Works contract classification in printing contracts defeats exemption where transfer of goods is merely incidental to job execution.

Printing textbooks, magazines and periodicals under a contract where the printer used its own paper, worked on a piece-rate basis, and delivered finished goods to the publisher was treated as a works contract rather than a sale. Applying the statutory definitions in the Andhra Pradesh General Sales Tax Act, 1957, and the constitutional position after Article 366(29-A), the decisive test was the nature of the transaction: any transfer of property in goods was only incidental to execution of the printing job, not a transfer of chattel as chattel. The exemption for sales of printed books and periodicals was held inapplicable because the contract was for printing work itself.

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Issues: Whether the printing of textbooks, magazines and periodicals under the contractual arrangement described in the case constituted a sale entitled to exemption, or a works contract exigible to tax under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The contract involved printing specified quantities of textbooks, magazines and periodicals on materials supplied for the work, with the printer using its own paper and carrying out the printing on a piece-rate basis. The finished printed goods were required to be delivered to the publisher, who alone had the right to market them. On the statutory definitions in Section 2(n) and Section 2(t) of the Andhra Pradesh General Sales Tax Act, 1957, and in the light of the constitutional position after Article 366(29-A) of the Constitution of India, the decisive consideration was the nature of the transaction. The arrangement was treated as one for printing work in which any transfer of property in goods was only incidental to the execution of the job, and not as a transfer of chattel as chattel. The exemption notification was found inapplicable because it covered sales of periodicals and printed books for reading, whereas the transaction in question was the printing contract itself.

Conclusion: The transaction was held to be a works contract and not an outright sale. The claimed exemption was not available, and the challenge to the tax demand failed.

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