Declared goods in works contracts remain taxable at the declared-goods rate despite change in form, the Karnataka HC held.

Declared goods used in civil works contracts do not lose their character merely because they are cut, adapted, or otherwise changed in form during execution, so they remain taxable at the rate applicable to declared goods. Applying binding Supreme Court precedent, the Karnataka HC treated the issue as already settled and held that iron and steel used in works contracts under the Karnataka Value Added Tax Act could not be taxed at a higher rate on that footing. The Tribunal's relief in favour of the assessees was left undisturbed, and the State's revision petitions were dismissed.

---

---

Issues: Whether iron and steel used in civil works contracts under the Karnataka Value Added Tax Act, 2003 could be taxed at a higher rate on the footing that the goods had changed form, and whether such goods were liable only to tax at 4% as declared goods.

Analysis: The controversy was treated as concluded by the Supreme Court decision holding that iron and steel used in works contracts remain liable to be taxed as declared goods at 4%, notwithstanding the change in form during execution of the contract. The Tribunal had granted relief to the assessees on that basis, and the High Court found the issue covered by the binding precedent. As the legal position was already settled, no further question of law survived for consideration in the revisions.

Conclusion: The assessees succeeded and the State's challenge failed; the tax on the iron and steel used in the works contracts could not be sustained at the higher rate and remained confined to 4%.

Final Conclusion: The revision petitions were dismissed, leaving the Tribunal's view in favour of the assessees intact.

Ratio Decidendi: Declared goods used in a works contract do not lose their character merely because they are cut or adapted for execution of the contract, and they remain taxable only at the rate applicable to declared goods.

---