1975 (9) TMI 161 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Appellate Tribunal failed to consider individual contracts entered into by the customers with the assessee.
2. Whether there were two separate contracts for the supply of paper and for printing (work and labour).
3. Whether the finding that the sale was of a finished product is justified in law and based on material.
4. Whether the Tribunal was justified in holding that the assessee was realizing the sale price and was a dealer in the finished product.

Summary:

Issue 1: Consideration of Individual Contracts
The assessee contended that he was not a dealer but executed works contracts using his own paper, charging clients for both the paper and the work. The Tribunal rejected this, holding that the printed materials were finished products and the assessee was realizing the sale price, thus acting as a dealer.

Issue 2: Separate Contracts for Supply and Printing
The Tribunal found that the orders placed by customers were for printed materials, not mere paper. The Supreme Court in Government of Andhra Pradesh v. Guntur Tobaccos Ltd. clarified that a contract for work using materials does not necessarily constitute a sale of those materials. The Tribunal concluded that the contracts were for printed materials, not separable into paper supply and printing services.

Issue 3: Sale of Finished Product
The Tribunal's finding that the sale was of a finished product was based on the nature of the contracts and the materials produced. The court referenced previous judgments, including P.K. Dewer v. State of Kerala, which held that printed paper is not mere paper but a new product with different characteristics.

Issue 4: Realization of Sale Price and Dealer Status
The Tribunal held that the assessee was realizing the sale price for printed materials, thus acting as a dealer. The court distinguished between contracts for work and labour (e.g., printing judgments) and contracts for the sale of finished products (e.g., bill books, vouchers). The former involves incidental use of materials and does not constitute a sale, while the latter involves the sale of new products.

Conclusion:
The court upheld the Tribunal's decision that bill books, vouchers, receipt books, letter heads, and notices are finished products liable to tax. However, it held that printing question papers is a contract for work and labour, not subject to sales tax. The Sales Tax Officer was directed to separate the charges for question papers from other taxable turnovers. The petitions were partly allowed.