1957 (2) TMI 53 - HC - VAT and Sales Tax

Summary

Issues:
Liability of printing works to pay sales tax on sales of printed stationery - Distinction between sale of paper and printing work - Definition of "manufacturer" under Sales Tax Act - Nature of contracts for printing work - Existence of separate contracts for paper and printing charges - Applicability of previous legal judgments.

Analysis:
The judgment by the High Court of Madhya Pradesh pertains to a reference by the Commissioner of Sales Tax regarding the liability of a printing works business to pay sales tax on the sales of printed stationery during a specific year. The primary issue revolves around whether the stationery goods supplied to customers and the printed material produced by the assessee are considered goods under the Sales Tax Act and are liable to tax.

The assessee, a printer in Indore, argued that the transactions of selling paper and the printing work were distinct and separate, and thus, the taxable turnover should be nil. However, the assessing authority determined the taxable turnover after deducting the cost of paper and levied sales tax accordingly. The Appellate Judge and Sales Tax Commissioner upheld this decision, leading to the reference before the High Court.

The definition of "manufacturer" under the Act is crucial in this case, as it includes a dealer who produces goods from materials by manual, animal labor, or machinery. The Court emphasized that the stationery sold by the assessee qualifies as goods, and the production of printed stationery for individual customers constitutes a commercial commodity capable of being sold. The Court relied on previous legal judgments to establish that the assessee is indeed a manufacturer in this context.

The Court rejected the argument that the contracts were solely for work and labor, emphasizing that the essence of the business was the production of stationery for sale. The Court also dismissed the contention that separate contracts for paper and printing charges existed, as there was no evidence to support this claim. The absence of proof of distinct transactions led the Court to affirm the finding that the supply of paper and printing constituted a single transaction.

In conclusion, the Court answered the questions raised in the reference, affirming the liability of the printing works to pay sales tax on the printed stationery. The judgment provides clarity on the classification of goods, the definition of a manufacturer, and the nature of contracts for printing work, setting a precedent for similar cases in the future.

This comprehensive analysis of the judgment highlights the key legal principles and interpretations applied by the High Court in resolving the issues raised in the reference regarding sales tax liability for printing works.