BUILDERS ASSOCIATION OF INDIA & ORS. ETC. ETC. versus UNION OF INDIA & ORS. ETC. ETC.

Citation: [1989] 2 S.C.R. 320 · Decided: 31-03-1989 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Disposed off

Cited by 9 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

A 
BUILDERS ASSOCIATION OF INDIA & ORS. ETC. ETC. 
v.. 
UNION OF INDIA & ORS. ETC. ETC. 
MARCH 31, 1989 
B 
[R.S. PATHAK, CJ, E.S. VENKATARAMIAH, 
}-
RANGANATH MISRA, M.N. VENKATACHALIAH AND 
f-
N.D. OJHA, JJ.] 
Constitution of India 1950: Articles 286, 366(29A) and Seventh 
' 
Schedule List II Entry 54-Constitutional validity of Constitution 
c (Forty-sixth Amendment) Act 1982-Validity of-Power of State legis-
--4 -
lature to levy tax on the transfer of property in goods involved in the 
execution of works contracts-Suggestion that Amendment Act should 
be prefaced by statement that it had been duly ratified by the States. 
Words and Phrases: "Building Contracts"-Works contracts-
0 What are. 
The petitioners in the writ petition are building contractors en-
gaged in the business of constructing buildings, factories, bridges etc. + 
They have challenged the levy of sales tax, by the concerned State 
Governments under the sales tax laws passed by them, on the turnover 
E of the works contracts entered into by them. 
-
The petitions raised two questions for the consideration of the 
Court; the first question relates to the constitutional validity of the 46th 
Amendment Act by which the State legislatures have been empowered 
,._. 
to levy sales tax on certain transactions described in sub-clauses (a) to 
F (f) of clause (29-A) of Article 366 of the Constitution, and the second 
question is whether the power of the State legislature to levy tax on the 
~ 
transfer of property in goods involved in the execution of works con-
tracts referred to in sub-clause (b) of clause (29A) of Art. 366 of the 
' 
Constitution is subject to the restrictions and conditions in Art. 286 of 
the Constitution. 
G 
r-
On the passing of the 46th Amendment, the State Governments 
after making necessary amendments in their laws commenced to levy 
sales tax on the turn-over of the works entered into by the building 
contractors for constructing houses, factories, bridges etc. In some 
States taxable turnover was determined by deducting the money spent 
H on labour engaged in connection with the execution of the works con-
320 
BUILDERS ASSCN. v. U.0.1. 
321 
tracts. In some other States .a certain fixed percentage of the total 
turnover was deducted from the total turnover as labour charges before 
arriving at the taxable turnover. Each State adopted its own method of 
determining taxable turnover either by framing mies under its sales tax 
law or by issuing administrative directions. 
Affected and aggrieved by the levy of sales tax so imposed, the 
petitioners tiled the writ petitions under Art. 32 of the Constitution 
challenging inter alia the Constitutional validity of the 46th Amendment 
Act. Civil appeals were also tiled by some other building contractors 
against the orders of the High Court for similar relief. 
The petitioners and the appellants have raised two contentions; 
viz (1) that the 46th Amendment Act is uncollStitutional because it bad 
not" been ratified by the legislatures ofnot less than one-halfof the states 
by Resolutions passed to that effect by these legislatures before the Bill 
which led to the amendment in question was presented to the President 
for assent; and (2) that it was not open to the States to ignore the 
provisions contained in Art. 286 of the Constitution and the provisions 
of the Central Sales Tax Act, 1966 while making assessment under the 
Sales Tax laws passed by the legislatures of the States. 
Notices were issued to the Attorney General for India and the 
Advocates General for the concerned States, some of which contested 
the Issues. 
The main contention of the States on the second point was that 
sub-clause (b) of Article.32"ii(29 A) bestowed on them a power to levy tax 
on works contract independent of Entry 54 of List II. 
Disposing of the Writ Petitions and directing that the appeals be 
now placed before the Bench hearing Tax matters, this Court, 
)-. 
HELD. There has been in the instant case due compliance of 
the provisions contained in the proviso to Art. 368(2) of the Consti-
tution. [344E] 
Sales tax laws passed by the legislatures of States levying taxes on 
the transfer of property in goods-whether as goods or in some other 
form-involved in the execution of a works contract are subject to the 
restrictions and conditions mentioned in each clause of sub-clauses of 
Art. 286ofthe Constitution. [355B] 
A 
B 
c 
D 
E 
F 
G 
H 
B 
c 
322 
SUPREME COURT REPORTS 
[1989] 2 S.C.R. 
All transfe

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