Works contract classification for customised printing jobs on specific orders prevailed over sale of goods treatment.

Printing of bill books, receipt books, name pads and similar articles on specific customer orders, where the items are not intended for general market sale and the transfer of materials is merely incidental to the printing work, constitutes a works contract rather than a taxable sale of goods. The Madras HC held that the revisional authority was wrong to treat the transaction as a sale because the materials supplied were tailored to the customer's requirements and the dominant element was execution of the work. The revisional order was therefore set aside in favour of the assessee.

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Issues: Whether the printing of bill books, receipt books, name pads and similar printed materials on specific orders for a particular customer constituted a works contract or a taxable sale of goods.

Analysis: The printed articles were prepared for specific customers on special orders and were not meant for general sale in the ordinary course of business. The work was undertaken by a charitable organisation engaged in vocational training, and the materials supplied were tailored to the customer's requirements. On these facts, the transfer of property in the materials was incidental to the execution of the printing work. The revisional authority's view that the transaction was a sale was therefore unsustainable, and the transaction properly fell within the category of works contract under the charging scheme of the Act.

Conclusion: The transaction was a works contract and not a taxable sale of goods, and the revisional order was set aside in favour of the assessee.

Ratio Decidendi: Printing work executed on specific customer orders, where the articles are not intended for general market sale and the transfer of materials is incidental to the work, constitutes a works contract rather than a sale of goods for sales tax purposes.

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