Double taxation barred for works contract turnover already taxed as deemed sale in subcontractor's hands.

Turnover from a works contract executed by a subcontractor was treated as a single deemed sale when the goods were incorporated in the work. Because that turnover had already been taxed in the subcontractor's hands, it could not be subjected again to resale tax in the hands of the main contractor. The analysis emphasises that taxing the same turnover a second time would amount to impermissible multiple deemed sales and double taxation under the constitutional scheme governing works contracts. The revisional order imposing resale tax on the contractor was therefore unsustainable.

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Issues: Whether the turnover relating to work executed by a subcontractor, which had already been taxed in the hands of the subcontractor as a deemed sale, could again be subjected to resale tax in the hands of the main contractor under section 6B of the Karnataka Sales Tax Act, 1957.

Analysis: The turnover arising from execution of a works contract by a subcontractor constitutes a single transaction of deemed sale when the goods are incorporated in the work. Once the same turnover has suffered tax in the hands of the subcontractor, there is no second sale or resale of the very same goods in the hands of the contractor. Levying tax again on the same turnover would result in multiple deemed sales and impermissible double taxation, which is inconsistent with the constitutional scheme governing works contracts.

Conclusion: The subcontract turnover could not be taxed again as resale tax in the hands of the assessee, and the revisional order imposing such tax was unsustainable.

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