Works contract principle excludes printed materials from sales tax, while consumables for cleaning machinery were also kept outside taxable turnover.

Printed materials such as cinema tickets and wall posters were treated as outside taxable sales because the Court applied the principle that a contract is for work or service, not sale, where the maker does not retain property in the finished product as a commercial commodity available in the market; the sales tax levy on those items was held unsustainable. The Court also held that turnover relating to wax, cotton waste and similar consumables used for cleaning printing machinery could not be added to taxable turnover under section 7-A, and the Tribunal erred in including it; that inclusion was unsustainable.

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Issues: (i) Whether sales of printed materials such as cinema tickets and wall posters were liable to sales tax or were transactions in the nature of works contracts; (ii) whether the turnover relating to purchase of wax, cotton waste and similar items used for cleaning printing machinery could be brought to tax under section 7-A.

Issue (i): Whether sales of printed materials such as cinema tickets and wall posters were liable to sales tax or were transactions in the nature of works contracts.

Analysis: The Court applied the principle that a contract is one for work or service, and not for sale, where the person executing it does not retain property in the thing produced as a whole and the finished product is not a commercial commodity capable of sale to others in the market. On that basis, printed materials like cinema tickets and wall posters were treated as falling outside taxable sales.

Conclusion: The levy of sales tax on the printed materials was not sustainable and the issue was decided in favour of the assessee.

Issue (ii): Whether the turnover relating to purchase of wax, cotton waste and similar items used for cleaning printing machinery could be brought to tax under section 7-A.

Analysis: The Court held that the Assistant Commissioner was correct in excluding this turnover and that the Tribunal erred in including it in the taxable turnover on the Revenue's enhancement petition. The turnover was therefore not liable to be taxed under section 7-A.

Conclusion: The inclusion of this turnover in the taxable turnover was unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The tax case was allowed, and the assessments could not be sustained in respect of either the printed materials or the disputed consumable purchases.

Ratio Decidendi: A transaction is a works contract rather than a sale where the finished product is not a commercial commodity available for sale to others, and consumables used for cleaning machinery cannot be included in taxable turnover without legal basis.

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