Works contract deduction requires proof of earlier tax levy or liability on the same goods before claiming relief.

Deduction under section 3-F(2)(b)(iii) of the U.P. Trade Tax Act, 1948 is available only if the dealer proves that the relevant goods had already suffered tax, or were liable to tax, at an earlier stage. The provision operates through section 3-F's non obstante clause and applies to the transfer of property in goods involved in execution of a works contract. On the facts, no material showed that tax had been levied or was leviable on cement, sariya and bricks, so the dealer could not claim the deduction merely because it was not the manufacturer or importer. The Revenue's disallowance was therefore upheld.

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Issues: Whether deduction under section 3-F(2)(b)(iii) of the U.P. Trade Tax Act, 1948 was allowable in respect of cement, sariya and bricks used in execution of the works contract without proof that tax had been levied or was leviable on those goods at an earlier stage.

Analysis: Section 3-F of the U.P. Trade Tax Act, 1948 creates a charge on the transfer of property in goods involved in execution of a works contract and, by virtue of its opening non obstante clause, operates notwithstanding sections 3-A, 3-AAA and 3-D. The deduction under clause (b)(iii) of sub-section (2) is available only where the dealer establishes that the relevant goods had suffered tax, or were liable to tax, under the Act at some earlier stage. The dealer produced no material to show that tax had been levied or was leviable on the value of cement, sariya and bricks. The appellate finding that deduction was permissible merely because the dealer was not the manufacturer or importer was therefore unsustainable.

Conclusion: The deduction was not allowable and the disallowance sought by the Revenue was justified.

Final Conclusion: The tax demand on the disputed turnover was restored and the Revenue succeeded in challenging the deletion of tax on the goods used in the works contract.

Ratio Decidendi: A deduction under section 3-F(2)(b)(iii) is available only on proof that tax has been levied or is leviable on the same goods at an earlier stage; absence of such proof disentitles the dealer to the deduction.

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