Composite works contract relief applies where imported furniture is consumed as part of furnishing work

Supply and fitting of furniture imported from outside the State, where undertaken to furnish a guest house in accordance with approved specifications, formed an integral part of a composite works contract. Goods brought from outside the State and consumed in executing such a contract fell within the statutory relief under Section 3F(2)(b)(i), so the separate-treatment approach adopted by the authorities could not stand. The claim for relief was therefore maintainable, and the assessments and appellate orders were set aside.

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Issues: Whether the supply and fitting of furniture imported from outside the State, as part of a contract for furnishing a guest house, formed an integral component of a composite works contract so as to attract relief under Section 3F(2)(b)(i).

Analysis: The contract terms showed that the assessee was required not merely to supply furniture but to furnish the guest house and fit it with furniture and related items in accordance with approved specifications. The furniture was therefore not a separate transaction, but an integral part of the works contract. Where goods brought from outside the State are consumed in the course of execution of a works contract, the transaction falls within the statutory relief contemplated by Section 3F(2)(b)(i). The contrary view of the authorities treated the furniture supply as disconnected from the contractual work and could not be sustained.

Conclusion: The issue was decided in favour of the assessee, and the claim for relief under Section 3F(2)(b)(i) was held to be maintainable.

Final Conclusion: The revision succeeded and the assessments and appellate orders were set aside.

Ratio Decidendi: Goods brought from outside the State and consumed as an integral part of the execution of a composite works contract are entitled to the statutory relief applicable to such works contract transactions.

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