State Of Chhattisgarh & Ors vs M/S. Vtp Constructions

The Supreme Court upheld the constitutional validity of Section 35 of the Chhattisgarh Vanijyik Kar Adhiniyam, 1994, which allows for tax deduction at source on works contracts. The Court emphasized that the provision is necessary to prevent tax evasion by contractors who may leave the state after receiving payments. The judgment of the Chhattisgarh High Court declaring Section 35 unsustainable was reversed, affirming the legislative competence of the State to enact such provisions under Article 246 of the Constitution.