Declared goods in works contracts retain tax status absent loss of identity; fabricated steel articles do not qualify for exemption.

Declared goods retain their character in a works contract unless their commercial identity is lost, so iron and steel reinforcements used in cement concrete works remain subject to the Section 15 restrictions under the Central Sales Tax Act, 1956; mere cutting, bending, tying or joining does not amount to manufacture of a new commodity, and the goods were taxable only at the declared-goods rate. By contrast, fabricated doors, window frames and grills made from iron and steel were not used in the same form in execution of the works contract, so the turnover deduction or exemption was unavailable and the assessee's claim failed.

---

---

Issues: (i) Whether iron and steel reinforcements used in cement concrete works contracts retain their character as declared goods and are taxable only at the rate prescribed for declared goods; (ii) Whether fabricated doors, window frames and grills made from iron and steel and used in works contracts are entitled to exemption under the relevant turnover deduction rule.

Issue (i): Whether iron and steel reinforcements used in cement concrete works contracts retain their character as declared goods and are taxable only at the rate prescribed for declared goods.

Analysis: Declared goods under Section 14 of the Central Sales Tax Act, 1956 remain subject to the restrictions in Section 15 of that Act even when used in works contracts. The taxable event in such contracts is the transfer of property in goods at the point of incorporation or accretion into the structure. Mere cutting, bending, tying, or joining of iron and steel bars for reinforcement does not change their commercial identity or amount to manufacture of a new commodity. The goods continue to be the same declared goods and cannot be subjected to a higher rate merely because they are used in civil construction.

Conclusion: The declared goods in question retained their identity and were liable to tax only at 4%.

Issue (ii): Whether fabricated doors, window frames and grills made from iron and steel and used in works contracts are entitled to exemption under the relevant turnover deduction rule.

Analysis: The deduction provision applied only to goods purchased from registered dealers and used in the same form in execution of the works contract. Where the purchased iron and steel were consumed in making other goods such as doors, window frames and grills, the goods were no longer used in the same form. The explanatory rule excluded such goods from the exemption because they had been manufactured into different articles before being used in the works contract.

Conclusion: The exemption was not available and the assessee's claim failed.

Final Conclusion: The appeals concerning reinforcement steel succeeded to the extent that only the declared-goods rate could be applied, while the appeal relating to fabricated articles failed. The State's appeals were rejected and the assessee's appeal in the fabrication matter was dismissed.

Ratio Decidendi: Goods declared to be of special importance retain their character in a works contract unless their commercial identity is lost; mere processing, bending, cutting or joining does not amount to manufacture, and tax on such goods must conform to the restrictions of Section 15 of the Central Sales Tax Act, 1956.

---