TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 990
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....Sales Tax Appellate Tribunal (for short 'the Tribunal') in T.A. No. 1586/2003 which was decided on 15.03.2005. 5. The question of law involved is as to (a) whether the petitioner would get exemption of payment of tax on the turnover of books and periodicals printed at the printing press of the petitioner in terms of G.O. Ms. No. 625 Rev. (CT-II) dated 31.07.1996 and (b) whether the Tribunal was justified in holding that the nature of job undertaken by the petitioner would fall within the purview of 'works contract' or whether it would be termed as a sales in terms of the definitions provided under the provided under the provisions of APGST Act, 1957. 6. For proper appreciation and adjudication of the dispute, the brief facts relevant are that the petitioner is a limited company incorporated under the Companies Act, 1956. It is into the business of printing books and also printing of periodicals, magazines, brochures and leaflets etc. In the instant case, it is the printing of the books for reading and the periodicals printed at the petitioner's establishment which is the bone of contention and for which the petitioner had sought for an exemption of payment of tax under the APGST ....
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.... CD to be converted into a textbook or magazine/periodicals as the case may be. And in the course of execution of their work, after the printing of the books, the CD and the Zip is handed over to the publisher and after receiving the consideration for the printing of books and magazines, the printed material i.e. the books and magazines are handed over back to the publisher. It is submitted that once when the printing work is complete, unless and until the entire printed material is transferred to the publisher, it is the petitioner who is the owner of the said property and it is by way of nature of sale that the printed materials are now being handed over back to the publisher and therefore for all practical purposes, the said printing of the books and handing it over back to the publisher on the consideration that was agreed upon amounts to a sale and not a works contract. 12. Learned counsel for the petitioner in support of his contentions had relied upon the following decisions: * State Of Andhra Pradesh V/S Krishna Power Press 1960 LawSuit(AP)11 * S R P Works, Ruby Press V/S State Of Andhra Pradesh 1972 LawSuit (AP) 214 * Studio Kamalalaya V Commercial Tax Officer decid....
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....on by the petitioner. 16. It was also the contention of the learned Senior Standing Counsel for the respondent that except for the printing of the textbooks, periodicals and magazines, the petitioner thereafter is not entitled to sell the same in the open market or to any other person, but to hand over the entire printed material i.e. the textbooks, magazines and periodicals to the publisher who in turn would have the exclusive right of sale of the said products. 17. Having heard the contentions put forth on either side and on perusal of records, it would be relevant at this juncture to take note of the definition of sale as also definition of works contract as is defined under Section 2(n) and 2(t) of the APGST Act, 1957. For ready reference, the definition of both these terms is reproduced herein under: "(n) "Sale" with all its grammatical variations and cognate expressions means every transfer of the property in goods whether as such goods or in any other form in pursuance of a contract or otherwise by one person to another in the course of trade or business, for cash, or for deferred payment, or for any other valuable consideration or in the supply or distribution of goods ....
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....ntire book. The sale price of the textbook or the magazine is entirely different than the cost of the printing of the books and magazines. 22. The fact which needs to be further looked into is that if the transaction between the printer and the publisher is treated as sale, then the publisher in turn would claim exemption on the sale value of the textbook on the ground of the same being second sale. Therefore, the contention of the learned counsel for the petitioner becomes difficult to be accepted. 23. Yet another fact which needs to be considered is that if the contention of the learned counsel for the petitioner is to be accepted, then there shall be no distinction between the printing of textbooks, magazines and periodicals and the printing works of letter heads, bill books, account books, leaflets etc., as any printing carried on by the printer would have to be treated as sale upon which G.O. Ms. No. 625 would become applicable. 24. Hence, we are of the considered opinion that the grounds raised by the petitioner does not appear to be acceptable or appealing nor the analogy floated by the petitioner can be accepted. 25. As regards the judgments cited by the learned counsel....
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....oks was of a composite nature. The judgment states that the paper and ink used were the property of the respondent before printing but thereafter they became the property of the Board; while the property in these goods passed to the Board, this was, in the very nature of things, only incidental or ancillary to the contract of printing. The High Court laid stress on this Court's judgment in State of Tamil Nadu v. Anandam Viswanathan [1998] STC 1 where the printing and supply of question papers to a university was involved. This Court held that though there was sale of paper and ink, it was merely incidental. It was not a case of sale but a works contract having regard to the nature of the job to be done. Following this judgment, the High Court held that there was no sale." 28. Distinguishing the two elements i.e. sale from that of services, the decision of full Bench of Bombay High Court which stood affirmed by the Supreme Court in the aforesaid two judgments reported in (1999 [Vol. 93]386 Sales Tax Cases) in paragraph 3, 4 and 5 held as under: "3. Following are the uncontroverted salient features pertaining to the transaction: (1) The applicant runs a printing press where only....
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....in the case of State of Tamil Nadu v. Anandam Viswanathan [1989] 73 STC 1. It was a case of printing and supply of question papers of the University. The Supreme Court held that though sale of paper and ink was involved, it was merely incidental. It was not a case of sale but of a works contract having regard to the nature of the job to be done and the confidence reposed for the work to be done for remuneration. Following observations are apposite: "The primary difference between a contract for work or service and a contract for sale is that in the former there is in the person performing or rendering service no property in the thing produced as a whole, notwithstanding that a part or even the whole of the material used by him may have been his property. Where the finished product supplied to a particular customer is not a commercial commodity in the sense that it cannot be sold in the market to any other person, the transaction is only a works contract. See the observations in Court Press Job Branch, Salem v. State of Tamil Nadu [1983] 54 STC 382 (Mad.) and Commissioner of Sales Tax v. Ratna Fine Arts Printing Press [1984] 56 STC 77 (MP). In our opinion, in each case the natur....