 bill no 30 of 1919  - the constitution (forty-ninth amendment) bill, 1979 a billfurther to amend the constitution of india be it enacted by parliament in the thirtieth year of the republic of india as follows:-1 this act may be called the constitution (forty-ninth amendment) short ~~m ~ 2 in article 269 ot: the constitution,-5 (a) in clause (1), after sub-clause (g), the following bub-clause shall be inserted, namely:-amendment of article 269 10 u (h) taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-state trade or commerce"; (b) in clause (3), for the words "sale or purchase of ioods", the words "sale or purchase of, or consignment of, goods" shall be substituted 15 3 in article 286 of the constitution, for clause (3), the following clause amendshall be substituted, namely:-ment of article 286 u (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 purcbase 01 goods declared by, parliament by law to be of special importance in inter-state trade or codldlerce; 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 s (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" 4 in article 366 of the consti~ution, after clause (29), the following 10 clause shall be inserted, namely:- '(29a) "tax on the sale or purchase of goods" includes-amendment off article 366 (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 considerauon; is (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 bire-purchase or any system of payment by instalments; 20 (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 s~p'ply of goods by any unincorporated association or body of persons to a member thereof for cash, 2 deferred payment or other valuable consideration; s (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 consuplption or any drink (\'f~th4!r or not intoxicating), where such supply or service is for ~!lsh, 30 deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be ii sale of, those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to w~~~ such transfer, d~livery or su~ply is made;' '_ 3s 5 in the seventh schedule to the constitution, in list i-union list, after entry 92a, the following entry shall be inserted, riameiy:-an1endmentoi seventh schedule "92b taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-state trade or 40 commerce  validation and exemption 6 (1) for the purposes of every provision of the constitution: in which the expression "tax on the sale or purchase of goods" occurs, and for the purposes of any law passed or made, or purporting to have been paued or made, before the commencement of thia· act, in pursuance of 4s any such provision,-   ,-'r --(althe said expression shall be deemed to inelude; and shall be s d~med always to have included, a tax (hereafter in this section refe~ t6 as the aforesaid 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)' for cash, deferred' payment or other valuable consideration; and 10 (b) every transaction by way of supply of the nature referred to in clause (a) made before such commencement shall be deemed to be, and ,shall be deemed always to have been, a transaction by way of sale, with respect to which the person making such supply is the seller and the person to whom such supply is made, is the putdhaser, i and notwith~ta'ndlng anv judiment, decree or ~rder of' any court, tribunal s or authority, no law which was passed or made before such commencement and which imposed or authorised the imposition of, or purported to impose or authorise the imposition of, the af-oresaid tax shall be deemed to be invalid or ever to have been invalid on the ground merely that the legislature or other authority passing or making such law did 20 not have competence to pass or make such law, and accordingly-(i) all the aforesaid taxes levied or collected or purporting ta have been levied or collected under any such law before the commencement of this act shall be deemed always to have been validly levied or collected in accordance with law; 2s (ii) no suit or other proceeding shall be maintained or continued in any court or before any tribunal or authority for the refund of, and no enforcement shall be made by any court, tribunal or authority of any decree or order directing the refund of, any such aforesaid tax which has been collected; 30 (iii) recoveries shall be made in accordance with the provisions of such law of all amounts which would have been collected thereunder as such aforesaid tax if this section had been in force at all material times (2) notwithstanding anything contained in sub-section (1) ,any 3s supply of the nature referred to therein shall be exempt from the aforesaid tax-"~ ,'  ,' ,""1~ (a) where such supply has been made, by any restaurant or eatin~ house (by whate:ver name called), at any time on or after the 7th day of september, 1978 and before the commencement of this 40 act and the aforesaid tax has not been collected on such supply on the ground that no such tax could have been levied or collected at that time; or (b) where such supply, not being "any such supply by any restaurant or eating house (by whatever name called), has been 4s made at any time on or after the 4th day of january, 1972 and before the commencement of this act and the aforesaid tax has not been collected on such supply on the ground that no such tax could have been levied or collected at that time: provided that the burden of proving that the aforesaid tax was dot collected on any supply of the nature referred to in clause (a) or, as the case may be, clause (b), shall be on the person claiming the exemption under this sub-section (3) for the removal of doubts, it is hereby declared that,-s (a) nothing in sub-section (1) shall be construed as preventing any person-(i) from questioning in accordance with the provisions of any law referred to in that sub-section, the assessment, reassessment, levy or collection of the aforesaid tax, or 10 (ii) from claiming refund of the aforesaid tax paid by him in excess of the amount due from him under any such law; and (b) no act or omission on the part of any person, before the commencement of this act, shall be punishable as an offence which would not have been so punishable if this act had not is come into force sales tax laws enacted in pursuance of the government of india act, 1935 as also the laws relating to sales tax passed after the coming into force of the constitution proceeded on the footing that the expression "sale of goods", having regard to the rule as to broad interpretation of entries in the legislative lists, would be given a wider connotation however, in ganndn dunkerle?ls case (air 1958 sc 560), supreme court held that the expression "sale of goods" as used in the entries in the seventh schedule to the constitution has the same meaning as in the sale of goods act, 1930 this decision related to works contracts 2 by a series of subsequent decisions, supreme court has, on the basis of the decision in gannon drmke-rlell's case, held various other transactions which resemble, in substance, transactions by way of sales, to be not liable to sales tax as a result of these decisions, a transaction, in order to be subject to the levy of sales tax under entry 92a of the union list or entry 54 of the state list, should have the following ingredients, namely, parties competent to contract, mutual assent and transfer of property in goods from one of the parties to the contract to the other party thereto for a price 3 this position has resulted in scope for avoidance of tax in various ways an example of this is the practice of inter-state consignment transfers, ie, transfer <yf goods from head office or a principal in one state to a branch or agent in another state or vice verlm or transfer of goods on consignment account, to avoid the payment of sales-tax on interstate sales under the central sales-tax act while in the case of a works contract, if the contract treats the sale of materials separately from the cost of the labour, the sale of materials would be taxable, but in the case of an indivisible works contract, it is not possible to levy sales tax on the transfer of property in the goods i!lvolved in the execution of such contract as it has been held that there is no sale of the materials as such and the property in them does not pass as moveabies though practically the purchaser in a hire-purchase agreement gets the goods on the date of the hire purchase, it has been held that there is sale only when the purchaser exercises the option to purchase at a much later date and therefore only the depreciated value of the goods involved in such transaction at the time the option to purchase is exercised becomes assessable to sales tax similarly while sale by a registered club or other association of persons (the club or association of persons having corporate status) to its members is taxable, sales by an unincorporated club or association of persons to its members is not taxable as such club or association, in law, has no separate existence from that of the members in the associated hmels of india case (air 1972 sc 1131) supreme court held that there is no sale involved in the supply of food or drink by r hotelier to a person lodged in the hotel 4 in the new india sugar mills case (air 1963 sc 1207) supreme court took the view that in the transfer of controlled commodities in pursuance of a direction under a control order, the element of volition by the seller, or mutual assent, is absent and, therefore, there is no sale as defined in the sale of goods act, 1930 however, in oil and natural gas commission vs state of bihar (air 1976 sc 2478), supreme co'urt  had '~cationto consider its  eatlier decisions with regard to the uabtlitv, of transfers of controlled commodities to be charged to sal~' tax the strpreme court held that where the're are any statutory cmnpulsiol'ls; the statute itself should be treated as supplying the consewstis  and· furnishing the modality of the consensus~ suth transactions co'ttld, therefore, amount to sale and subject to sales tax but it is cotlsidered desirable to put the matter beyond any doubt 5 the various problems connected with the power of the states to levv a tax on the sale of !toods and with the central sales tax act, 1956 were referred to the law commission of india the commission considered these matters in their sixty-first report and, recommended inte7' alia certain amendments in the constitution if as a matter of administrative policy it is decided to levy tax on transactions of the nature mentioned in the preceding paragraphs 6 ,device by wav of lease of films has also been resulting in avoidance of sales tax the main riltht in regard to a film relates to its exploitation and after exploitation for a certain period of time in most cases, the film ceases to have any value it is, therefore, seen that instead of resorting to the outri~ht sale of a fum, only a lease or transfer of the right to exploitation is made 7 there- were reports from state governments to whom revenues from s1lles t8x have been assigned, as to the lar,g'e scale avoidance of central sales tax leviable on inter-state sales of ~oods throuqh the device of consi~ment of ~ds from one state to another and as tl) the leakage of loeal snles tax in works contracts hire purchase tranc;a~tions, lease of films, etc though parliament could levy a tax on these transactions, as tax on sales has all8lon~ been treated as an item of revenue to be assigned to the states, in regard to! these trnnsactions which resemble sales, alee, it is considered that the same policy should be adopted 8 beside!; the above mentioned matters, a new problem has arisen as' a remilt i)f the decision of 'the supreme court -in northern t'ldia caterers a1ldfi!) ltd'vs lt govemor ofihlhi (arr1978 sc november part, page 1591') states have been proceeding' on the basis that the associateclhotelb of india'-ease was applicable only to supdly of food or drink by'8 h()teliei to -0 person 'lodged in the 'hotel and that tax was leviable on'the lialeof foodstuft's by a restaurant butover-rulin~ the decision of the-delhi hi/!h 'court, supreme' court hus held in the' abtwe case that service ,of meals whether in a hotel' 'oj't'estaurllnt noes 'not' constitute r ' fude"'of -food for the pur'poee' of levy of sales taxbutmustberegal'd'ed' as the 1'enderrn~ of a service in'the sathffactfon of a human' need 'i)r ministering to the bodily want of, human beings it would not make any , difference whether the visitor to the restaurant is charged for the me~l as a whole or according to each dishljeparately  - i q it is, theret«e, proposed to suitablyame~d the constitution· tq ui  elude in article 366 a definition of "tax on the ~e or purchase of goods" by inserting a new clause (29a) the definition would specifically include within the scope cif that expressicm tax on-(i) transfer for considerati'lil of controlled commodities; (ii) the transfer of property in goods involved in the execution of a works contract; (iii) delivery of goods on hire purchase or any system of payment by instalments; (iv) transfer of the right to use any goods for any purpose for cash, deferred payment or other valuable consideration; (v) the supply <of goods by ~ unincorporated association or body of persons to a member therem for c8$h, deferred payment or other valuable consideration; (vi) the supply, by way of or as part of any service, 01 food er any drink for cash, deferred payment or other valuable consideration (see clause 4) 10 ~ new entry is sought to be bjaerted in the union list in the seventh schedule, as entry 92b, to enable the levy of tax 00 the consignment of goods where such consignment takes place in the course of inter-state trade or commerce (see cla,wle 5) 11 clause (1) of article 269 is proposed to be amended 110 that the tax levied on the consignment of goods in tbe courae of inter-state trade 01' comn"lerce shall he assigned to the states clause (3) of that article is proposed to be amended to enable parliament to formulate by law principles for determining when a consignment of goods takes place in the course of inter-state trade or commerce (see clause 2), 12 clilllse (3) of article 286 is proposed to ,be amended to enable parliament to specify, by law, restrictions and conditions in regard to the system of levy, rates and other incidents of the tax on the transfer of ~qods involved in the execution of a works contract, on the delivery of goods on hire purchase or any system of payment by instalments and· on the right to use any goods (see clause 3) 13 the proposed amendments would help in the augmentation of the state revenues to a considerable extent clause 6 of the bill seeks to validate laws levying tax on the supply of food or drink for consider~tion and also the collection or recoveries made by way of tax wlder any such law lwwever, no sales tax will rbe payable on f~ or drink supplied by a hotelier to a person lodged in the hotel during the period from the date of the judgment in the associated hotels oj india case and the commencement of the present amendment act if the conditions mentiod-ed in sub-clause (2), of clause 6 df the bill are satisfied in the case of food or drink supplied by restaurants this relief wi11 be available only in respect of the period after the date of judgment in the no(rthern india caterers (india) limited case and the commenc~rnent of the present amendment act 14 the bill seeks to achieve the above objects charan singh new delhi; the 8th february, 1979  president's recommendation under articles 117 and 274 of the constitution of india[copy of letter no 28133176-st(pt), dated the 6th march, 1979 from shri charan singh, deputy prime minister and minister of finance to the secretary, lok sabha] the president having been apprised of the subject matter of the bill further to amend the constitution of india has been pleased to recommend under clause (1) of article 117 and clause (1) ot article 274 of the constitution, the introduction of the bill in lok sabha - - - - - 9 (1) the following duties and taxes shall be levied and collected by the government of india but shall be assigned to the states in the manner provided in clause (2), namely:-- - - - - taxes levied and collected by the union but assigned to the states (g) taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-state trade or commerce - - - - - (3) parliament may by law formulate principles for determining when a sale or purchase of goods takes place in the course of inter-state trade or commerce - - - - - z86 (1)                 -                              -                                          -                                                       -                                                                    - restric-tions as to imposition of tax on the sale or pur-chaseot goods     (3) any law of a state shall, in so far as it imposes, or authorises the imposition of, 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, 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               -                               -                                              -                                                              -                                                                              - deflni-tionjj     38g in this constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say-             -                              -                                               -                                                               -                                                                                -            (29) "tax on income" includes a tax in the nature of an excess      profits tax;               -                               -                                                -                                                                -                                                                                -  seventh schedule [article 246]list i-union list - - - - - 92a taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-s~te  ~ad, or conudeme; • - - - - - a bill further to amend the constitution of india 