STATE OF CHATTISGARH vs M/S VTP CONSTRUCTIONS

The Supreme Court upheld the constitutional validity of Section 35 of the Chhattisgarh Vanijyik Kar Adhiniyam, 1994, which mandates tax deduction at source for works contracts. The Court found 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, which declared Section 35 unsustainable, was overturned, affirming the legislative competence of the State to enact such provisions.