FIRM OF M/S. PEARE LAL HARI SINGH vs THE STATE OF PUNJAB & ANOTHER

The Supreme Court ruled that the East Punjab General Sales Tax Act, 1948, does not empower the state to levy tax on the supply of materials in building contracts, as there is no distinct sale of materials involved. The Court held that the building contract is a lump sum contract for construction, and the provisions of the Act attempting to tax material supply are ultra vires. The judgment followed the precedent set in State of Madras v. Gannnon Dunkerley & Co., [1959] S.C.R. 379, affirming that the materials do not constitute a sale under the Act.