PANDIT BANARSI DAS BHANOT versus THE STATE OF MADHYA PRADESH & OTHERS

PANDIT BANARSI DAS BHANOT versus THE STATE OF MADHYA PRADESH & OTHERS

In an entire and indivisible works contract there is no sale of materials as such, and thus, the Provincial Legislature is not competent to levy sales tax on materials supplied in such contracts by treating it as a sale. Exemptions granted under s. 6(1) are conditional and subject to notifications under s. 6(2). However, powers of delegation to amend exemption schedules by notification are not unconstitutional.

Parties
Appellant: Pandit Banarsi Das; Appellants: Jabalpur Contractors' Association and others; Appellant: Madhya Pradesh Contractors' Association, Nagpur; Respondents: State of Madhya Pradesh and Others; Intervener: State of Bombay (Intervener); Intervener: State of Punjab (Intervener)
Jurisdiction
India
Judgment Date
03 April 1958
Procedural Posture
Civil Appeal / Appeal From Judgment and Decree of the Former Nagpur High Court in Misc. Petitions Nos. 245, 279 and 308 of 1954
Outcome
Appeals allowed.
Legal Topics
Sales Tax, Legislative Competence, Delegated Legislation, Works Contracts, Building Contracts, Exemptions, Ultra Vires
Taxation Law Constitutional Law Sales Tax Legislative Competence Delegated Legislation Works Contracts Building Contracts Exemptions +1 more

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Parties

Pandit Banarsi Das

Appellant

Jabalpur Contractors' Association and others

Appellants

Madhya Pradesh Contractors' Association, Nagpur

Appellant

State of Madhya Pradesh and Others

Respondents

State of Bombay (Intervener)

Intervener

State of Punjab (Intervener)

Intervener

Procedural Posture

Civil Appeal / Appeal From Judgment and Decree of the Former Nagpur High Court in Misc. Petitions Nos. 245, 279 and 308 of 1954

Legal Issues

  1. 1 Whether the Provincial Legislature had authority under Entry 48 of List II, Sch. VII of the Government of India Act, 1935, to impose a tax on the supply of materials in works contracts by treating supply as a sale.
  2. 2 Whether the withdrawal of exemption by notification under s. 6(2) of the Central Provinces and Berar Sales Tax Act, 1947, was an unconstitutional delegation of legislative authority.

Ratio Decidendi

In an entire and indivisible works contract there is no sale of materials as such, and thus, the Provincial Legislature is not competent to levy sales tax on materials supplied in such contracts by treating it as a sale. Exemptions granted under s. 6(1) are conditional and subject to notifications under s. 6(2). However, powers of delegation to amend exemption schedules by notification are not unconstitutional.

Court Disposition

Appeals allowed.

Orders

  • Orders of the High Court set aside.
  • Respondents restrained from enforcing the Central Provinces and Berar Sales Tax Act, 1947, insofar as it seeks to impose a tax on construction works which are entire and indivisible.