J. Chelameswar J.

These two writ petitions raise an identical issue. Therefore, the facts in WP No. 1278 of 2006 are taken as representative facts and the writ petition is filed with the prayer as follows :

"For the reasons stated in the accompanying affidavit it is prayed that this honourable court may pass writ of mandamus or any other appropriate writ, order or direction under article 226 of the Constitution of India, declaring that section 22(3) and (4) of the Andhra Pradesh Value Added Tax Act, 2005 along with rule 18(1) of the Andhra Pradesh Value Added Tax Rules, 2005 and Explanation VI of section 2(28) along with section 2(29)(c)(i)(a) and rule 17(2)(k) are ultra vires and beyond the legislative competence of the State of Andhra Pradesh under serial No. 54, List II of the Seventh Schedule of the Constitution of India, being violative of serial No. 92-A of the Union List and articles 269(1)(g) and 286, and sections 3, 4 and 5 of the Central Sales Tax Act, 1956 besides being ultra vires article 366(29A) and the said provisions being inconsistent with articles 14, 19(1)(g) are inoperative, and the recoveries under the said provisions are violative of articles 265 and 300A of the Constitution of India or pass such further or other orders or directions as may deem fit and proper in the circumstances of this case, and render justice."

The first petitioner is a limited company and the second petitioner is a shareholder of the first petitioner-company. The first petitioner-company is involved in different business activities like manufacturing, trading, execution of works contract, etc. They are executing the various projects on turnkey basis in the State of Andhra Pradesh either for the State or various departments of the Government of India. According to the petitioner, in the process of execution of such contracts, one or some of the following factors :

(i) Specific contract even without involving transfer of property in goods and thus not liable to levy of tax under the Act, yet will be subjected to tax deduction at source,

(ii) supply of specific goods as per the terms and conditions of contract in the nature of "sale in the course of inter-State trade or commerce", liable to levy of Central sales tax in the dispatching State. Though not exigible to taxation jurisdiction of Andhra Pradesh yet may be subjected to tax deduction at source under APVAT Act,

(iii) specific nature of work relating a particular contract being entrusted on back-to-back basis to registered sub-contractors who under the scheme of the APVAT Act while will be liable to tax, yet the petitioner being the main contractor despite their no-tax liability may be subjected to tax deduction at source under APVAT Act, are invariably present in such contracts. The first petitioner is a registered dealer both under the Andhra Pradesh Value Added Tax Act, 2005 (APVAT Act) and the Central Sales Tax Act, 1956. It is further asserted that the petitioner has been regularly filing prescribed returns under the above-mentioned Acts. It is further stated in the affidavit filed in support of the writ petition that the assessments of the first petitioner are completed under the APVAT Act for the assessment years 2001-2002 and 2002-03 resulting in a refund of Rs. 77,77,522 and Rs. 97,99,619, respectively. The said amounts were deducted by the employer/contractee at the time of payment of bills of the petitioner pursuant to the various provisions of the VAT Act which are impugned in the present writ petitions.

It is argued by the learned counsel for the petitioner that the provisions of section 2(28), Explanation VI and section 22(3) and (4) are beyond the competence of the Legislature of Andhra Pradesh apart from being violative of article 286 of the Constitution read with sections 3 and 4 of the Central Sales Tax Act, 1956. Broadly the scheme of the Act insofar as it is relevant for the present purpose is as follows :

Under section 4(4) ((4) Every VAT dealer, who i