2020 (2) TMI 747 - HC - VAT and Sales Tax

Works Contract or not - job of printing of Bill books, receipt books, name pads e.t.c., of the particular institution viz., Arokiya Matha Higher Secondary School - Section 3 (2) of the TNGST Act - HELD THAT - The Impugned Order passed by the Joint Commissioner (SMR) of Commercial Taxes under revisional jurisdiction is not sustainable. The works carried out by the Assessee, which is a charitable organisation for Women promoting vocational training to Rural youth and women in various discipline is in the nature of the works contract as the goods are supplied to a particular institution on specific orders and as such are not utilised in the course of business of the Assessee for sale otherwise and the property in question stands transferred to the customer as per the specification of the customer and that the specific works contract has been carried out by the Assesee complying with the specific orders and, therefore, the same clearly falls under the Section 3(B) of the TNGST Act, 1959, falling within the charging provision of Section 3 of the Act. The order of the Revisional authority is liable to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Determination of whether the job of printing of various materials constitutes a works contract subject to tax under the Tamil Nadu General Sales Tax Act.
2. Interpretation of relevant case laws and judgments to ascertain the nature of the transaction in question.

Issue 1: The primary issue in this case revolves around whether the job of printing various materials, such as bill books and receipt books, amounts to a works contract subject to tax under the Tamil Nadu General Sales Tax Act. The Joint Commissioner (SMR) of Commercial Taxes had reversed the order passed by the Appellate Assistant Commissioner, holding that the printed materials were not subject to tax as works contract but as sales of goods under Section 3(2) of the Act. The Appellate Authority, however, ruled in favor of the Assessee, emphasizing that the printed materials were specifically designed for individual customers and not for general use, thus falling under the category of works contract. The Assessee's counsel argued that the materials were supplied to a particular institution based on specific orders, qualifying as a works contract under the Act. The court ultimately concluded that the Assessee's work constituted a works contract, as the materials were tailored to the customer's specifications and not utilized for general sale, thus falling within the ambit of Section 3(B) of the TNGST Act, 1959.

Issue 2: In analyzing the nature of the transaction, the court referred to relevant case laws to support its decision. The Assessee's counsel cited the judgment of the Bombay High Court in the case of Sarvodaya Printing Press Vs. State of Maharashtra, which highlighted a similar scenario where the supply of printed material was deemed a works contract due to its specific nature and purpose. Additionally, the counsel relied on the judgment of the Supreme Court in the case of State of Tamil Nadu Vs. Anandam Viswanathan, which emphasized the importance of discerning the intention of the parties in determining whether a contract constitutes a works contract or a sale of goods. By examining these precedents and the specific circumstances of the case, the court concluded that the Assessee's activities aligned with the characteristics of a works contract, warranting the reversal of the Revisional authority's order under the TNGST Act.

In conclusion, the High Court of Madras ruled in favor of the Assessee, determining that the job of printing various materials for a specific institution constituted a works contract rather than a sale of goods under the Tamil Nadu General Sales Tax Act. By considering the specific nature of the transaction and relevant legal precedents, the court set aside the Revisional authority's order, highlighting the distinction between works contracts and sales of goods in such scenarios.