In Brief
Larsen & Toubro Limited, a contractor, assigned work to sub-contractors and filed sales tax returns under the Karnataka Sales Tax Act. The revenue authorities included sub-contractor payments in L&T's total turnover for turnover tax calculation. The Supreme Court held that payments to sub-contractors should not be included in the main contractor's total turnover, as the taxable event—transfer of property in goods—occurs only with the sub-contractor, not the main contractor. Including such payments would result in double taxation and violate Articles 14, 19(1)(g), and 265 of the Constitution. Applying its earlier decision in the Andhra Pradesh case, the Court allowed the assessee's appeals and dismissed the revenue's appeal.
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