Purchase tax on unregistered-dealer materials used in construction remains payable despite separate deemed-sale taxation of works contracts.

Purchase-tax provisions independently tax taxable goods bought from unregistered dealers and consumed in construction, as consumption "otherwise" covers materials that lose their original identity and are unavailable for further sale or purchase. Sand, gravel and jelly used by works contractors therefore attract purchase tax where no tax was paid at the seller stage. Tax on the deemed sale of goods transferred in a works contract arises from a distinct taxable event and does not displace purchase tax. Deductions for goods purchased from registered dealers that have already borne tax do not extend to untaxed purchases from unregistered dealers. Consequential purchase-tax assessments and penalties are described as within jurisdiction.

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Issues: (i) Whether sand, gravel and jelly purchased by works contractors from unregistered dealers and used in construction works are liable to purchase tax; (ii) Whether levy of tax on the deemed sale component of a works contract excludes purchase-tax liability on goods procured from unregistered dealers.

Issue (i): Whether sand, gravel and jelly purchased by works contractors from unregistered dealers and used in construction works are liable to purchase tax.

Analysis: Purchase-tax provisions are independent charging and remedial provisions intended to prevent goods from escaping tax where no tax was paid at the seller's point. The binding interpretation of the expression "or otherwise" covers goods consumed in construction, since such goods cease to exist in their original form and are no longer available for sale or purchase. The admitted procurement from unregistered dealers and use in works contracts therefore satisfies the statutory conditions for purchase tax under both regimes.

Conclusion: Goods purchased from unregistered dealers and consumed in execution of works contracts are exigible to purchase tax. The issue is decided against the assessee and in favour of the Revenue.

Issue (ii): Whether levy of tax on the deemed sale component of a works contract excludes purchase-tax liability on goods procured from unregistered dealers.

Analysis: The levy on transfer of property in goods involved in a works contract and purchase tax arise from distinct taxable events and operate in separate fields. The works-contract provision permits deduction in respect of specified goods purchased from registered dealers that have suffered tax; it does not protect purchases from unregistered dealers on which tax was not paid at the earlier stage. Consequently, the deemed-sale levy does not result in impermissible double taxation or displace purchase tax.

Conclusion: The deemed-sale provision does not exclude purchase-tax liability for materials purchased from unregistered dealers. The issue is decided against the assessee and in favour of the Revenue.

Final Conclusion: The appellate and Tribunal orders exonerating the assessee were legally unsustainable, and the assessments imposing purchase tax and consequential penalty were within jurisdiction.

Ratio Decidendi: A works contractor's consumption of taxable goods purchased from unregistered dealers in construction is consumption "otherwise" attracting purchase tax, and a separate deemed-sale levy on the works contract does not negate that liability.

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