RANA PARTAP PRINTING PRESS Vs. STATE OF HARYANA

JUDGEMENT

(1.) THIS order will dispose of 34 General Sales Tax references 2 to 35 of 1986 involving identical questions of law and fact and arising out of a common statement of case referred to this Court by the Sales Tax Tribunal, Haryana under Section 42(3) of the Haryana General Sales Tax Act, 1973 (for short, the Act). Since arguments were addressed in General Sales Tax reference 27 of 1986, the facts are being taken from this case.

(2.) THE assessee is running a printing press at Rohtak. It is registered as a dealer under the Act as well as under the Central Sales Tax Act, 1956. It purchases different types and qualities of paper within the State of Haryana after paying Sales Tax leviable at the first stage in the State. The customers place their orders on the assessee for printing of letter pads, cash memos, bill books, invitation cards, visiting cards, wedding cards, examination papers etc. The quality of paper to be used is selected by the customer who also gives the specifications of the printing job and settles the price. In other words, items are printed according to the instructions of each customer and the printed material as such is of no use of any other person or customer. As found by the Tribunal, the assessee charges a consolidated amount for the printed ordered material that is supplied to the customer including the paper used therein. For the assessment year 1976 -77 the assessee filed its quarterly returns in which the gross turnover was shown of Rs. 50,904.58. The entire amount was claimed as a deduction under Rule 24(j) of the Haryana General Sales Tax Rules, 1975 (hereinafter called the rules) on the ground that the turnover represented the price of paper on which printing had been done and which had already been subjected to tax under Section 18 of the Act. It may be mentioned that Rule 24(j) as it then existed provided that a registered dealer could deduct from his gross turnover the sale of goods which had already been subjected to tax at the first stage under Section 18 of the Act. It is not in dispute that the sale of paper in the State of Haryana is subjected to tax at the first stage under Section 18 of the Act. The Assessing Authority accepted the return and framed an assessment on the basis of which the tax liability of the assessee was nil. The Revision Authority in a suo -muto action exercised its powers under Section 40 of the Act and after hearing the assessee allowed a deduction of only Rs. 33,044/ - instead of Rs. 50,904.58 Ps. which was the purchase value of the paper and the remaining turnover was subjected to tax. The order of the Assessing Authority was accordingly modified and thereby a tax demanded of Rs. 1,102/ - was created. Being aggrieved by the order of the Revising Authority, the assessee preferred appeal before the Sales Tax Tribunal. It was contended before the Tribunal that the Revisional Authority was not right in restricting the deduction under Rule 24(j) only to the purchase value of the paper and that it was entitled to deduct the sale value of the goods which had been subjected to tax under Section 18 of the Act. It was also urged that the assessee was only executing a job work which did not amount to 'sale' and, therefore, the entire turn over was not eligible to sales tax. The Tribunal agreed with the reasoning and conclusions of the Revising Authority on the first contention and held that the deduction to be allowed under Rule 24(j) referred to the value of goods which had suffered taxation at the first stage i.e. the purchase value of goods. On recording this finding, the Tribunal dismissed the appeal without examining the other contention raised before it. Thereafter on an application filed by the assessee, the Tribunal declined to refer any question of law to this Court. However, on a direction issued by this Court under Section 42(3) of the Act, the Tribunal has referred the following two questions of law for our decision : -

(3.) ON a consideration of the rival contentions advanced by counsel for the parties, the question that arises for our consideration is whether printing work carried on by the assessee in the circumstances of the present case is the execution of works contract or is there a composite contract for supply of material and for labour and service rendered by the assessee. If the contract is one 'entire and indivisible' then there can be no sale of goods and the turnover will not be liable to tax. But if the contract is a composite one, then sale of paper can be taxed as contended by the Revenue. Whether a transaction is a works contract or not is a decision that depends on the particular facts of each case and the point to be borne in mind is what is the intention of the parties viewing the transaction as a whole. It has to be found out whether the contract is for work or service or is it for sale of any goods. In the former case the person is performing or rendering service and no property in the thing produced as a whole passes notwithstanding that a part or even the whole of the material used by him may have been his property. In the latter case the contract is one for sale of goods in which property in those vary goods passes. In State of Tamil Nadu v. Anandam Viswanathan : 73 STC 1, the question arose whether charges for printing of question papers could be included in the assessable turnover of the assessee. It was contended on behalf of the assessee that the contract was for work and labour and that no sales tax was chargeable. The Revenue contended that the contract was for sale of printed material. After noticing the case law, their Lordships of the Supreme Court observed as under : -