Works contract taxation applies to goods used in construction, and separate company identities are not merged by common directors.

Transfer of property in goods used in construction was held taxable as works contract turnover under Section 3B of the Tamil Nadu General Sales Tax Act, 1959, because the assessment targeted the value of goods involved in execution of the construction activity rather than the completed building as immovable property. Separate companies with distinct registrations were not treated as one legal entity merely because they shared common directors, since a private limited company has an identity separate from its directors and shareholders. The assessment treating the transaction as taxable works contract turnover was therefore sustained.

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Issues: (i) Whether the transfer of property in goods used in constructing the building was taxable as a works contract under Section 3B of the Tamil Nadu General Sales Tax Act, 1959. (ii) Whether two companies with separate registrations but common directors could be treated as one and the same legal entity.

Issue (i): Whether the transfer of property in goods used in constructing the building was taxable as a works contract under Section 3B of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The materials were purchased by one registered dealer and used in the construction of a building, which was later placed with another separately registered concern. The assessment was directed not at the completed building as immovable property, but at the value of goods involved in the construction. Where property in goods is transferred in the execution of construction activity, the transaction falls within the scope of works contract taxation under Section 3B.

Conclusion: The issue is answered in favour of the Revenue and against the respondent.

Issue (ii): Whether two companies with separate registrations but common directors could be treated as one and the same legal entity.

Analysis: A private limited company has a legal identity distinct from its directors and shareholders. The mere fact that the same individuals were directors in both concerns did not merge their separate legal personalities. Since each concern held separate registration under different enactments, the plea that the transaction was one of self-use by the same entity could not be accepted.

Conclusion: The issue is answered in favour of the Revenue and against the respondent.

Final Conclusion: The assessment treating the transaction as taxable works contract turnover was sustained, and the contrary view of the appellate authorities was reversed.

Ratio Decidendi: When one legally distinct company purchases materials and uses them in construction that is later associated with another separately registered company, the value of goods involved in that construction is taxable as a works contract transfer of property in goods.

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