Research › Search › Judgment

Gauhati High Court · body

2012 DIGILAW 1324 (GAU)

Dainik Janambhumi v. State of Assam

2012-12-11

ADARSH KUMAR GOEL, N.KOTISWAR SINGH

body2012
ORDER Adarsh Kumar Goel, C.J. 1. This petition seeks quashing of order dated November 1, 2009, passed by the Commissioner of Taxes, Assam, under section 105 of the Assam Value Added Tax Act, 2003, holding as under: In this case, since the petitioner transfers property in form of ink and other materials in execution of printing works, it amounts to works contract. As such it is clarified that both contracts are works contract and taxable at 13.5 per cent as per entry at Sl. No. 2 of the Fifth Schedule to the Assam Value Added Tax Act, 2003. The case of the petitioner is that it publishes newspaper which is got printed on job-work basis from respondent No. 3. The question which arose in respect of tax liability in transaction of the printing job was whether tax is attracted on the value of ink and other materials in execution of printing work when printing paper was supplied by the petitioner and ink was used by the printer. The question was referred to the Commissioner under section 105 of the Act, at the instance of the printer and the same has been answered in the manner already indicated above. It was held that transfer of property in the form of ink and other material in the course of execution of printing work amounted to works contract, which was taxable under entry 2 of the Fifth Schedule to the Assam Value Added Tax Act, 2003. 2. Aggrieved by the above, the petitioner moved this court by submitting that no transfer of property took place in respect of ink used in the course of printing. The same is consumed in the process of printing and loses its identity as goods and, thus, is not transferred by printer to the consumer. 3. We have heard learned counsel for the parties. 4. Stand taken on behalf of the Revenue is that the works contract in question involves composite contract of work as well as sale of material used in execution of the work of printing. 5. The learned counsel for the petitioner submits that even though ink is used by the printer for printing, but in this process, no goods are supplied. After the ink is used in the printing process, ink does not remain goods. It has no physical existence thereafter. It has no marketability. 5. The learned counsel for the petitioner submits that even though ink is used by the printer for printing, but in this process, no goods are supplied. After the ink is used in the printing process, ink does not remain goods. It has no physical existence thereafter. It has no marketability. Reliance has been placed on the following judgments: (i) Commissioner of Sales Tax, Maharashtra State, Bombay v. R.M.D.C. Press Pvt. Ltd. [1999] 112 STC 307 (Bom); (ii) Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC) : [2006] 145 STC 91 (SC) : [2006] 282 ITR 273 (SC) : [2006] 3 SCC 1; and (iii) S.S. Photographic Lab Pvt. Ltd. v. State of Assam [2011] 44 VST 39 (Gauhati) : [2011] 3 NEJ 638. 6. On due consideration, we find that in view of the above judgments, no sale of goods is involved in executing the work of printing merely because the printer has used the ink in the process. The use of ink in the process cannot be held to be transfer of goods by the printer to the person for whom a printing job has been executed. The view taken by the Bombay High Court in R.M.D.C. Press Pvt. Ltd. [1999] 112 STC 307 (Bom) fully supports the assessee and is in consonance with the view taken by the honourable Supreme Court in Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC) : [2006] 145 STC 91 (SC) : [2006] 282 ITR 273 (SC) : [2006] 3 SCC 1. In Bharat Sanchar Nigam Ltd. [2006] 3 VST 95 (SC) : [2006] 145 STC 91 (SC) : [2006] 282 ITR 273 (SC) : [2006] 3 SCC 1, it was observed (pages 117 and 119 in 145 STC): 50. What are the 'goods' in a sales transaction, therefore, remains primarily a matter of contract and intention. The seller and such purchaser would have to be ad idem as to the subject-matter of sale or purchase. The court would have to arrive at the conclusion as to what the parties had intended when they entered into a particular transaction of sale, as being the subject-matter of sale or purchase. In arriving at a conclusion the court would have to approach the matter from the point of view of a reasonable person of average intelligence. ... 56. The court would have to arrive at the conclusion as to what the parties had intended when they entered into a particular transaction of sale, as being the subject-matter of sale or purchase. In arriving at a conclusion the court would have to approach the matter from the point of view of a reasonable person of average intelligence. ... 56. This view was adopted in Tata Consultancy Services v. State of Andhra Pradesh [2004] 137 STC 620 (SC) : [2004] 271 ITR 401 (SC) : [2005] 1 SCC 308, for the purposes of levy of sales tax on computer software. It was held (SCC page 342, para 81): 'A "goods" may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being brought and sold; and (c) capable of being transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customised satisfies these attributes, the same could be goods'. 7. In S.S. Photographic Lab Pvt. Ltd. [2011] 44 VST 39 (Gau), the question was whether processing of negatives into photo by the photographer involves transfer of goods. It was observed (page 45 in 44 VST): 18. A combined reading of all the provisions suggests that goods for processing must be in existence. As we have already held that exposed photographic film rolls and negatives are not 'goods' the provisions of sections 7, 8 and Schedule VI of the Act do not come into play at all. When a customer goes to the appellants to have his exposed photographic film rolls developed or negatives processed, there may be an agreement for the transfer of property in the chemicals used in the processing or otherwise treating or adapting the exposed photographic film rolls and negatives. But since they are not 'goods' within the meaning of the Act, the question of taxing the 'sale' of the chemicals does not at all arise. 19. The above discussion undoubtedly leads to only one conclusion which is that the conversion of exposed photographic film rolls into negatives and then into positive photographs or the conversion of negatives into positive photographs is nothing but a rendering of service specific to a customer and is a matter of skill and expertise of the developer--it is not a works contract. 8. 8. In view of above, we allow this petition, set aside the order passed by the Commissioner of Taxes, Assam (respondent No. 2) and direct respondent No. 2 to pass fresh order in accordance with law. The petition is disposed of.