JUDGMENT

A. K. GANGULY, C.J. : Both these writ petitions were heard together as common questions of fact and law are involved.

2. The petitioner is a company incorporated under the provisions of the Companies Act and is engaged in the business of constructing/ executing road works throughout India and also in various other countries of the world. The petitioner is a regis¬tered dealer under Orissa Sales Tax Act, 1947 as a ‘Works Con¬tractor’ under the Sales Tax Officer, Bhadrak Circle, Bhadrak. The petitioner secured the contracts for road construction in the State of Orissa, which were awarded by the National Highway Au¬thority of India, Ministry of Surface Transport, New Delhi. For a price of Rs.310.94 crores and Rs.257.93 Crores (inclusive of all rates and taxes). These two contracts are the subject matter of W.P.(C) No.94 of 2007 and W.P.(C) No.2774 of 2007.

3. The petitioner’s case is that in order to execute the works contract, the petitioner has given a portion of the work relating to construction of road to various sub-contractors and according to the petitioner most of these sub-contractors are registered dealers under the Orissa Sales Tax Act. The sub-contractors are required to procure and effect transfer of property in goods,which obliges them to seek registration and to pay taxes under the Act, independent of the liability of the petitioner. The petitioner in its term has effected TDS against payment made to the above sub-contractors and deposited the tax deducted at a source with the Government Treasury and issued the necessary certificates to the sub-contractors.

4. The further case of the petitioner is that in response to notices dated 03.03.2006 and 29.04.2006, purported to have been issued under Section 12(4) of the OST Act, it furnished books of account, contract copy, transaction documents/bills/vouchers, various statement of turnovers, details of Regd. Sub-contractors and details of tax deducted at source with the appropriate authority.

5. For the purpose of clarity, relevant facts pertaining to the aforesaid cases are noted herein below :

W.P.(C) No.94 of 2007 (A.Y.2004-05)

Petitioner’s return/Claim Order of Assessment

Gross Turnover : Rs.72,20,57,901.00 Same

Exempted Turnover

Labour and Service

Charges : Rs.31,36,86,623.06 Rs.31,94,66,886.00

Payment to

Sub-Contractors : Rs.27,15,49,324.00

Total- Rs.58,52,35,947.06

Taxable Turnover : Rs.12,06,19,86.00 Rs.40,25,91,014.42

W.P.(C) No.2774 of 2007

Petitioner’s return/Claim Order of Assessment

Gross Turnover : Rs.60,99,03,766.00 Same

Exempted Turnover:

Labour and Service

Charges : Rs.24,41,65,498.00 Rs.39,25,40,559.00

Payment to

Sub-contractors : Rs.20,96,45,308.00

Total- Rs.45,38,10,806.00

Taxable Turnover : Rs. 6,41,80,809.00 Rs.21,73,63,206.00

The aforesaid computation was arrived at by the Assessing Officer by rejecting the claim of the petitioners-Company for exemption of turnover both, towards Labour & Service charges as well as towards payment made to the sub-contractors.

6. From the facts which have been disclosed above, it is clear that the main attack is against the assessment order. Normally assessment order cannot be challenged by filing a writ petition in view of clear statutory remedy. But in the instant case, challenge has been made in both the writ petitions to the vires of Section 5(2)(AA)(i) of the Orissa Sales Tax Act, 1947. Section 5(2)(AA)(i) is as follows :

“(AA) Notwithstanding anything contained in Sub-section (2)(A) “Taxable turnover” in respect of,-

(i) ‘work contract’ shall be deemed to be the gross value received or receivable by a dealer for carrying out such contract, less the amount of labour charges and service charges incurred for the execution of this contract.”

7. However, learned counsel for petitioner in course of his argument did not press the aforesaid point about vires of the Section. But the learned counsel has challenged validity of two circulars namely, Circular No.VIII(i) 6/99-16715/CT. dated 30.