2004 (5) TMI 547 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to trade circular dated October 8, 2003 regarding the applicability of the Maharashtra Sales Tax Act on printing activities; Declaration sought that printing on paper supplied by customers does not constitute a works contract; Constitutionality of retrospective tax liability on printers; Assessment notices issued to members of printers associations challenged.

Analysis:
The petitioners, including an apex body and associations of printers, challenged a trade circular dated October 8, 2003, seeking a declaration that printing on paper supplied by customers does not amount to a works contract under the Maharashtra Sales Tax Act. The petitioners argued that there is no consideration for the transfer of goods between printers and customers, hence the Act of 1989 should not apply. They relied on legal precedents to support their case, emphasizing the lack of a contractual obligation to supply goods.

In response, the respondents contended that the Act of 1989 could be applied to printers engaged in printing on customer-supplied paper, as property transfer occurs during such activities. They highlighted the need to scrutinize the nature of contracts during assessment proceedings, providing an opportunity for objections and clarifications regarding the applicability of the Act.

The court referred to past judgments, including the Full Bench decision in Sarvodaya Printing Press, which emphasized the importance of parties' intentions in determining works contracts. The Supreme Court affirmed this decision, stressing that the dominant intention of parties must be considered to differentiate between a works contract and a sale. The court also cited the Matushree Textile case, where the intention to transfer colored shades on fabrics influenced the application of the Act of 1989.

Ultimately, the court concluded that each case should be assessed individually by the concerned officer, considering the nature of the contract and dominant intentions of the parties. The court dismissed the writ petition, stating that the assessment proceedings should determine the applicability of the Act and any disputes could be addressed through statutory remedies like appeals. The judgment highlighted the need for a case-by-case analysis and adherence to legal procedures in tax assessments.