DEPUTY COMMISSIONER OF SALES TAX LAW BOARD OF REVENUE TAXES ERNAKULAM Vs. VIDYARAMBHAM PRESS AND BOOK DEPOT

JUDGEMENT

(1.) When a printer supplies letter heads, visiting cards, bill books, account books, balance sheets, ration cards and the like to a customer in pursuance of orders placed by him, is there a sale of finished goods or printed material to him Is their 'turnover' exigible to sales tax That is the common question in these revisions by the Revenue, against the orders of the Sales Tax Appellate Tribunal.

(2.) The Tribunal has held, on the basis of the material on record and in the light of decided cases, including the decisions of this Court in P. T. Varghese v. State 1976 (37) STC 171 and John Mathew Bros. v. State (1978) 42 S. T. C. 140, that moss of the transactions were in the nature of works contract. It has also indicated that marginal instances would require closer scrutiny with reference to the facts and circumstances of each transaction and that the test of marketability will be a useful guide in most of the situations. Mr. Karunakaran Nambiar for the Revenue however contends that the Tribunal should have treated all the transactions as out and out sale of printed material or paper. It is alternatively contended that in respect of bill books, vouchers, receipt books, letter heads and notices, the Tribunal should have implicitly followed the clear pronouncement in P. T. Varghese (37 S. T. C. 171) that they could be regarded only as sale of finished products.

(3.) In Srinivasa Printing Works v. STO ( 1966 KLT 1139 ) Govindan Nair J. (as he then was) held that printing of letter heads, binding of books and supply of journal forms were contracts for sale, as work and labour was not of the essence of the contract. But in Srinivasa Printing Works v. STO ( 1966 KLT 1139 ) Isaac J. thought that merely because certain transactions involve transfer of property in the printed material, they could not be regarded as sale of paper products or as anything other than execution of a works contract. A suggestion that in all such cases labour charges could be deducted and the balance treated as cost of paper and taxed accordingly, was rejected in STO v. Somasundaram 1974 (33) STC 68 . The court there held that the correct approach would be to examine the nature of the contract as a whole, and not to bifurcate it into artificial components. But in P. T. Varghese v. State (1976) 37 S. T.C. 171 it was observed that "in the case of a composite contract involving an agreement for sale as well as for labour, the State may be able to bifurcate the contract into two and impose tax on the turnover of the sale". Holding however that no such composite contract could be spelt out in the case of printing bill books, vouchers etc. the court held:-