Works contract for printed materials: retrospective sales tax amendment inapplicable and assessment quashed.

Retrospective section 3(b) of the T.N.G.S.T. Act, 1959 did not apply to the 1984-85 assessment year, so the dispute turned on whether printed letter pads, bill books and similar materials were sold as goods or produced under a works contract. Applying State of Tamil Nadu v. Anandam Viswanathan, the Tribunal held that where the main object is work and labour and paper is only incidental, the transaction is not taxable as a sale of goods. The assessment order was therefore unsustainable in law and was quashed.

---

---

Issues: Whether the impugned assessment order could stand where the assessee's supply of printed materials was governed by the pre-existing law and the governing Supreme Court decisions treated the transaction as a contract for work and labour with the supply of paper being merely incidental.

Analysis: The assessment year being 1984-85, the retrospective amendment introducing section 3(b) of the T.N.G.S.T. Act, 1959 was held inapplicable. The decisive question therefore was whether the printed letter pads, bill books and similar materials were sold as goods or produced in a works contract. The Tribunal applied the Supreme Court's ruling in State of Tamil Nadu v. Anandam Viswanathan and noted that where the nature of the job and the confidence reposed show that the main object is work and labour, the supply of paper is only incidental and the entire price of the printed article is not liable to sales tax. It held that enquiries into whether the customer supplied paper, whether signatures were obtained, or whether surplus paper was returned were outside the scope of the issue after the Supreme Court decision. The later reliance on marketability principles was found not to displace the earlier binding ruling on printed articles produced under such contracts.

Conclusion: The assessment order was unsustainable in law and was quashed.

---