AIR 2000 SUPREME COURT 808 ::2000 AIR SCW 359 ::2006 (1) Com LJ 302 SC ::(2000) 91 ECR 771 ::(2000) 159 CurTaxRep 37 ::2000 (2) SCC 385 ::(2000) 1 Scale 381 ::(2001) 1 KantLJ(Trib) 189 ::2000 (2) BLJ 552 ::2000 (118) STC 9 ::2000 (1) LRI 1037 ::2000 (1) Supreme 346 ::(2000) 1 JT 498 (SC) ::2000 (1) JT 498 ::2000 (3) SRJ 63

Supreme Court Of India

(From : Madhya Pradesh)*

Hon'ble Judge(s): S. P. Bharucha, N. Santosh Hegde , JJ

(A) Constitution of India , Art.366(2A)(b)— (as incorporated by 46th Constitutional amendment) - Sales tax-on works contract - Definition of 'sale' and 'works contract - Enlargement - Effect - State can divide works contract into contract for sale of goods involved and contract for supply of labour and service - But for this dominant intention of works contract should be transfer of property. Madhya Pradesh General Sales Tax Act (2 of 1959) , S.2(n)— Prior to the Amendment of Article 366, the States could not levy sales-tax on sale of goods involved in a works contract because the contract was indivisible. All that has happened in law after the 46th Amendment is that it is now open to the States to divide the works contract into two separate contracts by a legal fiction (i) contract for sale of goods involved in the said works contract and (ii) for supply of labour and service. This division of contract under the amended law can be made only if the works contract involved a dominant intention to transfer the property in goods and not in contracts where the transfer in property takes place as an incident of contract of service. The Amendment, has not empowered the State to indulge in microscopic division of contracts involving the value of materials used incidentally in such contracts. What is pertinent to ascertain in this connection is what w....