TaxTMI 
TaxTMI 
2001 (9) TMI 1080
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....o the Constitution the State Act had been amended and section 3-B was introduced in 1986, which was recast and substituted in the year 1993 by Act 25 of 1993 which amending Act also introduced section 7C into the State Act. 3.. The Constitution Bench of the Supreme Court in the case of Builders Association of India v. Union of India [1989] 73 STC 370 held that Constitution amendment enabling the States to levy tax on transfer of property in the goods involved in the execution of contract created a legal fiction dividing that contract into two, one of which dealt with transfer of property of the goods involved in the execution of the works contract. The constitutional amendment introducing clause (29A) in article 366, it was observed by the court, was made in order to overcome the effect of decision of the Supreme Court in the case of State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1958] 9 STC 353 wherein it was held that a works contract was an indivisible contract and the turnover of the goods used in execution of the works contract would not be exigible to sales tax. 4.. The later Constitution Bench of the apex Court in the case of Gannon Dunkerley & Co. v. State of Ra....
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....nsfer 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 of India, or in the course of import of the goods into the territory of India or in the course of inter-State trade or commerce; (b) all amounts for which any goods, specified in the First Schedule or Second Schedule, are purchased from registered dealers liable to pay tax under this Act and used in the execution of works contract in the same form in which such goods were purchased; (c) all amounts relating to the sale of any goods involved in the execution of works contract which are specifically exempted from tax under any of the provisions of this Act; (d) all amounts paid to the sub-contractors as consideration for execution of works contract whether wholly or partly: Provided that no such deduction shall be allowed unless the dealer claiming deduction, produces proof that the sub-contractor is a registered dealer liable to pay tax u....
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....n within such period and in such manner as may be prescribed: Provided that the option under this sub-section for the financial years commencing on the 1st day of April, 1993 and the 1st day of April, 1994, shall be exercised on or before the 30th day of June 1994: Provided further that the option under this sub-section in respect of works contract other than civil works contract for the financial year commencing on the 1st day of April, 1999 shall be exercised on or before the 31st day of January, 2000. (3) Where a dealer has exercised his option under sub-section (1),- (a) in respect of each works contract, such option shall be final till the completion of such works contract; (b) in respect of all works contract, such option shall be final for that financial year. (4) A dealer, exercising option under sub-section (1) shall, so long as the option remains in force, not be required to maintain accounts of his business under this Act or the rules made thereunder except the records in originals of the works contract, extent of their execution and payments received or receivable in relation to such works contract, executed or under execution." 7. While section 3-B conforms to t....
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....ay be prescribed." 12.. The Act does not anywhere provide that the total value of the works contract in respect of which a dealer has exercised the option to pay the prescribed percentage towards tax instead of paying in accordance with section 3-B, shall be deemed to be either the turnover of such dealer or the taxable turnover of such dealer in so far as the works contract in which he is engaged is concerned. 13.. It is in this background that the arguments advanced for the dealer that the Tamil Nadu Additional Sales Tax Act which imposes an additional tax on the tax payable under the TNGST Act with reference to taxable turnover of such dealer-a tax which cannot be passed on by the dealer to any other-is not attracted to the amounts paid by the dealer under section 7-C of the TNGST Act, 1959 is required to be considered. 14.. The Tamil Nadu Additional Sales Tax Act, 1970 provides for levy of additional tax on the sale or purchase of goods. Section 2 of that Act provides for the levy. Section 2(1)(aa) provides thus: Section 2: Levy of additional tax in the case of certain dealers.(1)(aa) The tax payable under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 195....