D. M. DHARMADHIKARI, C.J. - The petitioner-Larsen and Toubro Limited is a company registered under the Companies Act, 1956 and a leading engineering concern. It undertakes works contracts of different nature. It entered into a contract with National Dairy Development Board, Anand (respondent No. 3) for setting up automated dairy plant at Banas II Dairy on August 25, 1999 for a total value of Rs. 28,82,05,360 which is now increased, with additional works, to Rs. 29,09,51,966 on the terms and conditions contained in the document of contract.

During the course of works contract, the petitioner-company submitted its bills periodically for payment to its employer, viz., National Dairy Development Board. The department insisted on deducting 2 per cent on the amounts payable for the works executed under various bills in accordance with the impugned provisions contained in section 57B of Chapter VA inserted by Gujarat Act No. 15 of 1997 with effect from April 1, 1997 to Gujarat Sales Tax Act, 1969.

By this petition, the petitioner-company ("contractor", for short) challenges the constitutional validity of the provisions contained in Chapter VA and particularly section 57B thereof