1979 (4) TMI 163 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the contract for the supply of examination papers, envelopes, and other printed material constitutes a works contract or a job work?
2. Whether the turnover of paper and envelopes is liable to tax?

Analysis:
1. The case involved a printing press owner who entered into an agreement for the supply of examination papers, envelopes, and other printed material. The assessee contended that the work done was a job work and not liable to tax, claiming exemption on the turnover of various items. The Sales Tax Officer taxed the turnover of envelopes and printed material. The assessee argued that the agreement constituted a works contract, citing relevant case law. The court considered previous judgments where composite contracts were treated as works contracts, emphasizing that the contract in question could not be split into separate parts for taxation purposes. The court agreed with the assessee's contention, ruling that the entire contract was a works contract and not subject to tax.

2. The Standing Counsel referred to various cases to argue that the turnover of paper and envelopes should be taxed. However, the court distinguished those cases from the present situation. In one case, it was held that the supply of packing material was incidental to a works contract, similar to the situation in the current case. The court found that the contract in question was composite in nature, involving the supply of printed examination papers along with the necessary packaging and delivery services. As a result, the court ruled that the turnover of paper and envelopes was not liable to tax. The revision was allowed, setting aside the previous decision and directing the authorities to treat the turnover as a works contract, granting costs to the assessee.