TaxTMI 
TaxTMI 
2015 (1) TMI 452
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....and paper in the transaction effected in post-46th Amendment era?" The advocate for the applicant and respondent state that the word "paper" in the question is a mistake. Therefore, the question framed is only with regard to transfer of property in ink and lacquer. The facts leading to the present reference are as under: (a) The respondent-assessee is registered as a dealer under the Maharashtra Sales Tax on Transfer of Property in Goods involved in the Execution of Works Contracts (Re-enacted) Act, 1989 (Works Contracts Act) and also under the said Act. (b) The respondent-assessee carries on business as a manufacturer as well as job-worker. So far as manufacturing activities are concerned, there is no dispute between the parties. The job-work which is undertaken by the respondent-assessee is as under: (i) Plate making wherein plates are supplied by the customers and the same are returned after forming an image on the plates. (ii) Pure labour job which involves the job of film making (positive making) out of design supplied by the customers in black and white. (c) In the job-work of plate making the customers of the respondentassessee supplies to the respondent....
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....of property in ink and lacquer under the Works Contracts Act in the process of plate making on job-work basis by the respondent-assessee. Mr. Sonpal, special counsel appearing for the appellant-Revenue in support of the appeal submits that: (i) there is a deemed sale by way of transfer of property in ink and lacquer as contemplated under section 2(l) of the Works Contracts Act; (ii) this is particularly so as the lacquer and ink are used by the respondent-assessee in the process of plate making so as to ensure that images formed on the plates are not disturbed/smudged due to constant use. The lacquer and ink in plate so used get settled on the plate so as to become a part of the plate; (iii) the Tribunal applied an incorrect test to hold that there is no transfer of property of lacquer and ink, viz., the thickness of the plates continue to remain the same both before and after the process; and (iv) in any case the issued raised in this reference stands concluded in favour of the applicant-Revenue by the decision of this court in the matter of Commissioner of Sales Tax v. Matushree Textile Limited reported in [2003] 132 STC 539 (Bom). On the other hand Mrs. Bhadeka, c....
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.... to which one of us is a party (J.P. Devadhar, J.). In the case of Matushree Textile [2003] 132 STC 539 (Bom) this court was concerned with the issue whether the process of dying, bleaching and printing of grey fabrics on job-work basis results in a transfer of materials as a deemed sale within the meaning of section 2(1)(l) of the Works Contracts Act. This court after considering the ruling of the apex court held that there is a transfer of property in goods, i.e., materials used for dying and bleaching under the Works Contracts Act has observed as under (pages 558 and 559 in 132 STC): "33. We see no merit in the contentions raised by the respondents. When the term 'sale' in the Works Contracts Act has been defined to include by a deemed fiction, the transfer of property in goods in any form, there is no reason to restrict the definition to cover only those transactions which involve transfer of goods in some physical form and not in some chemical form. In our opinion, the words 'some other form' used in the definition of 'sale' in the Works Contracts Act apply to the transfer of property in goods in its every form, i.e., physical form or any other form,....
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....allowing the second appeal, held that in the activity of plate making there is no transfer of property in (ink and lacquer) because even after undergoing the process of application of ink and lacquer the plates continue to remain plates as they have the same thickness both before and after the process. Further the Tribunal holds that the same plates can be reused. Thus according to the Tribunal it cannot be said that any goods have been transferred along with the plates. In support of the aforesaid conclusion, the Tribunal placed reliance upon the decision of this court in the matter of Commissioner of Sales Tax v. R.M.D.C. Press Pvt. Ltd. reported in [1999] 112 STC 307 (Bom) in which it was held that there is no transfer of property whether as ink or in any other form when printed material is given. The aforesaid decision of this court in the matter of R.M.D.C. Press Pvt. Ltd. [1999] 112 STC 307 (Bom) has no precedential value as held by this court in the matter of Matushree Textile [2003] 132 STC 539 (Bom) wherein at para 38 it is held as under (page 561 in 132 STC): "38. The ratio laid down by this court in the case of R.M.D.C. Press Pvt. Ltd. [1999] 112 STC 307 (Bom), has no....
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....d in [2001] 124 STC 59 (SC); [2001] 4 SCC 593, wherein it has been held that even where dominant intention of the contract is rendering of service it would amount to works contract and in the execution of such contract, if the property of the material used passes then in such a case it would be a deemed sale and liable to be taxed under the Works Contracts Act. Our court in the matter of Matushree Textile [2003] 132 STC 539 (Bom) at para 37 deals with the reliance upon Rainbow Colour Lab [2000] 118 STC 9 (SC); [2000] 2 SCC 385 as under (pages 560 and 561 in 132 STC): "37. It is true that the decision of the apex court in the case of Rainbow Colour Lab [2000] 118 STC 9 (SC); [2000] 2 SCC 385, supports the contention of the respondents. However, since the ratio laid down therein has been doubted by the three-Judge Bench decision in the case of Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); [2001] 4 SCC 593, we are bound by the ratio laid down by the Larger Bench in the case of Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); [2001] 4 SCC 593, which is a later decision in point of time. As stated hereinabove, the larger Bench of the apex court has held that after ....
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.... be to transfer goods. In this case, it is her submission that the respondent-assessee was rendering services, and therefore, supply of any goods was incidental to rendering of services hence not chargeable to tax under the Works Contracts Act. According to her, the dominant intention of the contract has to be ascertained and in this case dominant intention of the contract for the respondent-assessee was to render services and therefore, no tax under the Works Contracts Act is payable on the ink and lacquer used in the execution of the contract. In our view the reliance upon the above decision is misplaced. In Bharat Sanchar Nigam [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC); [2006] 282 ITR 273 (SC); [2006] 6 RC 276, the court was concerned with article 366(29A)(d) of the Constitution, i.e., a tax on the transfer of a right to use any goods for any purpose and not with article 366(29A)(b) of the Contract Act which deals with a tax on the transfer of property, i.e., goods involved in execution of works contract. Further, so far as the dominant intention is concerned the apex court negatived such a test as applicable in its decision in the matter of Associated Cement Companies Ltd. [....
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....66(29A) as also of the Constitution Bench decision of this court in Builders' Association. of India v. Union of India [1989] 73 STC 370 (SC); [1989] 2 SCC 645. 50. We agree. After the 46th Amendment, the sale elements of those contracts which are covered by the six sub-clauses of clause (29A) of article 366 are separable and may be subjected to sales tax by the States under entry 54 of List II and there is no question of the dominant nature test applying. Therefore when in 2005, C.K. Jidheesh v. Union of India [2006] 3 VST 1 (SC); [2006] 144 STC 322 (SC); [2005] 279 ITR 118 (SC); [2005] 5 RC 670; [2005] 8 SCALE 784, held that the aforesaid observations in Associated Cement [2001] 124 STC 59 (SC); [2001] 4 SCC 593 were merely obiter and that Rainbow Colour Lab [2000] 118 STC 9 (SC); [2000] 2 SCC 385 was still good law, it was not correct. It is necessary to note that Associated Cement [2001] 124 STC 59 (SC); [2001] 4 SCC 593 did not say that in all cases of composite transaction the 46th Amendment would apply." Mrs. Bhadeka also placed reliance upon the decision of the apex court in the matter of Idea Mobile Communication Ltd. v. Commissioner of Central Excise and Customs,....