Works contract classification covers fitting out activities and makes materials used in execution taxable as turnover.

Pressing cotton lint into bales with hessian cloth and iron hoops, and lamination using polyester film and gum, were treated as works contracts under section 2(t) of the Andhra Pradesh General Sales Tax Act, 1957. The statutory definition was applied to movable property where the activity involved fitting out, improvement or repair, and it was not necessary that a new article emerge. The materials used in carrying out the work were not treated as mere sale items, but as components of the execution of the contract. The materials were therefore taxable as part of the assessable turnover.

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Issues: Whether the activity of pressing cotton lint into bales using hessian cloth and iron hoops, and the activity of lamination using polyester film and gum, amount to works contract within section 2(t) of the Andhra Pradesh General Sales Tax Act, 1957, and whether the materials used in such activities are taxable as part of the turnover.

Analysis: The expression "works contract" in section 2(t) covers, in relation to movable property, fitting out, improvement or repair. The activity of pressing cotton into bales involved supplying hessian cloth and iron hoops as things fit and necessary for the work, and therefore fell within "fitting out" even though no new article emerged. The same reasoning applied to lamination, where polyester film and gum were used in carrying out the work and the transaction was not a mere sale of those materials. The contention that the activities were only service or labour contracts was rejected because the statutory definition did not require production of a new end-product for "fitting out" to apply.

Conclusion: The activities were rightly treated as works contracts under section 2(t), and the materials used in executing them were liable to tax as part of the assessable turnover. The challenge failed.

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