Works contract tax on timber and plywood depends on whether goods are transferred in the same form as purchased.

Timber and plywood used in civil construction under a works contract are taxed under entries 18 and 19 of the Fourth Schedule, because section 5(1)(iv)(a) applies the special schedule rate only where goods are transferred in the same form as purchased. Where such materials are consumed in making doors, windows, ceiling, panelling, and similar components, they are not sold or supplied as timber or plywood in their original form, so the Fifth Schedule rate does not govern the transaction. The proviso to section 5(1)(iv) and the earlier cited decision did not change that result.

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Issues: Whether timber and plywood used in the execution of a works contract were taxable under the Fifth Schedule to the Kerala General Sales Tax Act, 1963, or under entries 18 and 19 of the Fourth Schedule.

Analysis: Section 5(1)(iv)(a) applies to transfer of goods involved in the execution of a works contract only where the transfer is in the same form, attracting the rate and point prescribed in the First, Second or Fifth Schedule. Timber and plywood purchased for civil construction are ordinarily consumed in the work for making doors, windows, ceiling, panelling and similar components, and are not sold or supplied as such in the form in which they were purchased. The Fifth Schedule rate therefore does not govern such use. The contention based on the proviso to section 5(1)(iv) and the cited earlier decision did not alter the applicable rate for timber and plywood used in civil construction.

Conclusion: The applicable rate of tax for works contract involving supply of timber, plywood and similar materials is the rate under entries 18 and 19 of the Fourth Schedule to the Kerala General Sales Tax Act, 1963, depending on the nature of the work.

Final Conclusion: The revisions by the State succeeded and the assessment was restored at the rate applicable under the Fourth Schedule.

Ratio Decidendi: Materials used in a works contract attract the schedule rate applicable to works contract only when the transfer is in the same form as purchased; where the goods are consumed or appropriated in construction and not sold as such, the special schedule rate for the goods does not apply.

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