S. SANKARASUBBAN, J. –

This original petition challenges the vires of item (c) of Explanation 4 of clause (xxi) of section 2 of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as "the Act"). This was introduced by Act 11 of 1995 which repealed Ordinance No. 11 of 1995. Item (c) of Explanation 4 of section 2 of the Act says that for the purpose of this Act, the transfer of property in goods whether as goods or in some other form involved in the execution of a works contract shall be deemed to have taken place in the State, if the goods are within the State at the time of such transfer, irrespective of the place where the agreement of works contract is made, whether the assent of the other party to the contract is prior or subsequent to such transfer.

According to the petitioner, it deals with works contract and the contract consists of both sale of goods as well as sale of labour. But so far as the sale of goods is concerned, according to the petitioner, goods sold are sales of inter-State and hence, not liable to be taxed by the State Legislature. Before we deal with the contentions of both parties, it is necessary to state in brief the law regarding the wor