Chaitanya Builders & Leasing Pvt Ltd Vs Assistant Commissioner (CT) (Madras High Court)
CHENNAI – The Madras High Court has issued a ruling in the case of Chaitanya Builders & Leasing Pvt Ltd Vs Assistant Commissioner (CT), clarifying the application of a proviso within Section 3-B(2)(d) of the Tamil Nadu General Sales Act, 1959. The court determined that this proviso does not apply to a contractor who has assigned work to a sub-contractor, provided the sub-contractor is a registered dealer.
The decision stems from a writ petition challenging the legislative competence and constitutional validity of the said proviso. The High Court’s First Bench had previously addressed an identical issue, allowing a similar petition in Larson & Tourbo Limited v The Assistant Commissioner(CT), Zone XI, Chennai on April 23, 2024.
Both the Larson & Tourbo Limited case and the current judgment prominently referred to two significant Supreme Court judgments:
1. Larsen & Tourbo Ltd., v Additional Deputy Commissioner of Commercial Taxes [2016 96 VST 512(SC)]
2. Builders Association of India v Union of India [1989 73 STC 370]
The Madras High Court effectively “read down” the problematic proviso to Section 3-B(2). The original wording stipulated that “the turnover of such amounts is included in the return filed by such sub-contractor.” The court’s interpretation modifies this, ensuring the proviso does “not to apply to the contractor who has assigned the work to a sub-contractor who is a registered dealer.”
