SARASWATI PRINTING PRESS Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THIS is an application under Article 226 of the Constitution of India by the petitioner press, Messrs Saraswati Printing Press, wherein the petitioner has prayed for the setting aside of the order dated 7th September, 1956, of the Hyderabad Sales Tax Tribunal, by which order the Tribunal confirmed the order dated 22nd July, 1955, passed by the Deputy Commissioner, Sales Tax, Hyderabad.

(2.) THE circumstances which have given rise to this application may be briefly stated. THE Marathawada Prakashan Limited, a public limited company, which was registered under the Hyderabad Companies Act, was running a printing press known by the name of the Saraswati Printing Press. This press is situated in Aurangabad. THE above-mentioned public limited company sold this press to Messrs Parmanand Bapuji Muley on 1st March, 1954. THE petitioner press contends that it accepts contracts for printing works and for the supply of printed goods. On 10th March, 1955, the Sales Tax Authority under the Hyderabad General Sales Tax Act took accounts of the petitioner press for the years 1950-51, 1951-52, 1952-53 and 1953-54. THE Authority found that for the years 1950-51 and 1952-53, the turnover of the press was not of such an amount as to make it chargeable to sales tax. However, the Authority found that the turnover of the press for the years 1951-52 and 1953-54 was chargeable to sales tax. Accordingly, the Authority made an assessment order on 31 March, 1955, charging the petitioner press to sales tax for this turnover for the years 1951-52 and 1953-54. THE assessment order was communicated on the same day (31st March, 1955) to the petitioner press. THE petitioner press appealed from that order to the Deputy Commissioner, Sales Tax. THE Deputy Commissioner modified the order of the Authority. THE Deputy Commissioner treated the printing work done by the petitioner press as works contract under the Act and allowed a reduction of 30 per cent on the total turnover on the ground that the said 30 per cent represented the cost of labour involved in the printing work. Due to this reduction of 30 per cent, the turnover for the year 1953-54 went down so low that it did not become chargeable. After the reduction of 30 per cent, the turnover for the year 1951-52 only remained chargeable to sales tax. From this order made in appeal by the Deputy Commissioner, Sales Tax, the petitioner press made a second appeal to the Sales Tax Tribunal of the Hyderabad State. THE sales Tax Tribunal rejected the petitioner's appeal on 1st September, 1956. It is these orders of the Sales Tax Tribunal and the Deputy Commissioner, Sales Tax, made by them on 9th September, 1956, and 22nd July, 1955, respectively, that are sought to be quashed by the petitioner in this application.

(3.) MR. Deshpande has invited our attention to a decision of the Hyderabad High Court in Jubilee Engineering Co. v. Sales Tax Officer ((1956) A.I.R. 1956 Hyd. 79; 7 S.T.C. 423). In this case, and be it noted that it was a case of a building contract, it was observed by the Court, agreeing with the view of the Madras High Court, that the power of the Provincial Legislature to levy a tax on sale of goods was confined and restricted only to the transaction of sale as understood by the Parliament of the United Kingdom in the law relating to the sale of goods, and any attempt of the Legislature to tax under the guise or under the pretence of such a power transactions which were wholly outside would be ultra vires and must be declared invalid. Now, it is to be remembered that a building contract is one entire indivisible contract and in such a contract there is no sale of goods. One fundamental difference between a building contract and the work done by the petitioner press is that in a building contract, the various materials which are used in the process of constructing a building lose their original character, viz., the character of movable property and get converted into parts of immovable property by being fixed to a building. It is this important aspect of a building contract which distinguishes it from the work done by the petitioner press. As I have mentioned above, the press purchases stationery and brings into existence a finished product, viz., the printed material, and, therefore, when it supplies that product to its constituents, it sells it to the constituents. We are, therefore, unable to accept the contention of MR. Deshpande that the provisions of section 2, clause (m), Explanation 1, clause (i), of the Hyderabad General Sales Tax Act and rule 5, sub-rule (3), of the Hyderabad General Sales Tax Rules were ultra vires the legislative competence of the Legislature of the former state of Hyderabad.