M/S. MYCON CONSTRUCTION LTD. versus STATE OF KARNATAKA AND ANR.

Citation: [2002] 3 S.C.R. 854 · Decided: 07-05-2002 · Supreme Court of India · Bench: SHIVARAJ V. PATIL · Disposal: Dismissed

Judgment (excerpt)

A 
MIS. MY CON CONSTRUCTION LTD. 
v. 
STATE OF KARNATAKA AND ANR. 
MAY 7, 2002 
B 
[SHIVARAJ V. PATIL AND BISHESHWAR PRASAD SINGH, JJ.] 
Sales Tax: 
Karnataka Sales Tax Act, 1957 amended by Act 5 and Act 7 of 1996/ 
C 1997-Section 17(6)(i)-Constitutional validity of-Works contract-Levy 
of Sales Tax by State on total consideration of the works contract- Legislative 
competence of State-Held, Section 17 (6) constitutionally valid and within 
the legislative competence of the State-Retrospective operation of Section 
17(6)(i)-Held constitutionally valid-Legislative competence .to enact a 
D statute being consistent with constitutional provision, a provision cannot 
become unconstitutional because of its retrospective operation-Constitution 
of India, Articles 245, 246 and 366 (29A). 
The questions which for consideration in these appeals were whether 
sub-section 6 of Section 17 ofKarnataka Sales Tax Act, 1957 as amended by 
E Act No.5of1996 is unconstitutional and whether the amendment brought in 
Clause (i) of sub-section 6 of Section 17 of the Act by Act No. 7 of 1997 
retrospectively is also unconstiutional. 
Appellant challenged the constitutional validity of sub-section 6 of 
Section 17 of the Karnataka Sales Tax Act as amended by Act No.5 of 1996 
F before the High Court on the ground that ta" is leviable only on transfer of 
property in goods, whether as goods or in some other form, therefore, even 
under a scheme of composition of tax, the tax could not be levied on any goods 
other than goods in which there was transfer of property in execution of the 
works contract. The State had no legislative competence to levy sales tax on 
a· the total consideration of the works contract so as to include items or goods 
in which there was in fact no transfer of property. It challenged the validity of 
the amendment brought in Clause (i) of sub-section 6 of Section 17 of the Act 
by Act No. 7of1997 retrospectively contending that the appellant who had 
opted for the composition scheme could not be saddled with additional burden 
of tax by the amended provision which was given effect retrospectively. High 
H 
854 
• 
MYCON CONSTRUCTION LTD. v. STATE 
855 
Court disposed of the writ petitions relying on State of Kera/a v. Builders A 
Association of India's* case. It held that question was no longer res integra 
and amendment to sub-section 6 of Section 17 by Act 5 of 1996 is 
constitutionally valid. It also upheld the validity of Act No.7of1997 holding 
that the legislature was competent to enact the law with retrospective effect. 
However, it reserved liberty to the appellant to opt for regular assessment under 
Section SB of the Act notwithstanding the fact that they had opted for B 
composition under Section 17(6) of the Act. Aggrieved, appellant filed appeals 
before the Division Bench which were dismissed. 
In appeals before this Court, appellant submitted that even while evolving 
a simplified method for assessment of tax, such as the scheme of composition, C 
the law cannot give an option to the assessee which is in the teeth of 
constitutional provisions; amendment of sub-section 6 of Section 17 with 
retrospective effect by Act 7of1997 is unconstitutional and the judgment was 
based on an erroneous assumption of facts that the assessments so far made 
were on the basis of total consideration. 
D 
Appellant in other appeals submitted that they had opted under the 
; 
composite scheme and enjoyed the benefit for almost 9 years. It would be 
unreasonable to relegate them to the same position that they occupied before 
they exercised the option for assessment under the composition scheme. 
' 
E 
Dismissing the appeals, the Court 
HELD: I.I. Sub-section 6 of Section 17 of the Karnataka Sales Tax Act, 
1957 as amended by Act No. 5of1996 and also the amendment brought in 
Clause (i) of sub-section 6 of Section 17 of the Act by Act No. 7 of 1997 F 
retrospectively, are constitutionally valid. Further the challenge on the ground 
of lack of legislative competence of the State Legislature must be repelled. 
1863-H; 864-AJ 
*State of Kera/av. Builders Association of India, )19971 2 sec 183, G 
held applicable. 
1.2. The submission that even while evolving a simplified method for 
3.ssessment of tax, such as the scheme of composition, the law cannot give an 
option to the assessees which is in the teeth of constitutional provisions does 
not survive. (864-B] 
H 
856 
SUPREME COURT REPORTS 
[2002] 3 S.C.R. 
A 
State of Kera/av

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