JUDGMENT P. SHANMUGAM, J. – Petitioner was a partnership-firm during the relevant periods 1985-86 and 1986-87 engaged in the business of construction/erection of fire protection systems. In the course of their business they had entered into works contract with the industrial concerns in Kerala. 2. They have filed the above original petition for a declaration to declare item (c) in Explanation (4) for the definition of "sale" under section 2(xxi) of the Kerala General Sales Tax Act, 1963, inserted By Act 11 of 1995, as unreasonable, beyond legislative competence and unconstitutional. They have also prayed for a direction to quash the assessment orders. 3. One of the main questions that arises for consideration is whether the nature of the transaction carried out by the petitioner is a works contract or not. The issue relating to the works contract had been settled. But the case of the petitioner is that a similar question involved was referred to a Division Bench in O.P. No. 14939 of 1995 wherein a Division Bench passed an interim order directing the authorities to proceed with the assessment as proposed, but the final recovery would await orders for the Division Bench. In the right submission I called for the reference order in the said original petition. When the matter came up on the next day along with the reference order, learned counsel thereafter fairly conceded that the issue raised is not connected with the Full Bench decision in Moidoo v. State of Kerala [1995] 97 STC 1 (Ker); (1994) 2 KLT 251 . In that decision the Full Bench held that without prescribing the rules for deductions for arriving at the taxable turnover, the same cannot be determined by any authority under the Act. Consequently the impugned provisions will remain in the statute book unenforced. The Full Bench also held that they are not interested in making any academic or advisory exercise regarding the constitutionality of any provision. The Full Bench further made it clear that they have not concerned with the amendments made after July 1, 1987. Hence this original petition is considered on merits after hearing the counsel. 4. The Full Bench also held that they are not interested in making any academic or advisory exercise regarding the constitutionality of any provision. The Full Bench further made it clear that they have not concerned with the amendments made after July 1, 1987. Hence this original petition is considered on merits after hearing the counsel. 4. In so far as the works contract is concerned the matter stands concluded in the light of the decision in Symon v. State of Kerala [1995] 97 STC 283 (Ker) and State of Kerala v. Builders Association of India [1997] 104 STC 134 (SC) and in my view there is no scope of reopening the issue. 5. The petitioners now without challenging the charging section and the related provisions have now confined themselves for a declaration in reference to the explanation to the definition "sale". The gravamen of the charge of the petitioner is that by virtue of this clause inserted by Act 11 of 1995 the State has made a law levying tax on inter-State sale and is, therefore, to be declared as unconstitutional. The said argument cannot be accepted in the light of the charging section, section 5 which imposes tax on taxable turnover and the taxable turnover is excluding the purchase or sale in the course of inter-State trade or commerce which has been upheld by the learned Judge and confirmed by the Division Bench. A similar provision found in the Karnataka Sales Tax Act was upheld by the Supreme Court in Builders' Association of India v. State of Karnataka [1993] 88 STC 248; AIR 1993 SC 991 . Before the Supreme Court it was contended that Explanation 3, which is similar to the explanation now we are concerned with, which fixes the situs of the sale, has the effect of converting a transfer which is an inter-State sale or sale outside the State within the meaning of sections 3 and 4 of the Central Sales Tax Act, 1956 an inside sale and thereby subjecting the same to levy of tax under the Act which is beyond the legislative competence of the State Legislature under entry 54 of the State List read with article 366(29A)(b). The said contention of the appellant having been rejected by the High Court, the Supreme Court found no substance in the said contention. The said contention of the appellant having been rejected by the High Court, the Supreme Court found no substance in the said contention. The Supreme Court also held that the said clause has to be read with the other provisions of the Act, which expressly exclude a sale in the course of inter-State trade or commerce and that the explanation fixed the situs in respect of deemed sales resulting from transfer of property in goods involved in execution of a works contract. Similar provisions of the Tamil Nadu General Sales Tax Act on the definition of "sale" and explanation to the sale was upheld by a Division Bench of the Madras High Court in Larsen and Toubro Limited v. State of Tamil Nadu [1993] 88 STC 289. In Commissioner of Sales Tax v. Husenali Adamji and Co. [1959] 10 STC 297 the Supreme Court held that the property in the goods did not pass to the company until the logs arrived at destination and were there inspected, measured and accepted by the company and therefore the sales did not take place at the origin of the goods. The Supreme Court was concerned with the explanation to sale to the effect that the contract of the sale was deemed to be made for the purpose of the C.P. and Berar Sales Tax Act when the goods are actually at that points of time when the contract of sale was made. The Supreme Court considered the question that sale being the transfer of property in the goods agreed to be sold, they have to enquire if the property in the goods which fetched the sale proceeds on which the sales tax is sought to be levied was transferred in the Central Provinces as contemplated in main definition or if those goods were actually in the Central Provinces at the time when the contract for sale as defined in the Sale of Goods Act in respect thereof was made as required by Explanation II set out above. The agreement was that the buyer should, with the assent of the seller, appropriate the goods to the contract at Ambernath. The appropriation was not completed till the goods reached Ambernath and were appropriated by the company to the contract. The agreement was that the buyer should, with the assent of the seller, appropriate the goods to the contract at Ambernath. The appropriation was not completed till the goods reached Ambernath and were appropriated by the company to the contract. The Supreme Court also held that the explanation set out above would not apply since there was no evidence that at the dated when the agreement for sale was made, the particular logs delivered thereunder were in the Central Provinces in the shape of logs at all and the agreement was not in respect of any standing timber and there was no provision in the agreement for severance of the standing timber before sale. 6. A Division Bench of the Karnataka High Court in Builders Association of India v. State of Karnataka [1990] 79 STC 442 was dealing with the identical provision approved and followed the Division Bench judgment in 20th Century Finance Corporation Limited v. State of Maharashtra [1989] 75 STC 217. The Bombay High Court held as follows : "...........By reason of the said explanation, transfer of the right to use any goods shall be deemed to have taken place in the State of Maharashtra, irrespective of the place where the agreement for such transfer of the right to use took place, if the goods are in the State of Maharashtra at the time of their use. In other words, the situs or the location of the goods at the time of their use has been chosen as the basis of taxability under the Act. Thus, in view of the amended explanation to section 2(10) of the impugned Act, the place where an agreement is made for transfer of the right to use goods is irrelevant and under the impugned Act, the State of Maharashtra has assumed power to levy tax on such transfer of the right to use goods which are located in the State of Maharashtra at the time of their use. In or view, the said provision contained in the explanation to section 2(10) does not result in bringing inter-State sales or sales taking place outside the State of Maharashtra within the scope of the impugned Act. In or view, the said provision contained in the explanation to section 2(10) does not result in bringing inter-State sales or sales taking place outside the State of Maharashtra within the scope of the impugned Act. .......We have already pointed out that after clause (29A) was inserted in article 366, tax on sale or purchase of goods included, inter alia, tax on transfer of the right to use for any purpose goods for cash, deferred payment or other valuable consideration. Therefore, the validity of a tax on such transfer of right to use ought not to be tested by applying these reported decisions regarding the meaning of sale. It would not be also appropriate to apply the tests applicable for deciding when property in goods passes in case of transfers of the right to use goods for any purpose. The legal concepts of transfer of the right to use goods are quite different." I am in full agreement with this view and would squarely apply to the facts of this case. 7. Learned counsel for the petitioner strongly relied on the decision of the Supreme Court in Gannon Dunkerly & Co. v. State of Rajasthan [1993] 88 STC 204. As held by this Court and the Division Bench of the Madras High Court referred earlier the infirmity found under section 5 of the Rajasthan Sales Tax Act is not available under our Act. But many of the observations contained in the said judgment, in my view, would be in support of the vires of the provisions now under attack. The Supreme Court held that the location of the situs of the sale in the sales tax legislation of the State would, therefore, have no bearing on the chargeability of tax on sales in the course of inter-State trade or commerce since they fall outside the field of the legislative competence of the State Legislatures. The Supreme Court held that the location of the situs of the sale in the sales tax legislation of the State would, therefore, have no bearing on the chargeability of tax on sales in the course of inter-State trade or commerce since they fall outside the field of the legislative competence of the State Legislatures. The Supreme Court also held that the question whether a deemed sale resulting from transfer of property in goods involved in the execution of a particular works contract amounts to a sale in the course of inter-State trade or commerce under section 3 of the Central Sales Tax Act or an outside sale under section 4 or a sale in the course of import under section 5 has to be decided in the light of the particular terms of the works contract and it cannot be decided in the abstract. The Supreme Court also held that the taxable event is the transfer of property in goods involved in the execution of a works contract and the said transfer of property in such goods takes place when the goods are incorporated in the works, the value of the goods which can constitute the measure for the levy of the tax has to be the value of the goods at the time of incorporation of goods in the works and not the cost of acquisition of the goods by the contractor. Therefore it is clear that the Explanation (3A) states that a transfer of property in goods whether as goods or in some other form involved in the execution of works contract shall be deemed to be a sale. Explanation (4) states that the sale or purchase of goods shall be deemed for the purposes of this Act, to have taken place in the State wherever the contract of sale or purchase might have been made, if the goods are within the State, in the case of specified goods at the time of the contract and in the case of unascertained goods at the time of their appropriation. A new clause (c) added to this explanation states that for the purpose of this Act, the transfer of property in goods involved in the execution of works contract shall be deemed to have taken place in this State, if the goods are within the State at the time of such transfer, irrespective of the place where the agreement of works contract is made. Thus the situs of the sale for the purpose of sales tax is the State. As held by the Supreme Court there is no consequence in so far as sales in the course of inter-State trade or commerce are concerned. 8. Coming to the facts of the case it is seen that during the relevant time of assessment the impugned provision was not in existence. Their contention was that major portion of the materials was brought from Tamil Nadu and they were transported to Kerala for the purpose of executing the works contract. It was submitted that it is an inter-State sales and no tax can be levied under the KGST Act. The assessment officers allowed 20 per cent of the direct receipt towards labour charges and the balance was treated as taxable turnover. When the matter was taken up before the Tribunal the matter was remanded to the assessing officer to examine whether the transaction of the petitioner is as a result of inter-State sale or a local sale. Thereafter after giving notice under section 17(3) the officer proposed to verify the conditions and agreements and revealed that the purchaser, after the completion of the works by the seller, would inspect and the price would be paid only after satisfying that the supply and installation was in conformity with the purchase order. The property in the goods did not pass to the buyer until the goods were fixed or supplied as per the specification of the works order. Therefore the sales did not take place in Tamil Nadu and the transactions are liable to be taxed under the KGST Act. The petitioner objected to the said proposal. The assessing officer considered and heard the petitioner. He found that the purchaser will pay the price only after satisfying that the supply and installation was in conformity with the purchase order. In other words the purchaser has got a right to reject the goods. The petitioner objected to the said proposal. The assessing officer considered and heard the petitioner. He found that the purchaser will pay the price only after satisfying that the supply and installation was in conformity with the purchase order. In other words the purchaser has got a right to reject the goods. The property in the goods did not pass to the buyer until the goods were fixed or supplied as per the specification of the works order. Therefore, according to him, the sales did not take place in Tamil Nadu and the transactions are liable to be taxed under the KGST Act. The officer also found that even though it was argued strenuously throughout that appropriation of goods took place outside the State of Kerala the petitioner did not produce any document to show that the assessment in respect of the same goods was done in any other State under the C.S.T. Act. In the light of this factual finding that the petitioner had undertaken erection work in the nature of a works contract and the works completed in Kerala and appropriation of goods did take place in Kerala and there is no question of inter-State sales in this case. 9. This is admittedly execution of a works contract within the meaning of the works contract. As per explanation 4 the sale or purchase of goods shall be deemed to have taken place at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser whether the assent of the other party is prior or subsequent of such appropriation. In the light of the factual position which cannot be disputed, the petitioner is liable for the works contract. For all these reasons I do not find any grounds to grant the relief sought for and accordingly the original petition is dismissed. Petition dismissed.