Works contract taxation: iron strips and hooks used in job-work were held taxable as transferred goods.

Iron strips and hooks used in fastening cotton bales during job-work were treated as transfer of property in goods involved in execution of a works contract and were therefore taxable. Under the Rajasthan Sales Tax Act, 1954, read with article 366(29A)(b), once goods are supplied or delivered for use in performance of such a contract, transfer of property is presumed and the State need not separately prove an express sale. As the assessee purchased the items, used them in the job-work, and supplied them with the cotton bales, the levy was upheld.

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Issues: Whether iron strips and hooks supplied and used in fastening cotton bales in the course of job-work were exigible to sales tax as transfer of property in goods involved in the execution of a works contract.

Analysis: Under section 5 of the Rajasthan Sales Tax Act, 1954, packing materials and turnover of works contracts are liable to tax. After the Forty-sixth Amendment, article 366(29A)(b) of the Constitution of India treats transfer of property in goods involved in the execution of a works contract as a sale. Once it is shown that goods were supplied or delivered in the execution of such contract, the transfer of property in those goods is presumed, and the State need not separately prove an express sale. The iron strips and hooks were purchased by the assessee, used in the job-work, and supplied to the customer along with the cotton bales, so the property in those items passed in the course of the contract.

Conclusion: The goods were taxable, and the challenge to the levy failed.

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