P.K. Balasubramanyan, C.J.

1. Section 25-A of the Bihar Finance Act, 1981 has been the subject matter of controversy. The section provides for advance recovery of tax payable under that Act. Notwithstanding anything contained in Section 26 of that Act, Section 25-A provides that every person responsible for making any payment of sale price or any amount purporting to be the full or part payment of sale price or any payment in discharge of any liability on account of valuable consideration payable in respect of transfer of property in goods, whether as goods or in some other form, involved in the execution of a works contract has to deduct an amount, at a rate specified by the State Government, in a notification published in the official Gazette purporting to be a part or full amount of tax payable on the sale of such goods from every bill or invoice raised by a works contractor engaged by him. The petitioner in this writ petition, M/s. Larsen & Tubro challenged the said provision, as it then stood, in the High Court of Patna in CWJC No. 878 of 1997. The argument on behalf of the petitioner was that the State was incompetent to impose any tax on a works contract and the State also did not have the power to impose tax on the sale of goods, if the sale is not an intra-State sale. The Patna High Court in the decision reported in 117 STC 41, upheld the challenge of the petitioner. Of course, the extent to which the challenge was upheld is one of the matters in controversy. For the moment it needs only to be noticed that the challenge was upheld to the extent of the Division Bench holding that Section 25-A of the Bihar Finance Act, to the extent it related to transfer of properties in goods taking place in the course of inter-State trade or commerce or a sale outside the State, or in the course of import within the ambit of Sections 3, 4 and 5 of the Central Sales Tax Act or in "decided goods" within the meaning of Sections 14 and 15 of the Central Sales Tax Act must be held to be ultra vires Entry 54 of the State List read with Entry 92-A of the Union List and Article 286 of the Constitution of India. It was also held that to the extent the section provided for deduction from payment made on account of labour charges and other services towards sales tax, the provision must be included to be ultra vires Entry 54 of the State List read with Article 366(29-A)(b) of the Constitution of India. This decision was challenged in the Supreme Court by the State of Bihar without success.

2. The decision of the Patna High Court was rendered on 19.7.1999. On 15.11.2000, the Bihar-Reorganisation Act, 2000 came into force and the State of Bihar was divided into re-constituted State of Bihar and the State of Jharkhand. Under Section 85 of the Reorganisation Act, the State of Jharkhand had power to adapt the Bihar Finance Act and the Rules made thereunder. The Bihar Finance Act and all statutory terms, circulars, and notifications which were in force on 15.11.2000, were adapted by the State of Jharkhand. We may incidentally noticed that the Bihar Legislature after the Reorganisation enacted a Validation Act and re- introduced Section 25-A by trying to remove the defects which former the foundation of the judgment reported in 117 STC 41. We are not concerned with that aspect at the moment.

3. What the State of Jharkhand did was to merely introduce the third proviso to Section 25-A of the Finance Act by amending the Jharkhand Finance Act, 2001. We may now read the section in so far as it relates to Section 25-A(1) of the Act, after the addition of the third proviso :

"25-A. Advance recovery of tax--(1) Notwithstanding anything contained in Section 26, every person responsible for making any payment of sale price or any amount purporting to be the full or part payment of the sale price or any payment in discharge of any liability on account of valuable consideration payable in respect of transfer of property in goods, whether as goods or in some ot