Works contract classification for printed stationery limits tax to the labour component, not the full turnover.

Supply and printing of stationery by a press using its own materials was treated as a works contract, not a mere sale of goods. The court noted that the absence of a separate split between paper value and labour charges did not make the entire consideration taxable as turnover. The statutory 70:30 allocation for works contracts applied, and on that basis the taxable amount for each year fell below the assessable limit. Sales tax on the full turnover was therefore unsustainable, and the assessee's challenge to the assessment succeeded on the merits of classification.

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Issues: Whether the supply and printing of stationery by the press, where the press supplied the materials and delivered the finished books or articles at a fixed price, constituted a works contract under section 2(i-1) of the Madras General Sales Tax Act, 1939, and whether the turnover was therefore liable to sales tax.

Analysis: The transaction was held to be one of work and labour with materials supplied by the press, and not a mere sale of goods. The absence of a separate apportionment between paper value and labour charges did not convert the whole consideration into taxable turnover. The statutory 70 per cent. and 30 per cent. allocation for works contracts was applicable, and on that basis the taxable amount in each year fell below the assessable limit.

Conclusion: The transaction was a works contract and the levy of sales tax on the full turnover was unsustainable; the finding was in favour of the assessee.

Final Conclusion: The appeal failed and the assessee's challenge to the tax assessment succeeded on the merits of the works contract classification.

Ratio Decidendi: Where a printer supplies the materials and undertakes printing or making up stationery for delivery as finished articles, the transaction is a works contract and only the statutorily attributable labour and related component can be brought to tax.

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