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TMI Blog1987 (11) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... al statements in book form to be circulated to the members. It further appears from the said record that at one point of time it also printed a pamphlet entitled "Jabalpur Zila Me Nalkoop Yojni". It was published at the instance of Zila Sahakari Bhumi Vikas Bank Samiti, Jabalpur, and appears to have been meant for being distributed particularly among agriculturists to persuade them to derive benefit of the scheme with regard to irrigation. In proceedings for assessment of sales tax for eight periods between 13th November, 1966 and 12th January, 1981, the case of the petitioner was that it did not carry on the business of sale of goods but was executing works contract. This plea, however, did not find favour with the Additional Sales Tax Officer and orders of assessment were passed against the petitioner. Aggrieved, the petitioner preferred revisions before the Additional Commissioner of Sales Tax which were dismissed by a common order dated 4th January, 1983. It is these orders passed by the Additional Sales Tax Officer and on revision by the Additional Commissioner of Sales Tax which are sought to be quashed in the present writ petition. 2.. It has been urged by learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he essential character of the work is the printing work and the paper comes into existence and becomes the property of the client or customer only incidentally. The substance of the contract when a customer places an order with the assessee for doing certain printing work on paper to be supplied by the printer is the production of something to be sold to the customer. Accordingly, it was held that when a printer accepts orders from his customers for job-work such as receipt books, registers, forms, letter heads, etc., and prints them in accordance with the requirements of his customers on paper supplied by him, that if by the printer himself, the orders placed by the customers for such job-work are contracts for the sale of goods and not contracts for work and labour. 3.. In Saraswati Printing Press v. Commissioner of Sales Tax [1959] 10 STC 286, a Division Bench of the Bombay High Court held that where the assessee purchased the stationery and did printing work upon it according to the orders of individual customers and supplied the printed stationery to the customers, it produced commercial commodity which was capable of being sold or supplied and when it sold the printed sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ', he does not intend to buy or pay for the canvas or the paint, although canvas and paint are involved in the production of the painting, and title to such materials is transferred to him. But such transfer of title to the materials is not pursuant to any agreement for the sale of the materials as such. It would never have been in his mind to pay separately for the materials and for the labour. What the buyer buys is a finished product which is a work of art. On the other hand, when a person gets his manuscript printed as an article or a book of verses, the printer does no more than a mechanical or technical job. The printer does not create the article or the poem, but merely renders his services to print which is in the nature of a job-work. The manuscript as such is the result of the skill, industry and scholarship of the author. In such a case, there is no sale of the article or book by the printer; nor would it be possible in such a case to spell out an agreement for the sale of materials such as paper or ink, which may have been incidentally used in the production of the printed work. While the painter sells a finished product which is a work of art, quite distinct and differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the circumstances. There can be an agreement for work and labour or there can be one for sale of goods. If essentially the agreement is one for work and labour, complete exemption from taxation should be allowed. If, on the other hand, it is a contract for sale, the whole turnover should be taxed. There may be complex contracts for sale and for work and labour. In such cases, it may be possible and it may be necessary to bifurcate the contract into two by saying that really there are two contracts, one for work and labour and another for supply of materials. But if this view is to be taken, there must be material on the basis of which it is possible to say that the contract was not one and composite, but really two. A contract for printing of judgments of courts is essentially a contract for work and labour and there is no justification for bifurcating that contract into two different contracts, one for cost of labour and the other for sale of paper, whereas in the case of contracts relating to the printing of ration cards, it is in the nature of job-works and it is essentially a contract for the sale of finished articles. 4.. In Assistant Sales Tax Officer v. B.C. Kame [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor dealing in fabrication of Vanguard rolling shutters and steel works. The assessee manufactured iron shutters according to specifications given by the parties and fixed the same at the premises of the customers. After dealing with the material placed in this behalf in regard to the nature of the work executed by the assessee, it was pointed out that the process involved in the fabrication of a rolling shutter and its actual fixing to the premises at the site is a continuous one and is completed only when erection is completed in every way. The price charged by the contractor from the owner of the premises is one lump sum without at all specifying as to what part is meant for the materials used or fabricated and what part for the services or labour put in by the contractor. It was, therefore, clear that on the facts and circumstances of the case the transaction was a composite consolidated contract which was one and indivisible comprising labour and services executed for a lump sum and that the materials were not merely supplied to the owner so as to pass as chattel simpliciter, but were actually fixed to an immovable property and after the same were fixed and erected they became ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there had been no contract for the sale of spare parts to the Air Force and that the spare parts had been used during the course of execution of the works contract relating to servicing, repairing and overhauling of the aircraft, etc. It was held by the Supreme Court that since the spare parts and materials were supplied by the appellant in the course of execution of works contract, there was no sale thereof and their turnover was not exigible to sales tax, inasmuch as where passing of property was merely ancillary to the contract for the purposes of the works, such a contract does not thereby become a contract of sale. It was also pointed out that mere passing of a property in an article or commodity during the course of performance of the transaction in question does not render the transaction to be a transaction of sale. Even in a contract purely of work or service, it is possible that articles may have to be used by the person executing the work, and property in such articles or materials may pass to the other party. That would not necessarily convert the contract into one of sale of those materials. In every case the court would have to find out what was the primary obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was also not a manufacturer of the paper. The said observation will further not be applicable to the facts of the instant case in view of the decision of the Division Bench of this Court in the case of Sardar Printing Works [1958] 9 STC 75. 7.. At this place, with regard to the facts of the instant case it may also be pointed out that even though it is not conclusive, but is certainly an important indication in the matter of determining the nature of work done by the petitioner that as is apparent from paragraph 4 of the return filed on behalf of the respondents in the present writ petition, in the assessment for 1971-72, the cost of labour came to 22 per cent whereas the cost of material was 78 per cent. Similarly, in the assessment year 1972-73 the cost of labour and material was 27 per cent and 73 per cent, respectively. In the assessment year 1973-74, on the other hand, the break up came to cost of labour 18.2 per cent and that of material 81.8 per cent. 8.. Learned counsel for the petitioner brought to our notice the decision of a learned single Judge of the Allahabad High Court in Commissioner of Sales Tax v. Saraswati Press [1985] 58 STC 327. In that case the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as mentioned in the orders and supply them. Even though technically speaking since these orders were placed from time to time they may not literally fall within the category of a standing order either generally or for a fixed period as contemplated in the case of Uma Art Press [1984] 56 STC 300 (All.). Keeping in view the nature of the orders, there seems to be no doubt that the case of the petitioner in regard to articles mentioned in categories (1) to (7) specified above are of the same nature as contemplated in the case of Uma Art Press [1984] 56 STC 300 (All.). These orders were placed by the customers in the course of their business and after giving specification of the goods they required the petitioner to supply the goods in the quantity mentioned therein and subsequently the petitioner produced those goods on its own paper and supplied the same to the customers for price paid in lump sum. They fall in the category of finished goods as held by a Division Bench of this Court in the case of Sardar Printing Works [1958] 9 STC 75. Consequently, the impugned orders, in so far as they relate to articles specified at categories (1) to (7) mentioned above cannot be said to suffer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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