Works contract taxation: goods in a valid sub-contract cannot be taxed twice once already assessed in the subcontractor's hands.

In a works contract, only the transfer of goods in execution of the contract is taxable, and taxing statutes must be strictly construed. Goods used in a valid sub-contractor's portion remain part of the composite transaction for the principal contractor, but where that subcontracted turnover has already been separately assessed in the sub-contractor's hands, the same goods cannot be taxed again on the main contractor. The assessment was therefore interfered with only to prevent duplicate taxation on the same turnover, while the remaining assessment proceedings were allowed to continue in accordance with law.

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Issues: Whether sales tax could be levied again on the portion of a works contract executed by a valid sub-contractor where the goods used in that portion had already been separately assessed.

Analysis: A valid sub-contract formed part of the main works contract, and goods supplied in execution of the sub-contractor's portion were referable to the same composite transaction for the principal. Under the governing sales tax framework, only the transfer of goods in execution of the works contract was taxable, and taxing statutes had to be strictly construed. Where the assessing authority had already taken the subcontracted turnover into account in the sub-contractor's assessment, the same goods could not be subjected to tax again in the hands of the main contractor.

Conclusion: The petitioner could not be assessed a second time on the goods attributable to the subcontracted portion already assessed against the sub-contractor. The assessment and penalty notice were quashed to that extent, while the assessment proceedings were permitted to continue in accordance with law.

Final Conclusion: Tax was held leviable only once on goods supplied in execution of the works contract, including goods attributable to a valid sub-contract, and the impugned assessment was interfered with only to prevent duplicate taxation on the same turnover.

Ratio Decidendi: In a works contract, goods supplied by a valid sub-contractor are taxable only once when title passes to the principal, and once that turnover has been assessed in the subcontractor's hands, the main contractor cannot be taxed again on the same goods.

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