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2023 (10) TMI 990 - HC - VAT and Sales TaxExemption from payment of tax - turnover of books and periodicals printed at the printing press of the petitioner in terms of G.O. Ms. No. 625 Rev. (CT-II) dated 31.07.1996 - nature of job undertaken by the petitioner would fall within the purview of works contract or whether it would be termed as a sales in terms of the definitions provided under the provided under the provisions of APGST Act, 1957? HELD THAT - Admittedly, the petitioner is a business organization which is otherwise into the business of printing of textbooks, periodicals and other materials as per the orders/demand received from the various customers. What is also undisputed is that there is a contract entered with the customers for the printing of the books and magazines as the case may be. The contract is for the quantity of the printed materials in the form of books and magazines - What is required to be understood further is that in terms of the contract itself, it is the responsibility of the petitioner to use the required paper for the purpose of printing. Neither the printed material nor the raw material paper can be separated, nor can the aforesaid two materials be sold independently at the first instance and neither can the same can be sold by the petitioner in any manner. It can be sold only by the publisher who has got the materials printed. The fact which needs to be further looked into is that if the transaction between the printer and the publisher is treated as sale, then the publisher in turn would claim exemption on the sale value of the textbook on the ground of the same being second sale. Therefore, the contention of the learned counsel for the petitioner becomes difficult to be accepted - Yet another fact which needs to be considered is that if the contention of the learned counsel for the petitioner is to be accepted, then there shall be no distinction between the printing of textbooks, magazines and periodicals and the printing works of letter heads, bill books, account books, leaflets etc., as any printing carried on by the printer would have to be treated as sale upon which G.O. Ms. No. 625 would become applicable. No strong case for interfering with the impugned order of the Tribunal has been made out - Tax Revision Cases being devoid of merits, deserves to be and are accordingly, rejected.
Issues Involved:
1. Exemption of payment of tax on the turnover of books and periodicals. 2. Classification of the nature of the job as a 'works contract' or 'sale'. Summary: Issue 1: Exemption of Payment of Tax The petitioner sought exemption from payment of tax on the turnover of books and periodicals printed at their press under G.O. Ms. No. 625 Rev. (CT-II) dated 31.07.1996. The notification exempts sales tax on the sales of periodicals and printed books for reading. Issue 2: Classification as 'Works Contract' or 'Sale' The core issue was whether the nature of the job undertaken by the petitioner falls within the purview of a 'works contract' or should be termed as a 'sale' under the APGST Act, 1957. The petitioner argued that their work should be classified as a 'sale' because they use their own raw materials and the printed materials are transferred to the publisher only after completion and payment. The respondent countered that the transaction is a 'works contract,' emphasizing that the petitioner is paid only for the printing work and not for the value of the finished product. The printed materials are returned to the publisher, who has the exclusive right to sell them. Court's Analysis: The court examined the definitions of 'sale' and 'works contract' under Sections 2(n) and 2(t) of the APGST Act, 1957. It noted that the petitioner is only paid for the printing services and not for the finished product. The contract involves the petitioner using their own materials to print the books and magazines, which are then handed over to the publisher. The court distinguished between a 'contract for sale' and a 'contract for work and labour,' emphasizing that in this case, the primary objective is the service of printing rather than the sale of goods. The court also highlighted that accepting the petitioner's contention would blur the lines between different types of printing jobs, which is not the legislative intent behind the exemption. Precedents: The court referred to several judgments, including the Supreme Court's decision in State Of Karnataka And Others Versus Pro Lab And Others (2015) and State of Maharashtra V. Sarvodaya Printing Press Fine Art Printer (1994), which supported the view that the transaction in question is a 'works contract.' Conclusion: The court concluded that the petitioner's activities constitute a 'works contract' and not a 'sale.' Therefore, the petitioner is not entitled to the tax exemption under G.O. Ms. No. 625. The Tax Revision Cases were dismissed as devoid of merits, with no order as to costs. All miscellaneous petitions, if any, were also closed.
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