Rama Rao, J.:— These writ petitions are for issuance of an appropriate writ directing the respondents to forbear from levying sales tax on works contract; hire-purchase and lease transactions for the assessment year 1983-84 onwards.

2. The averments in the writ petitions may be briefly stated: The petitioners were not liable to levy of sales tax on transactions relating to works contract till the assessment year 1983-84. Relying upon the Forty-sixth Constitution Amendment Act of 1982 which came into force from 2nd February, 1983 and Act 18 of 1985 amending the A.P General Sales Tax Act, the notices proposing to levy sales tax on works contract transactions were issued. It is stated by the petitioners that though ‘-the tax on sale or purchase of goods” includes transfer of goods involved in execution of works contract by insertion of clause (29A) in article 366 of the Constitution the levy of tax is incompetent in the absence of the Act passed by Parliament pursuant to Article 286(3)(b) of the Constitution and appropriate amendments in the Sales Tax Act. In the counter-affidavit filed by the Assistant Commissioner (CT), it is stated that the sales of materials used in the execution of indivisible works contract are not exigible to levy of sales tax in view of the decision of the Supreme Court in Gannon Dunkerley's case, [1958] 9 STC 353 and other cases and with a view to obviate these aspects, the Parliament enacted the Forty-sixth Amendment of the Constitution whereby the sale of goods is enlarged to enable the levy of sales tax on materials used in works contract. Article 286(3)(b) empowers the Parliament to place restrictions upon the levy of tax and the enactment in this behalf is not a condition precedent for levy of tax by the State. Further suitable amendments to definitions of “sale” and “turnover” have been made in conformity with the amended definition of “tax” on sale or purchase of goods under clause (29A) of article 366 of the Constitution and as such the levy of tax is justified.

3. The learned, counsel for the petitioners, Sri S. Dasaratharama Reddi, raised twofold contention, viz., the State Legislature is not competent to provide an enactment unless Parliament pursuant to Article 286(3)(b) of the Constitution, enacts law and in the absence of rules prescribing the taxable event and rate of tax and mode of computation the charging section is not complete and cannot be enforced.

4. At the outset it is useful to tunnel into the antecedent provisions pertaining to levy of tax on works contract and the circumstances culminating in the amendments. The tax on the sale of goods provided in entry 54 of List II was interpreted as to sale within the meaning of the Sale of Goods Act and this attained finality in Gannon Dunkerley's case, [1958] 9 STC 353 by the Supreme Court. It is held that the levy of sales tax on the sale of materials embedded in the composite and indivisible works contract is not competent and the sales tax can be levied provided it is discernible from the agreement or transaction the cost of materials and such materials can be weeded out separately from the labour involved therein. In the case of hire-purchase agreements, it is held, that the purchase or sale is concluded when the purchaser exercises the option at a later date and it is realised that’ the depreciated value only becomes assessable to tax. After enduring diverse vicissitudes and spate of litigation the legislature marshalled suitable provisions by amendments to the Constitution and corresponding provisions in the State Act. The initial formidable move is amendment of tax on sale or purchase of goods by insertion of clause (29A) in the definition under article 366 of the Constitution. The amended clause (29A) is as follows:

“(29A) ‘tax on the sale or purchase of goods’ includes—

(a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;

‘(b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;

(c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments;

(d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;

(e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;

(f) a tax on the supply, by way of or as part of any service or in any Other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration,

and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made.”

5. This amended definition absorbed in entry 54 adds significant dimension to entry 54 of List II. By inclusive process formulated in the definition, the complexion of concept of tax on the sale or purchase of goods is changed and the sale under entry 54 hitherto considered as sale within the meaning of the Sale of Goods Act is given a broad sweep comprising mainly the transfer of goods involved in the works contract, a tax on the delivery of goods on hire-purchase, a tax on the transfer of right to use goods and a tax on the supply by way of or part of any service of goods being food or any other article for human consumption or any drink. By this definition designed to widen the ambit of entry 54, the State Legislature is competent to make suitable provisions enabling the levy of tax on transactions chronicled in the definition.

6. Pursuant to expansion of the legislative entry the amendments to the definitions of “dealer” and “turnover” are effected by the A.P General Sales Tax (Amendment) Act (18 of 1985). The amendment is a sequel to the decision of this Court reported in Hotel Dwaraka, Hyderabad v. Union of India, [1985] 58 STC 241 wherein the Division Bench held that the inclusive definition in clause (29A) under article 366 of the Constitution resulted in expansion of the legislative entry and enabled the State Legislature to legislate in respect of the matters embodied therein and there can be no law providing levy of tax in the absence of amendments to the definitions of “sale” and “turnover” under the State Act. Therefore, suitable amendments have been introduced by Act 18 of 1985 expanding the connotations of “dealer” and “sale” and enlarging the coverage of “turn-over”. The amended definition of “dealer” takes in the person carrying on the business in transfer of materials for consideration in the execution of works contract, delivering goods on hire-purchase including the payment by instalments and transfer the right to the use of the goods. The definition of “sale” is also suitably amended to comprehend transactions in works contract, hire-purchase and lease. Likewise the turnover is amended to include the consideration for the sale of goods involved in works contract and amounts received in the course of transactions on hire-purchase and lease. By section 2, clause (e), and section 5E, the amplitude of works contract and lease is envisaged. It is not necessary to refer to the other amendments made by Act 18 of 1985.

7. The initial contention is that Act 18 of 1985 is beyond the competence of the State Legislature as the Parliament did not step in and make law in respect of the transactions relating to works contract, hire-purchase and lease. This contention is sought to be aided by Article 286(3)(b) of the Constitution. Article 286 is as follows:

“286. Restrictions as to imposition of tax on the sale of purchase of goods.— (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place—

(a) outside the State; or

(b) in the course of the import of the goods into, or export of the goods out of, the territory of India.

(2) parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1).

(3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,—

(a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or

(b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29A) of article 366,

be subject to such restrictions and conditions in regard to the system of levy rates and other incidents of the tax as Parliament may by law specify.”

8. Clause (1) is concerned with an absolute embargo on the State to make law seeking to levy tax on the sale or purchase of goods outside the State or in the course of import into or export out of India. Clause (2) enables the Parliament to formulate principles regarding the situs of sale or purchase visualised under clause (1). Clause (3) provides that any law made by the State with reference to tax on the sale or purchase of goods, declared by the Parliament to be of special importance in inter-State trade or commerce or goods and in the transactions adverted to in clauses (b), (c) and (d) in clause (29A) of article 366 of the Constitution of India is subject to restrictions and conditions that may be specified by the Parliament. Clause (3)(b) empowers the Parliament to impose limitations or strings in relation to the modalities of levy of tax. The Parliament is competent to enact the law either before or after the concerned law is made by the State Legislature and the law by the Parliament need not necessarily be the forerunner to the law made by the State Legislature. It is clear from the conspectus of article 286 that clauses (1) and (3) pertain to different situations. Clause (1) seeks to interdict the State Legislature from making laws with respect to the matters enumerated therein. The texture of clause (3) is different as it empowers the Parliament to impose restrictions only with regard to mode of levy of tax including rates. Clause (3)(b) does not admit the interpretation of stalling the legislation by State until the Parliament makes law. It is not obligatory upon the Parliament to make law and it cannot be postulated that the State Legislature does not get competence if the Parliament refrains from making any law. The Parliament may choose to make law anterior or subsequent to the law made by the State or refrain from making law. The sterility attributed to the State Legislature till the Parliament swings into action is not rooted in the provision. There is absolutely no fetter upon the competence of the State Legislature save the restrictions that may be imposed at any time. Therefore, the State Legislature is competent to enact Act 18 of 1985 and the legislation does not suffer from any infirmity on stringing the definition in clause (29A) of article 366, Act 18 of 1985 and remodelling the definitions of “dealer” “sale” and “turnover” under the State Act.

9. The learned counsel for the petitioners contended that in the absence of recasting the charging section and prescription of rules regarding computation of turnover, taxable event and allied matters, the Act is unenforceable. In view of the reincarnation of the concept of tax on sale or purchase of goods pursuant to clause (29A) of article 366 coupled with suitable amendments brought by Act 18 of 1985 the materials or goods comprised in works contract or pertaining to hire-purchase and lease transactions are exigible to levy of sales tax in the same manner as already provided in the Sales Tax Act. The taxable event, levy point and rate of tax have already been prescribed under the Act for all the components or materials in the transactions and separate or fresh rules are not called for and the enlarged definitions of “sale”, “turnover” and “dealer” muster up the provisions already in vogue. The learned counsel sought to highlight certain inconsistencies, incongruities and infirmities in the course of levy of tax in certain situations, namely, the necessity of making suitable law or provision by the Parliament with reference to section 8(3)(b) of the Central Sales Tax Act when the materials in the works contract are purchased from outside the State and the possibility of interest element being embedded in the hire-purchase transaction and other problems that may crop up during the assessment proceedings. The learned counsel referred to the decision in Govind Saran Ganga Saran v. Commissioner of Sales Tax, [1985] 60 STC 1, wherein the Supreme Court held that the sales tax law of the State should specify the single point at which the tax may be levied in respect of declared goods in view of sections 14 and 15 of the Central Sales Tax Act and in the absence of such specification the Bengal Finance (Sales Tax) Act, 1941 as applied to the Union Territory of Delhi is invalid.; It is further held that the uncertainty or vagueness in the legislative scheme with regard to taxable event, the person obliged to pay tax and the rate of tax is fatal to the validity of the enactment. The three essential ingredients and components are present in the Act with regard to all materials and goods relatable to the transactions and as such the decision is not applicable. Regarding other projected deficiencies it is not necessary to dilate upon in detail as they are matters to be considered in the course of making the assessment and such deficiencies, if any, do not affect the validity of the provisions. In W.P Nos. 1064, 1065, 1067 and 1400 of 1985 the transactions relating to works contract for the assessment years 1983-84 and 1984-85 were before 1st July, 1985 and prior to the enactment of Act 18 of 1985. These transactions are not exigible to levy of tax in view of the decision of this Court in [1985] 58 STC 241 (Hotel Dwaraka, Hyderabad v. Union of India).

10. In the result, W.P Nos. 1064, 1065, 1067 and 1400 and 841 of 1985 allowed. W.P Nos. 8256, 9912, 11184, 12094, 14105 and 14394 of 1985 and W.P Nos. 380, 627, 930, 1244, 1979, 2130, 2132, 2863, 3107, 3293, 3458, 3574, 4136, 4925, 7280, 9149,: 9710 and 11585 of 1986 dismissed. No costs. Advocate's fee Rs. 150 in each writ petition.

11. Ordered accordingly.