2020 (1) TMI 1464 - HC - VAT / Sales Tax

Taxability - printing materials - works contract and not sale by the assessee - HELD THAT - The Division Bench of this court in STATE OF TAMIL NADU VERSUS PREMIER LITHO WORKS AND ANOTHER 2009 (7) TMI 1159 - MADRAS HIGH COURT where it was held that contractor undertaking to do the work would not necessarily be deemed to sell the materials by the fact that in the execution of the contract for work some materials were used and the property/goods so used passed to the other party. The writ petition filed by the State is liable to be dismissed and if the assessment proceedings in pursuance of the remand order made by the appellate authority are pending with the assessing authority - petition dismissed.

Summary

Issues involved:
Challenge to order of Sales Tax Appellate Tribunal on tax liability of printing materials as works contract, Fresh assessment orders pending, Interpretation of Division Bench judgment on works contract vs. sale.

Analysis:
The High Court of Madras heard a writ petition filed by the State of Tamil Nadu challenging the order of the Sales Tax Appellate Tribunal regarding the tax liability of printing materials supplied by the assessee, claimed to be a works contract and not a sale. The Tribunal had upheld the remand made by the first appellate authority on this issue. The counsel for the assessee pointed out that fresh assessment orders had not been passed post-remand. Both counsels acknowledged that a Division Bench judgment in the case of State of Tamil Nadu v. Premier Litho Works had already settled the controversy, which was also followed by the Bench in another case. The Division Bench in the Premier Litho Works case had held that the supply of printed materials did not constitute inter-State sales but a works contract, as the labels supplied by the dealer were customized for specific customers and could not be sold independently in the market. The judgment emphasized that the contractor undertaking the work was not deemed to sell the materials used in the process. Consequently, the High Court concluded that the present case's controversy was covered by the Division Bench judgment, and the writ petition by the State was dismissed. The Court instructed that if assessment proceedings were pending with the assessing authority following the remand order, they should be decided in light of the Division Bench judgments. No costs were awarded in the matter.