TaxTMI 
TaxTMI 
TaxTMI 
2004 (3) TMI 11
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....aterial from whom printed labels were purchased. Notice of hearing was given on the same day and the date for the same was fixed as October 9, 1998, during the course of which the assessee submitted all the required documents along with books of account and denied the liability of TDS for the financial years 1995-96 and 1996-97 under section 194C of the Act in respect of the printed labels purchased from M/s. Mudranika. It had contended that the transaction with M/s. Mudranika was a contract for sale and not works contract. However, the Income-tax Officer confirmed the demand of Rs. 40,481 and Rs. 79,134 for the first and second year, respectively, under section 201(1A) of the Act. By way of interest under section 201(1) of the Act, a further amount of Rs. 11,132 for the first year and Rs. 9,892 for the second year was also sought to be recovered, thus making a total of Rs. 1,40,639 by order dated January 16, 1998. This order came to be challenged before the Commissioner of Income-tax (Appeals) ("the CIT(A)"), Nagpur, in Appeal No. CIT(A)-1/NAG/75/ABAD/1999-2000, and it came to be dismissed vide his order dated April 4, 2000. It is pertinent to note that, a composite appeal was fil....
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....The following issues of law arise for our consideration in these two appeals. (a) Whether the supply of printed labels by M/s. Mudranika to the assessee amounted to contract for sale, or works contract? (b) Whether the single Bench of the Tribunal had jurisdiction to hear and decide the appeal for the financial year 1995-96? and (c) Whether the Tribunal was right in ignoring the appeal for the financial year 1996-97 on the ground that, no separate appeal was filed and fees was not paid for the said year? Shri Sharma, learned counsel for the assessee, submitted that the supply of printed labels by M/s. Mudranika was based on a specific purchase order, which clearly stated that, the assessee was not responsible for supply of raw material, etc., and the printing work was required to be carried out by the supplier in its own premises with the help of its own machinery and labour as well as raw material. Though the purchase order had given specifications of the labels required, that by itself would not make the transaction works contract, more so because M/s. Mudranika was not a captive unit of the assessee and it was supplying similar labels to many other companies/establishments a....
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....saction for supply of printed labels amounted to "works contract", is well supported by a catena of decisions and, therefore, no interference is called for in the said view. In support of these submissions, he has relied upon the following decisions of this court: (i) Sarvodaya Printing Press v. State of Maharashtra [1994] 93 STC 387; [1994] 2 Mah LJ 1322 [FB]; and (ii) Sunflag Iron and Steel Co. Ltd. v. Addl. CCE [2001] 3 Mah LJ 532. On the other hand, Shri Sharma, learned counsel for the assessee has relied upon the following decisions: (i) State of Himachal Pradesh v. Associated Hotels of India Ltd., AIR 1972 SC 1131; [1972] 29 STC 474 (SC); (ii) State of Tamil Nadu v. Anandam Viswanathan [1989] 73 STC 1 (SC); AIR 1989 SC 962; (iii) Associated Cement Co. Ltd. v. CIT [1993] 201 ITR 435 (SC); [1993] 2 SCC 556; (iv) Andhra Pradesh State Electricity Board v. Collector of Central Excise [1994] 95 STC 595 (SC); [1994] 2 SCC 428; (v) Income-tax Appellate Tribunal v. Deputy CIT (Assessments) [1996] 218 ITR 275 (SC); [1996] AIR 1996 SC 1066; and (vi) Birla Cement Works v. CBDT [2001] 248 ITR 216 (SC); 2001 AIR SCW 1028. Section 194C of the Act was brought into existence by the F....
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....was required to be done by the supplier was of no consequence. There was no works contract involved and accordingly, the provisions of section 194C of the Act were not applicable. The appeal of the assessee was allowed and the view taken by the Revenue was set aside. The case of State of Himachal Pradesh, AIR 1972 SC 1131; [1972] 29 STC 474 (SC) came to be decided by a Constitution Bench. In para. 9, the court observed thus: "The difficulty which the courts have often to meet with in construing a contract of work and labour, on the one hand, and a contract for sale, on the other, arises because the distinction between the two is very often a fine one. This is particularly so when the contract is a composite one involving both a contract of work and labour and a contract of sale. Nevertheless, the distinction between the two rests on a clear principle. A contract of sale is one whose main object is the transfer of property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where the principal object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one of work and labour. The test is whether or n....
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....yment of sales tax under the Tamil Nadu General Sales Tax Act. In para. 27, the court stated: "In our opinion, in each case the nature of the contract and the transaction must be found out. And this is possible only when the intention of the parties is found out. The fact that in the execution of a contract for work some materials are used and the property in the goods so used, passes to the other party, the contractor undertaking to do the work will not necessarily be deemed, on that account, to sell the materials. Whether or not and which part of the job-work relates to that depends, as mentioned hereinbefore, on the nature of the transaction. A contract for work in the execution of which goods are used may take any one of the three forms as mentioned by this court in Government of Andhra Pradesh v. Guntur Tobaccos Ltd., AIR 1965 SC 1396." In the case of Associated Cement Co. Ltd. [1993] 201 ITR 435 (SC), it was held that, the payment made to the labourers engaged by the contractor for loading the cement bags for transportation fall within the ambit of the term "any work", and therefore, TDS was deductible under section 194C. In para. 5, the court noted: "We see no reason to c....
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.... the same. There is nothing on record to show that, all other ancillary costs like the labels, ink, papers, screen-printing, screens, etc., were being supplied by the assessee to M/s. Mudranika. In the facts of this case, the supply of printed labels by M/s. Mudranika to the assessee was a "contract of sale" and it could not be termed as a "works contract". The Tribunal has rightly held in the case of Wadilal Dairy International Limited [2002] 81 ITD 238 (Pune) that, the supply of printed packing labels amounted to a "sale contract" and not a "works contract", and the same ratio is applicable in the instant case, as well. The single Bench of the Tribunal thus fell in gross error in holding that, the subject transaction was a "works contract", and therefore TDS was required to be deducted by the assessee under section 194C of the Act. It is true that, the assessee had not raised the point of jurisdiction before the single Bench when it argued its composite appeal and it had thus surrendered to the jurisdiction of the single Bench. If such a point was raised when the appeal was being heard by the single Bench, we would have, in the normal course, heard this as the preliminary issue,....