Works contract taxation of fabric processing depends on retained goods; bleaching alone may fall outside deemed sale treatment.

Dyeing and related processing of customers' fabrics were treated as a works contract under the Bengal Finance (Sales Tax) Act where goods used in execution retained some form in the processed fabric by accession or accretion. On that basis, the value of chemicals retained in the fabric could be brought within section 6D, while bleaching alone, which merely removed impurities and did not leave goods in the fabric, was outside that extent. The constitutional challenge under article 286 failed because the saving provision preserved the limits on tax over outside-State, import and export sales, so the deemed sale provision was not invalid on that ground.

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Issues: (i) Whether dyeing, bleaching and related processing of customers' fabrics constituted a works contract involving transfer of property in goods so as to attract section 6D of the Bengal Finance (Sales Tax) Act, 1941. (ii) Whether section 6D was invalid for alleged non-compliance with article 286 of the Constitution of India.

Issue (i): Whether dyeing, bleaching and related processing of customers' fabrics constituted a works contract involving transfer of property in goods so as to attract section 6D of the Bengal Finance (Sales Tax) Act, 1941.

Analysis: The processing activity was held to fall within the statutory concept of works contract under section 2(b)(iv), because the fabrics belonged to customers and were subjected to processing, treating and adapting. The applicable test was whether goods were involved in execution of the contract and whether, by accession or accretion, they remained in some form in the processed fabric. On the facts, dyeing resulted in coloured ions being retained in the fabric, so there was transfer of property in goods in that part of the activity. Bleaching, however, merely removed impurities and natural colouring substances and did not involve such accretion. The statutory notice under section 14(1) was therefore within jurisdiction for levy under section 6D, but the taxable element did not extend uniformly to bleaching.

Conclusion: The activity was a works contract to the extent of dyeing and whiting, and section 6D applied to the value of chemicals retained in the fabric; bleaching by itself did not involve deemed sale.

Issue (ii): Whether section 6D was invalid for alleged non-compliance with article 286 of the Constitution of India.

Analysis: The challenge was rejected because the saving provision in section 27 excluded sales outside the State and sales in the course of import or export from the tax net. The provision was treated as sufficient to preserve the constitutional limitation under article 286. The apprehension that deemed sales under works contracts would necessarily offend the restrictions in article 286 was not accepted, and the cited contrary decision was distinguished on the basis of different statutory language.

Conclusion: Section 6D was not invalid on the ground of article 286.

Final Conclusion: The jurisdictional notice was upheld and the constitutional challenge failed, so the application was dismissed and the tax proceedings were permitted to continue in accordance with the Court's findings.

Ratio Decidendi: For a works contract deemed sale to arise, the goods used in execution must remain in some form in the processed property by accession or accretion; if the processing merely destroys or removes the goods without any such continuing form, section 6D is not attracted to that extent.

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