisements published therein and under entry 54 in List II, the State Legislatures were empowered to impose taxes on the sale or purchase of goods, other than newspapers. 5.. With regard to imposition of sales tax on goods involved in the execution of works contracts, where the contract was single and indivisible, the question arose whether there was a "sale" of those materials within the meaning of that word in entry 48 in List II of the Seventh Schedule to the GI Act and entry 54 in List II of the Seventh Schedule to the Constitution. 6.. There was a sharp cleavage of opinion among the High Courts on that question. This Court, in Gannon Dunkerley & Co. (Madras) Ltd. v. State of Madras [1954] 5 STC 216; AIR 1954 Mad. 1130 took the view that the expression "sale o....
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....ng therein pursuant to that agreement. It was further held that in a building contract, which is entire and indivisible, there is no sale of goods because in such a contract the agreement between the parties is that the contractor should construct the building according to the specifications contained in the agreement and in consideration therefor receive payment as provided therein and in such an agreement, there was neither a contract to sell the materials used in the construction; nor does the property pass therein as movables. The apex Court therefore laid down that it was not within the competence of the Provincial Legislature under entry 48 in List II of the Seventh Schedule to the GI Act, to impose a tax on the supply of materials used in such a contract treating it as a sale. The said decision, though rendered in the context of entry 48 in List II of the Seventh Schedule to the GI Act, was equally applicable to the provisions found in entry 54 in List II of the Seventh Schedule to the Constitution. 11.. While laying down such a rule, the apex Court at page 387 of STC (427 of SCR), observed: "It is possible that the parties might enter into distinct and separate contra....
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....subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." 16.. After the Forty-sixth Amendment, various State Legislatures amended their sales tax legislations to make provision for imposition of sales tax in relation to works contracts. The constitutional validity of the Forty-sixth Amendment as well as the amendments made in the State legislations on that basis were challenged before the apex Court in appeals as well as writ petitions filed under article 32 of the Constitution. The said matters were disposed of by its judgment in Builders Association of India v. Union of India [1989] 73 STC 370; [1989] 2 SCR 320. Two points were raised therein. They are: (i) the Forty-sixth Amendment was unconstitutional for the reason that it had not been ratified by the Legislatures of not less than one-half of the States by resolutions passed to that effect by those Legislatures before the Bill which led to the amendment in question was presented to the President for assent; and (ii) it was not open to the States to ignore the provisions contained in article 286 of the Constitution and th....
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.... of property in goods under sub-clause (b) of clause (29-A) is deemed to be a sale of the goods involved in the execution of works contract by the person making the transfer and a purchase of those goods by the person to whom such transfer is made. The object of the new definition introduced in clause (29-A) of article 366 of the Constitution is, therefore, to enlarge the scope of 'tax on sale or purchase of goods' wherever it occurs in the Constitution so that it may include within its scope the transfer, delivery or supply of goods that may take place under any of the transactions referred to in sub-clauses (a) to (f) thereof, wherever such transfer, delivery or supply becomes subject to levy of sales tax. So construed the expression 'tax on the sale or purchase of goods' in entry 54 of the State List, therefore, includes 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 also. The tax leviable by virtue of sub-clause (b) of clause (29-A) of article 366 of the Constitution thus becomes subject to the same discipline to which any levy under entry 54 of the State List is made subject to under the Cons....
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....stitution, the power to tax a transaction which is deemed to be a sale under article 366(29-A) of the Constitution should also be subject to the same restrictions and conditions." 21.. After referring to the provisions of clause (1) of article 286, where the expression, "a tax on the sale or purchase of goods" is used, the apex Court at page 397 of STC (348 of SCR), observed: "Here again we have to read the expression 'a tax on the sale or purchase of goods' found in article 286 as including the transfer of goods referred to in sub-clause (b) of clause (29-A) of article 366 which is deemed to be a sale of goods and the tax leviable thereon would be subject to the terms of clause (1) of article 286." 22.. With reference to clauses (2) and (3) of article 286, at page 397 of STC (348 of SCR), it further observed: "Similarly, the restrictions mentioned in clause (2) of article 286 of the Constitution which says that Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1) of article 286 would also be attracted to a transfer of goods contemplated under article 366(29-A)(b). Similarly, c....
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.... of article 286 of the Constitution and the transfers and deliveries that take place under sub-clauses (b), (c) and (d) of clause (29-A) of article 366 of the Constitution are subject to an additional restriction mentioned in sub-clause (b) of article 286(3) of the Constitution." 24.. The contention urged on behalf of the States that the properties that are transferred to the owner in the execution of a works contract are not the goods involved in the execution of the works contract, but a conglomerate, that is the entire building that is actually constructed, was rejected by the apex Court and it was observed at page 402 of STC (354 of SCR), that after the Forty-sixth Amendment, it is not possible to accede to the plea of the States that what is transferred in a works contract is the right in the immovable property. The apex Court also rejected the plea put forward on behalf of the States that the Fortysixth Amendment had conferred on the States a larger freedom than what they had before in regard to their power to levy sales tax under entry 54 of the State List. It was held that the Forty-sixth Amendment does no more than making it possible for the States to levy sales tax on ....
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....he works contract. (9) While levying sales tax on the price of materials supplied in connection with the works contract, the sales tax authorities should take into account the conditions and restrictions imposed by article 286 of the Constitution and the provisions of the CST Act. (10) The assessing authorities are required to ascertain whether the sale of goods involved in the execution of works contract had taken place in favour of the person who had assigned the contract outside the State in which works contract is being executed or whether any part of the goods so used in a works contract had been imported from abroad on account of the person, who had assigned the contract or whether any part of the goods, such as iron and steel, etc., which are declared goods, had already suffered sales tax at an earlier point in the State and whether on such goods the tax which was being levied exceeded the limit prescribed by section 15 of the Central Act. (11) The assessing authority must also take into consideration whether the sale of the goods in question had been exempted under the sales tax laws of the State from payment of sales tax or whether it had suffered payment of tax e....
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.... not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration; Explanation (1).............. Explanation (2)................. (b) Section 20) defines "goods" thus: "'goods' means all kinds of movable property (other than newspapers, actionable claims, stocks and shares and securities) and includes all materials, commodities, and articles including goods (as goods or in some other form) involved in the execution of works contract or those goods to be used in the fitting out, improvement or repair of movable property) and all growing crops, grass or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale;" (underlining* was substituted by Act 28 of 1984 with effect from May 29, 1984). (c) Items (i) to (v) with effect from May 29, 1984 and item (vi) with effect from February 2, 1983 in the definition of "sale" under clause (n) of section 2 of the Principal Act had been substituted by Act 28 of 1984, which read as under: "(n) 'sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods (other than ....
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.... (e) Clause (u) of section 2, substituted by Act 28 of 1984 with effect from May 29, 1984, defines "works contract", which reads: "(u) 'works contract' includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning, of any movable or immovable property." (f) Rules 6-A and 6-B of the Rules, inserted by Notification S.R.O. No. A. 235(a)/84 dated October 1, 1984, read as under: "6-A. Notwithstanding anything contained in rule 5, the total turnover in relation to a works contract shall be the total amount payable for the execution of the works contract inclusive of the value of all goods and the labour and other charges involved in the execution of the contract. 6-B. In determining the taxable turnover of a works contract, the amounts specified in the following clauses, shall, subject to the conditions specified therein, be deducted from the total turnover- (a) Where under the contract, the transfer of property takes place in the form of finished goods or the contractor is require....
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....afts and helicopters 15 26-6-1986 6 Supply and fixing, laying all kinds of floor tiles, mosaic tiles, slabs, stones, marbles and glazed wall tiles 15 26-6-1986 7 Supply and installation of generators, generating sets and transformers 12 26-6-1986 Provided that the taxable turnover shall not be less than the market price of the same or similar finished goods sold otherwise than under a works contract." (g) The introduction of section 3-B, the Fourth Schedule of the Principal Act and amendment to rule 6-13 by Act 42 of 1986 reflect as below: (i) "Section 3-B: Levy of tax on the transfer of goods involved in works contract.-Notwithstanding anything contained in section 3, 4, 5, 7 or 7-A but subject to the other provisions of this Act, every dealer referred to in item (vi) of clause (g) of section 2 whose total turnover relating to the business of transfer of property in goods involved in the execution of a works contract is not less than fifty thousand rupees and every casual trader or agent of a non-resident dealer in respect of such business whatever be his turnover for the year, shall pay for each year a tax on his turnover of transfer of prop....
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....ucing section 3-B and the Fourth Schedule to the Principal Act with effect from June 26, 1986 and the amendments to rule 6-13 and all those writ petitions had been disposed of by a common judgment by a Division Bench of this Court in Larsen and Toubro Limited v. State of Tamil Nadu [1993] 88 STC 289. 30. As far as Act 28 of 1984 (referred to therein as "the 1984 Amendment Act") is concerned, the Division Bench upheld its constitutional validity by observing in paragraph 19 (at page 305) thus: "19. The challenge to the amendments introduced by the 1984 Amendment Act on the basis of the Constitution (Forty-sixth Amendment) Act, 1982, could no longer survive after the decision of the apex Court in the First Builders Association case [1989] 73 STC 370. The challenge to the said provisions, therefore, fails and shall consequently stand rejected." 31. The Bench, by adopting the technique of construction, known as "reading down", upheld the constitutional validity of section 3-B of the Principal Act and in so doing, the said section had been read down to tax only the transfer of property in goods involved in the execution of works contract and not any and every turnover, notwiths....
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....itutionally valid and do not also suffer from any other infirmity in law, warranting or necessitating it to be struck down. 32.. The contention that since the charging section 3-B(1) levies a tax on transfer of property in goods alone and not the transfer of property "in some other form", rule 6-B(b) of the Rules, which provides for levying tax on the turnover relating to transfer of property in goods involved in execution of works contract in "some other from" exceeds the scope of levy of the said charging section and is therefore, not sustainable had been considered by the Bench, which ultimately negatived it. The Bench would say, that with the amendment to the definition of "sale" in section 2(n) of the Principal Act, which serves as the interpretation clause for the Act as a whole encompassing all categories of transfer of property in goods, whether as goods or in some other form, the word "goods" in section 3-B has to be considered in the sense in which it has been defined, so as to include a transfer of property in goods or in some other form and the dichotomy which existed prior to the Forty-sixth Amendment to the Constitution and the consequent amendments carried out in ....
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....id and quite in accordance with law; (b) The provisions of the Tamil Nadu General Sales Tax (Fourth Amendment) Act, 1986 (Tamil Nadu Act 42 of 1986), are intra vires and valid and quite in accordance with law; (c) The provisions of rules 6-A and 6-B of the Tamil Nadu General Sales Tax Rules, 1959, are unconstitutional, illegal and are struck down as unenforceable in law; consequently any orders passed and any action initiated on the basis of such rules shall also be invalid in law; (d) The liability or otherwise of the dealers/assessees under the Tamil Nadu General Sales Tax Act, 1959 and the Rules made thereunder, de hors our decision striking down rules 6-A and 6-B shall not stand in any manner affected or undermined by this decision; (e) The State shall be at liberty to bring to life, force and effect section 3-B by appropriate legislation, including subordinate legislation in accordance with the principles and dicta laid down by the Supreme Court of India in the decisions in (i) Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204; [1992] 2 MTCR 474 and (ii) Builders Association of India v. State of Karnataka [1993] 88 STC 248; [1992] 2 MTCR 542; ....
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.... under: (i) Section 3-B (as substituted). "Section 3-B: Levy of tax on the transfer of goods involved in works contract.-(1) Notwithstanding anything contained in sub-sections (2-A), (2-B), (3), (4), (7) and (8) of section 3, or section 7-A, but subject to the other provisions of this Act, including the provisions of sub-section (1) of section 3, every dealer referred to in item (vi) of clause (g) of section 2 shall pay, for each year, a tax on his taxable turnover of transfer of property in goods involved in the execution of works contract at the rates mentioned in sub-section (2) of section 3, or, as the case may be, in section 4. Explanation.-Where any works contract involves more than one item of work, the rate of tax shall be determined separately for each such item of work. (2) The taxable turnover of the dealer of transfer of property involved in the execution of works contract shall, on and from the 26th day of June, 1986, be arrived at after deducting the following amounts from the total turnover of that dealer: (a) all amounts involved in respect of goods involved in the execution of works contract in the course of export of the goods out of the territory o....
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....he tax under this Act shall be payable by a dealer on the sale or purchase inside the State of declared goods at the rate and only at the point specified against each in the Second Schedule on the turnover in such goods in each year." On a comparison of the old and new section 4, the following is explicit: (a) The expression, "Notwithstanding anything contained in sub-sections (2) to (8) of section 3 or section 3-A or section 3-13 but subject to the provisions of sub-section (1) of section 3" was substituted for the expression, "Notwithstanding anything contained in section 3 or 3-A"; and (b) The expression, "whatever be the quantum of turnover in that year" occurring in the fag end of old section 4 had been omitted in the new section 4. (iv) Section 7-C (newly added by insertion) "Section 7-C: Payment of tax at compounded rates by civil works contractor.-(1) Notwithstanding anything contained in section 3-B, every Dealer referred to in item (vi) of clause (g) of section 2, in so far as civil works contract is concerned, may, at his option, instead of paying tax in accordance with section 3-B, pay, on the total value of the civil works contract executed by him in a y....
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....y of the assessee concerned and in this view of the matter, I do not think it necessary to pen down the facts even in some detail in one or two actions and in other cases generally, except to state that in most of the cases, interim orders in the nature of stay or injunction had been obtained preventing or restraining the authorities concerned from proceeding further, pending disposal of the respective writ petitions. (a) When those W.M.Ps. came up for hearing, learned counsel for the respective petitioners-assessees and learned Additional Government Pleader (Taxes) agreed for the disposal of the main writ petitions themselves and consequently, all of them had been listed for hearing and arguments were heard. 38.. From the nature of the submissions, emerged from the array of learned counsel for the respective petitioners-assessees and learned Additional Government Pleader (Taxes) representing the respective respondents in all these actions, the following points, in pith and substance, arise for consideration: (1) The non obstante clause in section 3-B (old), which overrides section 4 (before amendment) is in violation of the provisions of the Central Act. (2) Sec....
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....f the Act', and, therefore, does not stand by itself and that too completely divorced from the other provisions. Notwithstanding the non obstante clause in the opening part of the section, it abundantly makes it clear in the following phrase that it is also subject to the other provisions of the Act . It cannot be ignored that the non obstante clause is also sometimes appended to a section or rule in the beginning with a view to give the enacting part of that section or rule, in case of conflict, an overriding effect over the provisions of the Act mentioned in that clause. In this case before us, though the non obstante clause would indicate that section 3-B should prevail despite anything to the contrary in sections 3, 4, 5 and 7 or 7-A, the immediately following phrase 'but subject to the other provisions of this Act' makes the mandate clear that it would be subject to the other governing provisions." (paragraph 25, pages 310-311) "27. The contentions of the learned counsel for the petitioners that though in the execution of a works contract, transfer of property in goods is involved whether as goods or in some other form, section 3-B which is the charging provision as well....
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....ected in view of our conclusions as above." (pages 312-313). "30............ Equally untenable, in our view, are the contentions based on the so-called under-classification, the alleged invalidity in fixing the ceiling of percentage for deduction in respect of works-labour and other charges and the alleged absence of guidelines when a particular contract may be construed to fall under more than one of the illustrated items in the Table appended to clause (b) of rule 6-B of the Rules. The apex Court had an occasion to consider the legality and propriety of fixing a percentage for deduction, on account of the labour and other charges in the second Builders Association of India case [1993] 88 STC 248; [1992] 2 MTCR 542 which arose under the Karnataka Sales Tax Act. While repelling the challenge in this regard, the apex Court held that charges for labour and services cannot be uniform for all types of works contract and they would vary with the nature of the contract and services, and consequently, it is permissible for the rule-making authority to categorise all works contracts into different categories and prescribe a different percentage of the value of the contract for....
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....ties involved in the formulation of a taxation policy. Consequently, the plea of alleged discrimination has no merit and it has not been also substantiated before us with any definite or concrete materials, warranting our interference on that ground." (pages 315-316) 40.. Thus it is crystal clear that point Nos. 1 to 3, as now raised, had been earlier considered and negatived by a Division Bench of this Court, in the case of Larsen and Toubro Limited [1993] 88 STC 289. 41.. Useful reference may be made at this juncture as to what the apex Court of this country has said as to the binding effect of a decision in the case of T. Govindaraja Mudaliar v. State of Tamil Nadu AIR 1973 SC 974. Among several challenges, what came up for consideration was, whether the question regarding the validity of Chapter IV-A of the Motor Vehicles Act, 1939, on the ground of infringement of article 19(1)(f) of the Constitution, which though open, was not raised in earlier writ petitions, can ever be raised in subsequent writ petitions, notwithstanding the fact that the validity of the said chapter had been upheld in all previous decisions. Their Lordships, in answering the said question expressed ....
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....ore, the decision of the court was invited in the light of that argument. This contention, however, was repelled by the following observations at page 794: 'The binding effect of a decision does not depend upon whether a particular argument was considered therein or not, provided that the point with reference to which an argument was subsequently advanced was actually decided.' It is common ground in the present cases that the validity of Chapter IV-A of the Act has been upheld on all previous occasions and merely because the aspect now presented based on the guarantee contained in article 19(1)(f) was not expressly considered or a decision given thereon will not take away the binding effect of those decisions on us." 42.. In view of what has been stated as above, it is not open to the petitioners-assessees in all these actions to reagitate the same and consequently point Nos. 1 to 3 are answered in the negative. 43.. Point No. 4: It is but necessary to recapitulate at this juncture that the charge created under section 3-B by the Act 42 of 1986, with effect from June 26, 1986, though held to be valid, had, however, been made dormant and liable to be benumbed by strikin....
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....s or authorises the imposition of a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify. The Central Act came to be passed in 1956 and section 14 declared certain goods to be of special importance in interState trade or commerce. Under section 15 of the same Act, every sales tax law of a State in so far as it imposes or authorises imposition of tax on the sale or purchase of the declared goods was to be subjected to restrictions and conditions as set out therein. One of the conditions was that the tax payable under the State law in respect of such declared goods shall not exceed 4 per cent of the sale or purchase price thereof and that such tax shall not be levied at more than one stage. The second condition was that where the sales tax was levied under the State law in respect of the sale or purchase inside the State of any declared goods, and such goods were sold in the course of inter-State trade or commerce, the tax so levied and if paid was to be refunde....
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....p; 50 Transfer value 100 100 100 100 100 Illustration does not include work through sub-contractor 48. Let me now embark upon a discussion of that facet of the submission, which revolves on the alleged aspect of two stage levy of tax in respect of declared goods from the point of view of purchase from registered and unregistered dealers under section 3-B. In order to understand the various facets of the submissions, as aforesaid, one must visualise a clear picture of the methodology that had been provided for subjecting the goods involved in the execution of the works contract to sales tax. It is not as if sales tax is calculated on each and every item of goods involved in the execution of works contract and then totalled up in determination of the quantum of tax payable by the assessee. This is not done, because of the peculiar features of the works contract. Transfer of property involved in execution of the works contract takes place at the time of incorporation and not earlier. Therefore, the transfer value at the time of incorporation has to be taken into account for levy of tax. The methodology therefore adopted ....
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.... tax all the goods involved in the execution of a works contract at a uniform rate which may be different from the rates applicable to individual goods, because the goods which are involved in the execution of the works contract, when incorporated in the works can be classified into a separate category for the purpose of imposing the tax. What is contended on behalf of the State is that the profit margin of the contractor on the tax suffered declared goods, namely, Rs. 10 in the illustration, cannot at all be excluded from the "taxable turnover" and to put it otherwise, such profit margin should also suffer tax and that perhaps was the reason for the deduction given for such goods at the purchase value under section 3-B(2)(b) and such being the case, the contention of the other side, as noted above, has to necessarily bristle next to nothing. 50.. To the submissions emerging from the State as well as from the petitioners-assessees, I am unable to affix my seal of approval. The submissions as above appear to be captivating and attracting at first sight, on a cursory glance or survey of salient provisions adumbrated under section 3-B(2)(b), if made, treating section 3-B (as substi....
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....spect of such a stand, implicit reliance is placed in Govindan & Co. v. State of Tamil Nadu [1975] 35 STC 50, wherein a Division Bench of this Court expressed that to claim the benefit of tax on the ground that the sales effected by the assessees are second sales, the assessees need only to show that the dealers in question are real persons and their sales are taxable under the Act and there is no need to show that their sellers in fact paid the tax. 52.. Of course, to such a view of this Court, the Supreme Court affixed its seal of approval in the case of State Tamil Nadu v. Raman & Co. [1994] 93 STC 185. But the said decision approving the view of this Court is distinguishable for the simple reason, as rightly contended by learned Additional Government Pleader (Taxes) that in order to claim deduction in respect of second sales of goods in the First and Second Schedules, unlike section 3-B(2)(b), rule 6(g) of the Rules does not contain any such restriction, as purchase from a registered dealer liable to pay tax. Rule 6 uses the word "dealer", which is in contra distinction to the words used in section 3-B(2)(b), namely, "registered dealer". The insistence on proof of a condi....
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....t that the goods in question have come out of a basic raw material or a common substance is not of any consequence. The object of taxation is the commercial identity and not the substance out of which it is made. 56.. It is not as if the tangle posed by the rival submissions as above did not arise for consideration before courts of superior jurisdiction and in fact, the apex Court of this country dealt with such a question in decisions more than one and of them, the decision in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319, which decided the said question, by entering into discussion in a scintillating fashion, may be usefully referred to here. (a) It was claimed on behalf of the dealers that by reason of restrictions imposed by section 15 of the Central Act, the levy of tax under the Tamil Nadu Sales Tax Act (referred to therein as "the Tamil Nadu Act") was not permissible. The discussion leading to the conclusion on such a sort of contention is reflected as below: "Section 14 of the Central Act declares certain goods enumerated there to be of special importance in inter-State trade or commerce'. The list of goods given there at No. (iv), as it stood in 1968....
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.... scrap iron and leftovers of processes of manufacturing to 'wires' and 'wheels, tyres, axles and wheel sets'. Some of the enumerated items like 'melting scrap' or 'tool alloys' and 'special steels' could serve as raw material out of which other goods are made and others are definitely varieties of manufactured goods. If the subsequent amendment only clarifies the original intentions of Parliament, it would appear that heading (iv) in section 14, as originally worded, was also meant to enumerate separately taxable goods and not just to illustrate what is just one taxable substance: 'iron and steel'. The reason given, in the Statement of Objects and Reasons of the 1972 Act, for an elucidation of the 'definition' of iron and steel, was that the 'definition' had led to varying interpretations by assessing authorities and the courts so that a comprehensive list of specified declared iron and steel goods would remove ambiguity. The Select Committee, which recommended the amendment, called each specified category 'a sub-item' falling under 'iron and steel'. Apparently, the intention was to consider each 'sub-item' as a separate taxable commodity for purpose of sales tax. Perhaps some item....
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.... is general in terms it may restrict it: see this explained with many examples, Stukeley v. Butler, Hob. 171.' The quotation, given above, from Stroud's Judicial Dictionary shows that, ordinarily, the expression 'that is to say' is employed to make clear and fix the meaning of what is to be explained or defined. Such words are not used, as a rule, to amplify a meaning while removing a possible doubt for which purpose the word 'includes' is generally employed. In unusual cases, depending upon the context of the words 'that is to say', this expression may be followed by illustrative instances. In Megh Raj v. Allah Rakhia AIR 1947 PC 72, the words "that is to say", with reference to a general category 'land' were held to introduce, 'the most general concept' when followed, inter alia, by the words 'right in or over land'. We think that the precise meaning of the words 'that is to say' must vary with the context. Where, as in Megh Raj's case AIR 1947 PC 72, the amplitude of legislative power to enact provisions with regard to 'land' and rights over it was meant to be indicated, the expression was given a wide scope because it came after the word 'land' and then followed 'rights over....
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....e' and then sold in the market, such wire would only be taxable once so long as it retains its identity as commercial goods belonging to the category 'wire' made of either iron or steel. The mere fact that the substance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make no difference for purposes of the law of sales tax. The object appears to us to be to tax sales of goods of each variety and not the sale of the substance out of which they are made. As we all know, sales tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are merely joined together, they may remain commercially the goods which cannot be taxed again, in a series of sales, so long as they retain their identity as g....
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....nion that for the purpose of enjoying the benefit of single point taxation, the various articles mentioned in the different entries must retain their identity as a commercial commodity. Once that identity is lost and a different commercial commodity emerges as a result of manufacturing process or as a result of any other process, then the resultant commodity cannot be said to be the same commodity as the one from which it resulted and, therefore, the assessee cannot claim exemption from tax in respect thereon on the ground that the original commodity suffered tax. In other words, in the present case, the assessee cannot claim exemption from tax in respect of sales of M.S. angles and M.S. squares on the ground that the M.S. rounds out of which they were produced had suffered tax already. The position will be different as far as M.S. rounds sold in this State are concerned. They are commercially the same as the M.S. rounds that were purchased from the State out of which the M.S. rounds sold were made. Consequently, we are of the opinion that out of the three articles sold in the State of Tamil Nadu, namely, M.S. rounds, M.S. angles and M.S. squares, only M.S. rounds will be entitled ....
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....y to fall under the head "other like charges", which is included under the caption, "labour charges and other like charges" in section 3-B(2)(e). The expression "labour charges and other like charges" is of wider import, which, I am of the view, will take in its fold profit margin of the contractor, apart from labour charges actually incurred, besides the cost of consumables involved in the execution of works contract. The words "like charges" included in the expression, "labour charges and other like charges" immediately followed by the expression, "not involving transfer of property in goods" is full of significance. The word "like" will not mean "identical". The meaning of these two words are not identical but distinctively dissimilar, connoting different meanings. 62.. The Concise Oxford Dictionary of Current English (Eighth Edition, 1990) at page 585, gives the meaning for the word, "identical" as, "1. (of different things) agreeing in every detail; 2.. (of one thing viewed at different times) one and the same.......... and at page 687, for the word "like" as, "similar to, characteristic of." 63.. In the light of the meaning for the word, "like", as extracted above....
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.... This indicates that though the tax is imposed on the transfer of property in goods involved in the execution of a works contract, the measure for levy of such imposition is the value of the goods involved in the execution of a works contract. We are, however, unable to agree with the contention urged on behalf of the contractors that the value of such goods for levying the tax can be assessed only on the basis of the cost of acquisition of the goods by the contractor. Since the taxable event is the transfer of property in goods involved in the execution of a works contract and the said transfer of property in such goods takes place when the goods are incorporated in the works, the value of the goods which can constitute the measure for the levy of the tax has to be the value of the goods at the time of incorporation of the goods in the works and not the cost of acquisition of the goods by the contractor. We are also unable to accept the contention urged on behalf of the States that in addition to the value of the goods involved in the execution of the works contract the cost of incorporation of the goods in the works can be included in the measure for levy of tax. Incorporation....
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....charges for obtaining on hire or otherwise machinery and tools used in the execution of a works contract [item No. (iv)], and the cost of consumables such as water, electricity, fuel, etc., which are consumed in the process of execution of a works contract [item No. (v)] and other similar expenses for labour and services will have to be excluded as charges for supply of labour and services. The charges mentioned in [item No. (vi)] cannot, however, be excluded. The position of a contractor in relation to a transfer of property in goods in the execution of a works contract is not different from that of a dealer in goods who is liable to pay sales tax on the sale price charged by him from the customer for the goods sold. The said price includes the cost of bringing the goods to the place of sale. Similarly, for the purpose of ascertaining the value of goods which are involved in the execution of a works contract for the purpose of imposition of tax, the cost of transportation of the goods to the place of works has to be taken as part of the value of the said goods. The charges mentioned in item No. (vii) relate to the various expenses which form part of the cost of establishment of th....
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....labour and services; (h) profit earned by the contractor to the extent it is relatable to supply of labour and services. The amounts deductible under these heads will have to be determined in the light of the facts of a particular case on the basis of the material produced by the contractor. We may, however, make it clear that apart from the deductions referred to above, it will be necessary to exclude from the value of the works contract the value of the goods which are not taxable in view of sections 3, 4 and 5 of the Central Sales Tax Act and goods covered by sections 14 and 15 of the Central Sales Tax Act as well as goods which are exempt from tax under the sales tax legislation of the State. The value of goods involved in the execution of a works contract will have to be determined after making these deductions and exclusions from the value of the works contract." 64A. In view of what has been stated above, section 3-B (both prior to and after March 12, 1993) cannot be stated to be violative of article 286(3)(a) of the Constitution as well as sections 14 and 15 of the Central Act. 65.. Point No. 7: This question hinges upon the validity of the newly added....