Works contract turnover: imported goods used in execution were taxable, and cost-plus valuation was upheld.

Photographic papers imported from outside the State and used in executing a works contract were not deductible from taxable turnover because the inter-State character of their movement was not shown to have been occasioned by that particular contract. The works contract provision taxed the deemed transfer of property in goods on net turnover, and the goods kept as stock for ordinary business use did not qualify for the pleaded inter-State sale deduction. Where the actual sale consideration was not disclosed, the notified valuation method treating sale price as cost value plus incidental expenses and a 20 per cent addition was applied, and the Tribunal's estimate was upheld as consistent with that method.

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Issues: Whether photographic papers imported from outside the State and used in the execution of a works contract were deductible from the taxable turnover under the works contract provision, and whether the turnover could be estimated on the basis of cost value plus prescribed addition when the sale consideration was not disclosed.

Analysis: The revision arose under the works contract tax provision, which taxes the transfer of property in goods involved in execution of a works contract on net turnover. Deduction is available only where the value of goods falls within the specified categories, including goods covered by the inter-State sale provision. The imported photographic papers were kept as stock and used in the ordinary course of business, and the movement of those goods was not shown to have been occasioned by a particular works contract. The case therefore did not attract the inter-State sale deduction. On valuation, the taxable measure was the turnover of the deemed sale and not merely the purchase price. Where the actual sale consideration was not disclosed, the prescribed notification treated the sale price as cost value, including purchase price and incidental expenses, with an additional 20 per cent addition. The estimate adopted by the Tribunal was found to be in accordance with that notified method and was not shown to be erroneous.

Conclusion: The imported photographic papers were not excluded from tax on the pleaded inter-State basis, and the turnover estimate at Rs. 66,84,000 was upheld.

Final Conclusion: The revision failed because the goods were held taxable as part of the works contract turnover and the valuation method adopted by the authorities was sustained.

Ratio Decidendi: For goods used in a works contract, deduction from taxable turnover is available only when the inter-State character of the movement is shown to be occasioned by that contract, and where the sale consideration is undisclosed the prescribed cost-plus method for estimating turnover may be applied.

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