Printing ink used in works contracts can amount to transfer of property in goods under the constitutional sales fiction.

Printing ink manufactured from purchased raw materials and used in executing printing works contracts was treated as goods whose property was transferred in the course of the contract. Applying Article 366(29A), the court noted that the customer supplied only paper, while the assessee converted raw materials into printing ink and used it in completing the printing job. The ink did not cease to be marketable goods merely because it was consumed in the process of printing, and it was not comparable to ordinary consumables such as toner or developers. On that basis, the transfer of property in goods attracted Section 3-B of the Tamil Nadu General Sales Tax Act, 1959.

---

---

Issues: Whether printing ink manufactured by the assessee and used in executing printing work contracts is a consumable or goods involving transfer of property so as to attract levy under Section 3-B of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: Clause (29A) of Article 366 of the Constitution creates a deeming fiction by which transfer of property in goods involved in the execution of a works contract is treated as a sale. The Court applied this principle to the printing activity undertaken by the assessee, noting that the customers supplied only paper, while the assessee purchased raw materials, manufactured printing ink, and used that ink in completing the printing job. The ink did not lose its character as goods merely because it was used in the process of printing; it remained tangible, marketable property and was not comparable to mere consumables such as toner or developers in a maintenance arrangement. Since the raw materials were converted into printing ink and that ink was used in execution of the works contract, the transaction involved transfer of property in goods within the constitutional and statutory scheme.

Conclusion: The use of printing ink in the execution of the printing works contract amounted to transfer of property in goods and Section 3-B of the Tamil Nadu General Sales Tax Act, 1959 was rightly applied, against the assessee and in favour of the revenue.

---