Works contract turnover includes procurement and transport charges where goods are processed and incorporated into the work.

Expenditure on seigniorage, metal breaking, loading and unloading, and transport of metal used in road works formed part of taxable turnover under the Andhra Pradesh General Sales Tax Act because the contractor extracted, processed, transported, and incorporated the metal into the works contract. The metal became the contractor's property after extraction and conversion, and the cost of obtaining and using it was part of the value of goods transferred in execution of the contract. Applying the deemed sale principle on incorporation, the Court held that ancillary procurement charges were includible in the contractual transfer price, and the assessments were upheld.

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Issues: Whether the expenditure incurred towards seigniorage, metal breaking, loading and unloading, and transport charges for metal used in road works formed part of the taxable turnover under the Andhra Pradesh General Sales Tax Act.

Analysis: The contract required the contractor to extract boulders, convert them into metal of required size, transport them to the work site, and use them in laying the road. The Court held that, notwithstanding the initial extraction arrangement and payment of seigniorage, the metal became the contractor's property after extraction and conversion, and the cost incurred in obtaining and using that metal formed part of the cost of goods used in execution of the works contract. Applying the principle that goods incorporated in a works contract are transferred to the contractee on incorporation, the Court distinguished earlier authority relied on by the assessee and followed the later view that royalty and similar charges form part of the contractual transfer price in a works contract.

Conclusion: The disputed expenditure was rightly included in taxable turnover, and the challenge to the assessments failed.

Final Conclusion: In a works contract, the value of goods used and incorporated in the work is liable to tax as a deemed sale, including ancillary charges incurred to obtain and bring those goods into use.

Ratio Decidendi: Where goods are extracted, processed, transported, and incorporated into a works contract, the expenditure incurred in procuring them forms part of the taxable turnover because the transaction amounts to a deemed sale on incorporation.

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