SARVODAYA PRINTING PRESS Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) WE are called upon to determine the following question in a reference under section 61 (1) of the Bombay Sales Tax Act, 1959 (the Act) at the instance of the applicant/dealer. " Whether, on the facts and circumstances of the case, the Tribunal was justified in law in holding that the supply of printed material of Madhya Pradesh Electricity Board by the applicant was a sale and not a works contract ?" Printed material in question are the multi-coloured triplicate receipt books specially designed, printed and prepared for and as per specifications of the Madhya Pradesh Electricity Board (the MPEB) - a statutory corporation. Then entire page from top to bottom is covered in the background by printing the letters "madhya Pradesh Electricity Bard" in various faint colours. On that background is printed in black dark colour name of the MPEB, detailed beads of charges of electricity such as energy bills, surcharge, etc.

(2.) M/s. Sarvodaya Printing Press, Nagpur - the applicant, filed an application under section 52 (1) (c) of the Act before the Commissioner of Sales Tax for advance determination of the question as to whether the sales tax was payable in respect of the transaction of supply of such specially tailored receipt books which were of no use to anyone else. The Deputy Commissioner of Sales Tax, Nagpur Division, passed an order holding that the transaction was a works contract and, therefore, not liable to sales tax. The Commissioner of Sales Tax struck a different note and held that the supply amounted to a sale of goods. The Tribunal upheld that view of the Commissioner, and at the instance of the applicant made a reference to the High Court under section 61 (1) which was heard by the Division Bench at Nagpur. By an order dated July 27, 1990, the Division Bench referred the question to a larger Bench.

(3.) BOTH parties have referred to several decisions dealing with the difference between a sale and a works contract in the context of sales tax laws. They are too numerable to be noticed. The last word on the subject has been uttered in the authoritative pronouncement of the Supreme Court in the case of State of Tamil Nadu v. Anandam Viswanathan [1989] 73 STC 1. It was a case of printing and supply of question papers of the University. The Supreme Court held that though sale of paper and ink was involved, it was merely incidental. It was not a case of sale but of a works contract having regard to the nature of the job to be done and the confidence reposed for the work to be done for remuneration. Following observations are apposite : " The primary difference between a contract for work or service and a contract for sale is that in the former there is in the person performing or rendering service no property in the thing produced as a whole, notwithstanding that a part or even the whole of the material used by him may have been his property. Where the finished product supplied to a particular customer is not a commercial commodity in the sense that it cannot be sold in the market to any other person, the transaction is only a works contract. See the observations in Court Press Job Branch, Salem v. State of Tamil Nadu [1983] 54 STC 382 (Mad.) and Commissioner of Sales Tax v. Ratna Fine Arts Printing Press [1984] 56 STC 77 (MP ). In our opinion, in each case the nature of the contract and the transaction must be found out. And this is possible only when the intention of the parties is found out. The fact that in the execution of a contract for work some materials are used and the property in the goods so used, passes to the other party, the contractor undertaking to do the work will not necessarily be deemed, on that account, to sell the materials. Whether or not and which part of the job-work relates to that depends, as mentioned hereinbefore, on the nature of the transaction. A contract for work in the execution of which goods are used may take any one of the three forms as mentioned by this Court in Government of Andhra Pradesh v. Guntur Tobaccos [1965] 16 STC 240. In our opinion, the contract in this case is one, having regard to the nature of the job to be done and the confidence reposed, for work to be done for remuneration and supply of paper was just incidental. "