TaxTMI 
TaxTMI 
2004 (8) TMI 114
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Appeal No. 9027, Civil Appeal No. 9028 of 2003, Civil Appeal No. 194, Civil Appeal No. 195, Civil Appeal No. 4634, Civil Appeal No. 4635, Civil Appeal No. 4636, Civil Appeal No. 4637, Civil Appeal No. 4638, Civil Appeal No. 4639, Civil Appeal No. 4640, Civil Appeal No. 4651, Civil Appeal No. 4652, Civil Appeal No. 4653, Civil Appeal No. 4654, Civil Appeal No. 4655, Civil Appeal No. 4656, Civil Appeal No. 4657, Civil Appeal No. 4658, Civil Appeal No. 4659, Civil Appeal No. 4660, Civil Appeal No. 4661 of 2004, S.B.S.T.R. Nos. 646, S.B.S.T.R. Nos. 647, S.B.S.T.R. Nos. 655, S.B.S.T.R. Nos. 656, S.B.S.T.R. Nos. 660 of 1999 decided on August 12, 2004 Sushil Kumar Jain and Ansar Ahmad Chaudhary, Advocates, for the respondents. T.S. Doabia and M.N. Krishnamani, Senior Advocates (Y.P. Mahajan, Ravi P. Mehrotra, Ms. Monika Arora, Shreekant N. Terdol, B.V. Balram Das, Mrs. Sushma Suri, D.S. Mahra, Sanjeev Pandey and Nikhil Nayyar, Advocates, with them), for the appellant. [Judgment per : Santosh Hegde, J.]. - These appeals involving similar questions of law are preferred against the judgment of the High Court of judicature for Rajasthan at Jodhpur made in different ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....emained only as a ''Custodian" of such materials and used them on creation of immovable properties for completing the contracted job. In such circumstances, it is contended that there is no element of sale, therefore, the appellant Union cannot be treated as a 'dealer' under the Act nor it can be subjected to the levy of Sale Tax. The next contention in this regard is assuming for argument sake there would be some sort of a sale, the property so transferred being the property of the Union of India, under Article 285 of the Constitution of India the State has no authority to impose a tax on the property of the Union. 7.By the impugned judgment and orders the High Court of Rajasthan has rejected both the contentions advanced on behalf of the appellants and has held that the transfer in question amounted to sale as defined under the Act and the State tax being not a direct tax on the property of the Union as contemplated under Article 285 of the Constitution the same is liable for levy of Sales Tax. 8.In these appeals number of Advocates appearing for the appellants have commonly contended that in view of the exemption provided in Article 285 of the Constitution,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned we are satisfied that the question involved in these appeals are no more res integra. This Court as far back as in the year 1963 in a presidential reference case under Sea Customs Act held : "The bar of Article 289 of the Constitution of India does not apply to indirect tax like Customs duty, Central Excise duty, Sales Tax etc." 13.In the said case it was held that exemption of property from tax contemplated in Article 289 was confined to direct tax on property and not to the levy of indirect taxes. The ratio of the said judgment though delivered in context of Article 289, applies to the exemption in favour of the Union of India under Article 285 in all force. 14.Judgment in Sea Customs case (supra) was followed by this Court in the case of New Delhi Municipal Council v. State of Punjab & Ors. - 1997 (7) SCC 339, wherein this Court by majority judgment at para 148 held :- "It would be appropriate at this stage to notice the ratio of two judgments of this Court dealing with Article 289. In Sea Customs Act, Re, a Special Bench of nine learned Judges, by a majority, laid down the following propositions : (a) clause (1) of Article 289 provides for exemption of property ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ale. Therefore, though both excise duty and sales tax levied with reference to goods, the two are very different imposts; in one case the imposition is on the act of manufacture or production while in the other it is on the act of sale. In neither case therefore can it be said that the excise duty or sales tax is a tax directly on the goods for in that event they will really become the same tax." The decision in the Sea Customs Act case was considered by another nine-Judge Bench in the case of New Delhi Municipal Council v. State of Punjab and was affirmed." 16.From the above judgment of this Court, it is clear that Union is not exempted from the levy of indirect tax under Article 285 of the Constitution. The above discussion also shows reliance placed on the judgment of this Court in the case of New Delhi Municipal Council (supra) by one of the learned Counsel for the appellants is wholly misconceived and is opposed to his contention with reference to Article 285 of the Constitution. 17.The next contention urged on behalf of the appellant in the alternative is that on the facts of the cases in hand, there is no transaction of sale involved. For this strong reliance was pl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsure that quality materials are procured, the PWD undertook to supply such materials and stores as from time to time required by the contractor to be used for the purpose of performing the contract only. The value of such quantity of materials and stores so supplied was specified at a rate and got set off or deducted from any sum due or to become due thereafter to the contractor.........." 20.An attempt to distinguish the judgment in 'Goyal's case on fact came to be rejected by this Court in the above case of Rashtriya Ispat Nigam Ltd. 21.In the instant case also by the use or consumption of material supplied in the work of construction, there was passing of property and by virtue of receipt of value of such transferred property by way of adjustment in bills the consideration has also passed which in our opinion satisfies the definition of 'sale' in the local Sales Tax Act. 22.In Coach Behar Contractors Association v. State of West Bengal and Ors. this Court followed the decision in M/s. N.M. Goel & Co. (supra) and considering a similar clause as is found in the appeal before us this Court held that the goods supplied to the contractor by the contractee an....