2002 (7) TMI 759 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the alphabet charts qualify as "books" or "reading books" under entry 22.
2. Whether the exemption for the sale of reading books, including textbooks, is applicable to a printer who prints and sells alphabet charts.

Detailed Analysis:

Issue 1: Whether the alphabet charts qualify as "books" or "reading books" under entry 22.

The court examined whether alphabet charts could be classified as "books" or "reading books" under entry 22. The judgment referenced the case of *State of Tamil Nadu v. Mundran Kala Mandir* [1980] 46 STC 365, where a guide map with readable material was considered a "book for reading" and thus eligible for exemption. The court reasoned that alphabet charts are fundamental educational tools that introduce children to literacy, making them "reading books." The court emphasized that the form of the material (a chart versus a traditional book) was irrelevant; what mattered was the educational content. Therefore, the court concluded that alphabet charts are indeed "books" meant for reading and thus qualify for the exemption.

Issue 2: Whether the exemption for the sale of reading books, including textbooks, is applicable to a printer who prints and sells alphabet charts.

The court addressed whether the exemption applied only to dealers or also to printers who sell such educational materials. The Joint Commissioner had argued that the exemption was not available to printers, only to dealers. However, the court noted that previous clarifications and judgments did not restrict the exemption to dealers alone. For instance, the clarification issued on March 16, 1992, stated that printers who print and sell reading books, including alphabet charts, are not liable to tax. Additionally, the clarification dated May 23, 1988, indicated that reading books, including textbooks, were exempt from tax without limiting the exemption to dealers.

The court further referenced the *Builders Association of India v. Union of India* [1989] 73 STC 370 (SC), which discussed the implications of sales involved in works contracts. The apex court held that the transfer of materials in such contracts amounted to a deemed sale. Therefore, if a printer supplies goods based on a contract and charges for the materials and printing, it constitutes a deemed sale. Since the printed material (alphabet charts) qualifies as books, the exemption applies to these deemed sales as well.

The court also considered the decision in *State of Tamil Nadu v. Papco Offset Printing Works* [2000] 118 STC 160 (Mad.), which held that sales by a dealer of reading books were exempt, but this decision did not specifically address whether alphabet charts were considered books. The court noted that the *Papco* case did not involve the same arguments or clarifications presented in the current case and thus was not applicable.

Conclusion:

The court concluded that the Joint Commissioner erred in not treating alphabet charts as "books" and in denying the exemption to the printer. The order of the Joint Commissioner was set aside, and the order of the Appellate Assistant Commissioner was restored, granting the exemption to the printer for the sale of alphabet charts. The appeal was allowed with no costs.