Satyanarayana Rao, J.-This revision petition under section 12-B-1 of the Madras General Sales Tax Act raises an important question regarding the constitutional validity of certain of the provisions of the Madras General Sales Tax Amendment Act (XXV of 1947) by which “works-contracts” were included within the ambit of the Madras General Sales Tax Act and they are made subject to the levy of sales tax within the limitations provided in the said Act. The case was argued with considerable ability on both sides and all the available authorities bearing on the question which the industry of Counsel could discover, were placed before us.

The assessees, Messrs. Gannon Dunkerly &38; Co., (Madras), Ltd., are a private limited company incorporated under the Indian Companies Act and they carry on business as engineers and contractors. The Head Office of the company is at Madras but their work-spots are spread over several places in South India. Their business consists mainly of execution of contracts for construction of buildings, bridges, dams, roads and structural contracts of all kinds. The important customers of the company are the Central and State Governments but there are also some private parties. In addition to the said business, they also carry out sanitary engineering contracts and sell sanitary wares and other sundry goods. To facilitate the execution of their works, which are spread all over the State, and to provide amenities to the workmen, they also distribute to the workmen foodgrains and debit the cost thereof against the wages, which they have to pay to them. They also run canteens for the supply of food-stuffs to their employees at their work spots but they derive no profit either from the sale of the foodgrains or food-stuffs. In the case of most of the contracts, the controlled commodities such as steel and cement are supplied by their employers, while the non-controlled materials and work and labour and technical skill for the construction work are provided by the company. In the case of contracts with the State and Central Governments, they sometimes act as their procuring agents, purchasing materials on their behalf according to their specifications and instructions. In the case of such contracts, the Governments concerned retain and exercise absolute control and dominion over such materials till the construction is completed and taken over. It is only after the construction is completed that final settlements are made under the contracts.

In the accounting year 1949-50, the Deputy Commercial Tax Officer by his order, dated 30th March, 1951 assessed them on a turnover of Rs. 35,08, 153-5-0 made up of the following items:-

Rs. A. P.

3. Sales of sanitary wares ... 42,434 0 0

4. Turnover of canteens (Estimated) ... 81,000 0 0

5. Foodgrains ... 1,98,929 0 3

6. Sales Tax ... 13,080 6 9

Total ... -----------------------

Rs. 35,08,153 5 0

-----------------------

The company admitted their liability to items 2 and 3 but disputed the rest. Of these disputed items, items 1 and 5 alone now survive and are the subject-matter of challenge in this revision petition. There was an appeal to the Commercial Tax Officer as provided under the Act, who modified the amount determined by the Deputy Commercial Tax Officer and, on further appeal to the Tribunal, there was further modification. But, as regards items 1 and 5, they were unsuccessful before the department and the Tribunal and, therefore, they have filed this revision petition.

The contention as regards item 1, turnover of works contracts, was that the amending Act of 1947 was beyond the legislative competency of the Provincial Legislature as the works contracts executed by the assessees were not contracts of sale of goods and, therefore, the Provincial Legislature had no jurisdiction or power to enact the impugned provisions with a view to bring works-contracts of such a nature into the net of taxation. As regards the 5th item foodgrains, the contention urged was that they were not

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