The main legal point established in the judgment is that the printed material supplied by the petitioner using his own paper did not qualify as a paper product under the Kerala General Sales Tax Act of 1963.

1. The petitioner owns a printing press; and he has another section attached to his business where he sells paper. He takes orders for printing, for which he supplies paper from his own paper section. He issues two bills, one for the sale of paper and the other for the printing charges. In some cases, it appears that he has issued bills on the dates when the paper was taken for printing and the bills for the printing charges on the dates when the printed material was delivered. In other cases, it is found that he has issued both the bills on the same dates, the dates on which the printed material was delivered. The petitioner was assessed to sales-tax for the entire amount he received both for the sale of paper and for printing charges. The petitioner disputed the levy; and the matter came to this Court once. This Court remanded

the case for fresh consideration indicating that the petitioner would be liable to sales-tax only if what he delivered to his customers the printed material was "paper product". After the remand, the Tribunal considered the matter afresh and held that what the petitioner delivered to his customers was paper product. It is the correctness of this decision that is being challenged in this revision case.

2. At the very outset, we may observe that there is some incongruity in the conclusions of the Tribunal. Some of the material that was printed by the petitioner constituted court records printed for the High Court; and the finding of the Tribunal is that such court records are pot "paper product". Still, the Tribunal says that the other material printed by the petitioner and supplied to his other customers is paper product.

3. Though several decisions on works contract have been cited before us, we feel that they are not relevant for the short question involved in the case. In this case, the petitioner is sought to be taxed under item 42 of schedule I of the Kerala General Sales Tax Act of 1963. S.5 of the Act is the charging section; and that section provides that in the case of goods specified in the first schedule, the goods have to be taxed at the rates mentioned is the schedule at the points specified against each item. Item 42 reads:

"Paper (other than newsprint), card boards, straw boards and their products." And these goods are taxable at the first sale point in the State at 5 per cent.

4. Now the question can be viewed in two or three different ways. In a transaction between the petitioner and a customer of his for executing printing matter supplied by the customer on paper supplied by the petitioner, the contract may be a works contract, because, if the transaction is viewed as one, then the supply of the paper for printing will only be incidental. If so, the supply of the printed material will not be a sale of goods and the transaction will not be taxable either. The second mode of looking at the question is to treat the contract as really two contracts, one for the supply of paper and the other a contract for printing. Then, the first contract for the supply of paper will involve a sale of goods and that is taxable too. But, in the case before us, paper is taxable only at the first sale point; and the petitioner's sale not being the first sale, is not taxable. Therefore, even if the transaction is to be viewed in this manner, even then the sale of paper cannot be taxed. And the money received as printing charges cannot also be taxed, because that involves no sale of goods and the receipt of the amount is only a payment for the printing work done by the petitioner.

5. Then comes the third mode of looking at the question. Item 42 extracted above says that paper and its products are taxable. As we have already stated, paper cannot be taxed in the hands of the petitioner, he being the second seller; and his turnover, if it can be called turnover, can be taxed only if it is turnover resulting from the sale of "paper products". This appears to be what was pointed out by this Court when this C