Composition tax on works contracts binds a dealer to total consideration after voluntary election.

Section 17(6) of the Karnataka Sales Tax Act provides an optional composition scheme for works contracts, under which tax is paid on the total consideration for works contracts executed in the State in lieu of the normal assessment. Once a dealer voluntarily elects that route, the dealer is bound by the statutory consequences and cannot later split receipts or exclude components said to involve only labour and no transfer of property in goods. The levy on the full composition base was therefore sustained in line with the statutory scheme and the principle that a conscious election under an optional tax regime is final.

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Issues: Whether, on election under section 17(6) of the Karnataka Sales Tax Act, 1957, tax is payable on the total consideration for works contracts, so as to include receipts from contracts said to involve only labour and no transfer of property in goods.

Analysis: Section 17(6) provides an optional composition scheme under which a dealer may pay tax on the total consideration for works contracts executed in the State in respect of works contracts specified in the Sixth Schedule, in lieu of tax otherwise payable. The provision creates an alternate and simplified method of assessment, and once a dealer voluntarily elects to be governed by it, the dealer cannot later seek to bifurcate the contract receipts or exclude particular components from the composition base. The court relied on the principle that a dealer who has chosen the composition route, with knowledge of its consequences, is bound by that choice. The revisional order was therefore supported by the statutory scheme and the Supreme Court's exposition on optional composition taxation.

Conclusion: The levy under section 17(6) was upheld on the total consideration of the works contracts, and the challenge to tax on the composition basis failed.

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