The court emphasized the enabling provisions and the applicability of State Rules for assessment or reassessment under the Central Sales Tax Act.

Judgment

S.B. SINHA, J. - Leave granted.

2. The appellant herein is engaged, inter alia, in the printing of question papers for examination boards, competitive examination boards, recruitment boards and various universities and boards situate outside the State of Uttar Pradesh. It carries on a highly specialised and secretive work. The activities of the appellant admittedly amount to a works contract in the course of inter - State trade or commerce.

3. The Central Sales Tax Act, 1956 (for short "the 1956 Act") was enacted to formulate principles for determining when a sale or purchase of goods takes place in the course of inter - State trade or commerce or outside a State or in the course of imports into or export from India, to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter - State trade or commerce.

4. The said Act did not contain any provision to levy tax on works contract, despite insertion of clause (29 - A) in Article 366 of the Constitution of India. The question of levy of sales tax on works contract, inter alia, came up for consideration before this Court in Gannon Dunkerley and Co. v. State of Rajasthan 1. While noticing that the 1956 Act did not contain any definition of works contract, this Court held: (SCC pp. 389 - 90, para 38)

"38. Since the question of levy of inter - State sales tax under Section 6 of the Central Sales Tax Act is not in issue in these cases which only relate to imposition of sales tax by the States, we do not propose to go into the question, whether such a tax can be levied on deemed sales resulting from transfer of property in goods involved in the execution of a works contract without amending the definition of sale in Section 2(g) of the Central Sales Tax Act, so as to include such transfers within its ambit. It is, however, made clear that the absence of any amendment in the definition of sale contained in Section 2(g) of the Central Sales Tax Act, 1956 so as to include transfer of property in goods involved in execution of a works contract does not in any way affect the applicability of Sections 3, 4 and 5 and Sections 14 and 15 of the Central Sales Tax Act to such transfers."

5. It was, however, held while laying down that in the absence of law by Parliament so providing, it was not permissible for the State Legislatures to impose such a tax; it did not mean that the legislative power of the State could not be exercised till the enactment of a law under sub - clause (b) of clause (3) of Article 286 by Parliament, observing: (Gannon Dunkerley easel, SCC pp. 390 - 91, para 39)

"It only means that in the event of a law having been made by Parliament under Article 286(3)(b) the exercise of the legislative power of the State under Entry 54 in List II to impose a tax of the nature referred to in sub - clauses (b), (c) and (d) of clause (29 - A) of Article 366 would be subject to restrictions and conditions in regard to the system of levy rates and other incidents of tax contained in the said law. The existence of a law enacted under Article 286(3)(b) cannot, therefore, be regarded as a condition precedent for the exercise of the taxing power of the State under Entry 54 in List II to impose a tax of the nature referred to in sub - clauses (b), (c) and (d) of clause (29 - A) of Article 366. This does not, however, absolve Parliament from enacting a law as envisaged by Article 286(3)(b). Keeping in view the grievance of the contractors that there is wide disparity in the sales tax legislation of the various States in the matter of imposition, mode of assessment, rates, etc. of the tax on deemed sales resulting from transfer of property in goods involved in the execution of a works contract referred to in sub - clause (b) of clause (29 - A) of Article 366, the need for the law envisaged by Article 286(3)(b) cannot be minimised."

6. This Court noticed the matters which are envisaged for imposition of a tax on sale or purchase of goods after the