2009 (7) TMI 1161 - HC - VAT and Sales Tax

Whether the transaction was a works contract? Held that - There is no dispute about the fact that the first respondent printed labels to specifications for a particular customer on biscuit boxes. The labels contained the pictures of cookies and the name and address of the manufacturer, thus the transaction was a works contract. Appeal dismissed.

Summary

Issues:
1. Exemption claim on turnover related to sale of biscuit boxes and labels.
2. Classification of transaction as works contract.
3. Appeal against rejection of exemption claim.
4. Interpretation of terms of the contract, transaction circumstances, and trade customs.
5. Applicability of legal precedents in determining nature of contract.
6. Marketability of printed labels and cartons.
7. Relevance of various legal judgments in the context of the case.

Exemption Claim on Turnover:
The case involved an assessee under the Central Sales Tax Act seeking an exemption on a turnover related to the outright sale of biscuit boxes and labels to a specific customer. The claim for exemption was initially rejected by the assessing officer, leading to subsequent legal proceedings.

Classification of Transaction:
Upon appeal, the Appellate Assistant Commissioner classified the transaction as a works contract and remitted the matter back to the assessing officer for assessment accordingly. This classification played a crucial role in the subsequent legal analysis of the case.

Appeal Against Rejection:
The State filed an appeal before the Tamil Nadu Sales Tax Appellate Tribunal, which dismissed the appeal along with others by a common order. Subsequent legal actions, including a writ petition, were taken by the State but were also dismissed by the court, leading to the current appeal by the Revenue.

Interpretation of Terms and Trade Customs:
The appellate authority emphasized the importance of considering the terms of the contract, transaction circumstances, and trade customs in determining the nature of the transaction. Legal precedents, including the decision in State of Tamil Nadu v. Anandam Viswanathan, were cited to support the decision to set aside the order of assessment.

Marketability of Printed Labels:
The assessing officer's reasoning regarding the marketability of printed empty cartons and labels was challenged. The court analyzed the commercial value added by labels and cartons, emphasizing their role in determining the price in the public market. The argument that the labels were marketable was scrutinized in light of potential misuse and unlawful activities.

Relevance of Legal Precedents:
Various legal judgments, including Chandra Bhan Gosani v. State of Orissa and Anandam Viswanathan case, were cited by the Government Advocate to support the appeal. However, the court found these precedents inapplicable to the specific circumstances of the case. The court dismissed the appeal, highlighting that the cited decisions did not align with the nature of the transaction involving printed labels and cartons.

In conclusion, the court upheld the decision of the learned judge, dismissing the writ appeal and the connected miscellaneous petition, with no costs imposed. The detailed analysis of the transaction, marketability of printed labels, and the application of legal precedents formed the basis for the court's decision in this case.