Declared goods in works contracts remain capped by constitutional tax limits, with Supreme Court precedent controlling liability.

Declared goods used in civil works contracts remain subject to the constitutional and statutory limits under Article 286(3) of the Constitution and Section 15 of the Central Sales Tax Act, 1956. The Supreme Court position applied was that such goods are taxable only at a single point, at a rate not exceeding four per cent, with tax referable to the point of accretion or incorporation into the works. The Tribunal's view was therefore sustained and the revisional enhancement of tax on iron and steel could not stand.

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Issues: Whether the revisional order enhancing tax on iron and steel used in civil works contracts could be sustained, or whether the Tribunal was right in setting it aside in light of the binding Supreme Court decisions on declared goods used in works contracts.

Analysis: The dispute concerned taxability of iron and steel used in execution of works contracts for the assessment year 2003-2004. The revisional authority had treated the materials as having lost their original identity and applied a higher rate of tax. The Court noted that the controversy had already been settled by the Supreme Court, which held that declared goods used in works contracts remain subject to the constitutional and statutory restriction under Article 286(3) of the Constitution of India read with Section 15 of the Central Sales Tax Act, 1956. Such goods are taxable only at a single point and at a rate not exceeding four per cent, and the relevant point of tax is the point of accretion or incorporation into the works. In view of that settled position, the Tribunal's decision could not be faulted.

Conclusion: The revision petition was correctly liable to be dismissed, and the Tribunal's order in favour of the assessee was sustained.

Ratio Decidendi: Declared goods used in the execution of works contracts cannot be taxed beyond the constitutional and statutory limitation under Article 286(3) of the Constitution of India read with Section 15 of the Central Sales Tax Act, 1956, and the binding Supreme Court precedent must govern.

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