A.S. Anand JUDGMENT
S.C. Agrawal, J.
1 Having heard learned Counsel in SLP(C) Nos. 3365-68 of 1992 we hereby grant special leave to appeal and proceed to dispose of the appeals.
2. These appeals arising from the judgment of the Rajasthan High Court dated September 6, 1991, and the connected writ petition filed under Article 32 of the Constitution interest questions relating to imposition of tax on the transfer of property in goods involved in the execution of works contracts and the power to impose this tax became available to the State Legislature as a result of the amendments introduced in the Constitution by the Constitution (Forty Sixth Amendment) Act, 1982 hereinafter referred to as the Forty Sixth Amendment. The validity of the said amendment has been upheld by this Court in Builders Association of India and Ors. v. Union of India MANU/SC/0085/1989 : [1989]2SCR320 wherein this Court has also considered the scope and ambit of the legislative power to impose the said tax.
3. The relevant historical background leading to the enactment of the Forty Sixth Amendment has been set out in detail in the Builders Association case (supra). We would therefore only make a brief reference to the circumstances which led to the said amendment.
4. Under Entry 48 in List II of seventh Schedule to the Government of India Act 1935 the legislative power to impose taxes on sale of goods and on advertisements was conferred on the Provincial Legislatures under the Constitution as adopted the said taxing power was divided between Parliament and the State Legislature Under Entry 92 in List I of the Seventh Schedule to the Constitution. Parliament was empowered to impose taxes on the sale or purchase of newspapers and on advertisements published therein and under Entry 54 in the List II the State Legislatures were empowered to impose taxes on the sale or purchase of goods other than newspapers. With regard to imposition of sales tax on goods involved in execution of works contracts where the contract was single and indivisible the question arose whether there is a sale of those materials within the meaning of that word in Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935 and Entry 54 in List II of the Seventh Schedule to the Constitution. There was sharp cleavage of opinion among the High Court, on that question. The High Court of Madras in Gannon Dunkerley & Co. (Madras) Ltd v. State of Madras [AIR 1954 Mad 1130] took the view that the expression sale of goods in Entry 48 in List II of the Government of India Act, 1935 and Entry 54 in List II of the Constitution had the same meaning as it has in the Sale of Goods Act, 1930 and that construction works contracts were not contracts for sale of the materials used therein and that the contract, being entire and indivisible could not be broken into a contr........