Works contract taxation on bridge construction denied concessional treatment for iron and steel used in execution

Iron and steel used by a contractor in executing a bridge works contract were assessable under the works contract charging provision, because the goods were not transferred in the same form as purchased but were consumed in the execution of the work. Applying the principles governing works contracts and deduction of labour and service components, the Court found no basis for concessional tax treatment on those materials. The revisional authority and the Tribunal were therefore justified in sustaining the assessment revision, and the assessee's challenge failed.

---

---

Issues: Whether the revisional authority and the Appellate Tribunal were justified in denying concessional tax treatment on iron and steel used in the execution of the bridge works contract and in sustaining the revision of the assessment.

Analysis: The assessment related to a works contract for construction of a bridge, which fell within the charging provision for works contracts under Section 5B of the Karnataka Sales Tax Act, 1957 and the relevant civil works entry in the Sixth Schedule. The iron and steel purchased by the contractor were not transferred in the same form as purchased, but were used in the execution of the bridge work. Applying the principles laid down for works contracts and the deduction of labour and service components, the Court held that the assessee's claim for concessional treatment could not be accepted on the facts.

Conclusion: The revisional authority and the Tribunal were justified, and the challenge to their orders failed.

Ratio Decidendi: Where goods purchased by a contractor are used in the execution of a works contract and are not sold or transferred in the same form as purchased, their value is assessable under the works contract charging provision and the contractor is not entitled to concessional treatment on that basis.

---