Works contract deduction can be confined to goods used in the same or equivalent commercial form under constitutional tax law.

Section 3-B(2)(b) of the Tamil Nadu General Sales Tax Act was upheld as valid against article 366(29-A) because the constitutional phrase "whether as goods or in some other form" was read to expand the tax net for works contracts, not to require deduction where the purchased goods emerge as a commercially distinct taxable commodity. The provision may lawfully confine deduction to goods used in the same form, or in an equivalent commercial form within the statutory contemplation. The challenge to the restriction therefore fails.

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Issues: Whether the condition in section 3-B(2)(b) of the Tamil Nadu General Sales Tax Act, requiring goods purchased from registered dealers to be used in the execution of a works contract in the same form in which they were purchased, is inconsistent with article 366(29-A) of the Constitution of India.

Analysis: The words in article 366(29-A) relating to transfer of property in goods "whether as goods or in some other form" were held to enlarge the tax net so that goods which would otherwise escape levy could be taxed when used in the execution of a works contract. That expression was not construed to mean that a commercially distinct and taxable commodity emerging from a transformation must be treated as the original goods for purposes of deduction. The Court approved the view that deduction under section 3-B(2)(b) is available only when the purchased goods are used in the works contract in the same form, or in some other form falling within the same commercial category contemplated by the provision.

Conclusion: The condition in section 3-B(2)(b) is not inconsistent with article 366(29-A), and the challenge to the provision fails.

Ratio Decidendi: The phrase "whether as goods or in some other form" in article 366(29-A) does not protect the transformation of goods into a different commercially distinct taxable commodity, and the statutory deduction for works contracts may validly be confined to goods used in the same form or equivalent commercial form.

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