Accepted books of account bar estimated labour disallowance, while declared goods status must be proved for concessional tax treatment.

Once the books of account were accepted, the assessing authority could not make a separate estimated disallowance of labour expenditure recorded in those books without first rejecting the books as a whole; the labour-expense disallowance was therefore unsustainable. On classification, the taxpayer failed to show that the tower components and galvanized components assessed to higher tax fell within the declared goods entry needed for concessional treatment under the Central sales tax framework; the concurrent classification findings were left undisturbed. The result was partial relief on the labour-expense issue, but no relief on the tax classification issue.

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Issues: (i) Whether, after acceptance of the assessee's books of account, labour expenditure disclosed therein could still be disallowed on estimate under the State trade tax law. (ii) Whether steel structurals or the items taxed as tower components and galvanized components were entitled to treatment as declared goods so as to attract only the concessional rate of tax under the Central sales tax framework.

Issue (i): Whether, after acceptance of the assessee's books of account, labour expenditure disclosed therein could still be disallowed on estimate under the State trade tax law.

Analysis: The books of account had been accepted by the assessing authority. Once that position was taken, further rejection of a part of the expenditure recorded in those books was impermissible unless the books themselves were first rejected. An assessing authority cannot accept the books as a whole and simultaneously disbelieve a component of the expenditure reflected therein. Estimation of labour cost under the State provision could not be sustained in such circumstances.

Conclusion: The disallowance of part of the labour expenditure was not sustainable and this issue was decided in favour of the assessee.

Issue (ii): Whether steel structurals or the items taxed as tower components and galvanized components were entitled to treatment as declared goods so as to attract only the concessional rate of tax under the Central sales tax framework.

Analysis: The record did not establish that the goods on which higher tax was imposed were goods covered by the declared goods entry relied upon by the assessee. The assessment order and the Tribunal's findings showed that the higher levy related to tower components and galvanized components, and no material was shown to demonstrate that those items fell within the declared goods description. In the absence of such proof, the concurrent findings on classification did not warrant interference in revision.

Conclusion: The goods were not shown to be declared goods for the purpose of the concessional rate, and this issue was decided in favour of the revenue.

Final Conclusion: The revision succeeded only on the labour-expense issue, while the tax classification issue was rejected, resulting in partial relief to the assessee.

Ratio Decidendi: Once books of account are accepted, a component-wise estimated disallowance from those books cannot be made unless the books are first rejected; a claim to concessional tax treatment for declared goods must also be supported by material showing that the goods actually fall within the declared-goods entry.

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