Works contract tax on construction materials upheld; concessional rate relief denied where section 3-G did not override the levy.

Goods used in execution of a taxable civil works contract, including stone boulders used for dam construction, remained taxable under the works contract levy because the contract fell within the notification governing such contracts and the tax attached to the value of goods involved in execution. The claim that the boulders had already suffered tax on purchase from the Forest Corporation failed on the record. The concessional rate under section 3-G was unavailable for the period before 17 March 1992 because, at that stage, it did not override the levy under section 3-F. The tax levy was therefore sustained.

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Issues: (i) Whether the turnover relating to stone boulders used in execution of the civil works contract for construction of a dam was liable to tax under the works contract provisions and whether the claim that the boulders had been purchased from the Forest Corporation could exclude tax liability; (ii) Whether the dealer was entitled to the concessional rate of tax under section 3-G against form 3-D for the period prior to 17 March 1992.

Issue (i): Whether the turnover relating to stone boulders used in execution of the civil works contract for construction of a dam was liable to tax under the works contract provisions and whether the claim that the boulders had been purchased from the Forest Corporation could exclude tax liability.

Analysis: The contract was found to be a civil works contract for construction of a dam, a category expressly covered by the notification governing works contracts. The value of goods involved in execution of a works contract was taxable under section 3-F, and the relevant notification directed that such turnover would bear tax at the rate applicable to the goods under the rate notifications issued under section 3-A or section 3-D. Stone boulders used in the contract therefore did not escape tax merely because they were employed in laying the dam. The claim that the boulders had already suffered tax through purchase from the U.P. Forest Corporation was not established on the record, and the earlier finding that the dealer had not proved such purchase was accepted.

Conclusion: The turnover of stone boulders used in the works contract remained taxable, and the plea of prior taxability through purchase from the Forest Corporation failed.

Issue (ii): Whether the dealer was entitled to the concessional rate of tax under section 3-G against form 3-D for the period prior to 17 March 1992.

Analysis: Section 3-G granted a special concessional rate only where it operated as an overriding provision against the relevant charging provisions. Prior to the amendment by which section 3-F was brought within the overriding scheme, section 3-G overrode only sections 3-A and 3-D and did not control the levy under section 3-F. Since the tax in the present case was levied under section 3-F, the concession under section 3-G could not be invoked for the period before 17 March 1992.

Conclusion: The claim for concessional taxation under section 3-G was rejected.

Final Conclusion: The revision was found to be without merit and the tax levy sustained on both the taxable value of the boulders and the denial of concessional rate relief.

Ratio Decidendi: Goods involved in the execution of a taxable works contract are chargeable under the special works contract provision, and a concessional rate provision cannot apply to that levy unless it is made overriding by the statute itself.

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