2019 (12) TMI 884 - HC - VAT and Sales Tax

Classification of goods - printing materials manufactured out of their own materials and sold by dealers - whether liable to be taxed as printed materials or not? - HELD THAT - The work of printing the materials and supplying it to the individual customers as per their requirements obviously amounts to works contract and not sale, during the relevant period and as such since the extended definition of goods under CST Act came on the Statute book only with effect from 11.05.2002, no tax under the CST Act can be imposed on the Assessee prior to 11.05.2002, on works contracts. Petition allowed - decided in favor of assessee.

Summary

Issues:
Interpretation of works contract for printing materials under Tamil Nadu General Sales Tax Act, 1959.
Applicability of Central Sales Tax Act provisions for Assessment Year 1994-1995.

Analysis:
The High Court of Madras considered a Writ Petition filed by an Assessee challenging the Revisional order of the Joint Commissioner-II, Chennai for the Assessment Year 1994-1995. The dispute arose regarding the taxability of printing materials manufactured and sold by the Assessee. The Appellate authority initially ruled in favor of the Assessee, categorizing the printing materials under works contract, not as a sale under Section 3-B of the Tamil Nadu General Sales Tax Act, 1959. However, the Revisional authority reversed this decision, leading to the Writ Petition.

The Petitioner contended that the issue was settled by a Division Bench judgment in the case of State of Tamil Nadu Vs. Premier Litho Works, which held that supplying printed materials constituted a works contract, not an interstate sale. This judgment was further affirmed by the Supreme Court. The Petitioner argued that the Revisional authority wrongly imposed tax on the printing contract, which was a works contract. Additionally, the Petitioner highlighted that the definition of 'Sale' under the Central Sales Tax Act was amended post the relevant assessment year, and thus, the tax imposition was improper.

After hearing both parties, the Court agreed with the Petitioner's arguments. The Court held that the printing and supplying of materials to individual customers constituted a works contract, not a sale, during the relevant period. Due to the absence of the amended definition of goods under the CST Act at the time, no tax could be imposed on works contracts before the amendment date. Therefore, the impugned order of the Revisional authority was set aside, and the Writ Petition was allowed, with no costs imposed.