Back
PUNJAB & HARYANA HIGH COURT
R.S.Mongia, Jawahar Lal Gupta and N.K.Sodhi JJ.
Thomson Press (India) Ltd.
Versus
State Of Haryana
Review Application No. 147 of 1993,
Civil Writ Petition No. 337 of 1993,
Decided On : JULY 26, 1995
SALES TAX - WORKS CONTRACT - PRINTING OF LOTTERY TICKETS - WHETHER AMOUNTS TO EXECUTION OF WORKS CONTRACT - COMPETENCE OF STATE TO LEVY SALES TAX ON TRANSFER OF PROPERTY IN GOODS INVOLVED IN EXECUTION OF WORKS CONTRACT - CENTRAL SALES TAX ACT, 1956 - HARYANA GENERAL SALES TAX ACT, 1973.
Fact of the Case:
The petitioner, M/s. Thomson Press (India) Pvt. Ltd., Faridabad, is a registered dealer under the Haryana General Sales Tax Act, 1973 (20 of 1973) and the Central Sales Tax Act, 1956. It is engaged in printing of books, periodicals, magazines, annual reports of the companies, brochures, folders and lottery tickets etc. The petitioner filed its sales tax returns. it claimed deduction of certain amounts on the ground that lottery tickets were exempt from the payment of sales tax. Its claim for exemption was allowed. Later on, the Revisional Authority-cum-Deputy Excise and Taxation Commissioner, re-opened certain assessments and issued notices under the State Act as also under the Central Act. It was observed that printing of tickets did not amount to sale of lottery tickets. The petitioner was, therefore, called upon to show cause why the assessment order be not revised.
Finding of the Court:
The Court held that the printing of lottery tickets amounts to the execution of a works contract. The State of Haryana is not competent to levy sales tax on the transfer of property in goods involved in the execution of a work contract in a case where the order for printing of lottery tickets has been placed by another State, and there is movement of the end product in the course of inter-state trade and commerce. Clause 29-A which was added in Article 366 by the 46th Amendment of the Constitution only embodies an enabling provision. It does not, however, ipso facto authorise the Sate Legislature to levy taxes on the sale or purchase of goods where such sale or purchase takes place in the course of inter-state trade and commerce. The power in this behalf vests exclusively in the Parliament and unless the provisions of the Central Sales Tax Act, 1956, are amended, the fiction introduced under the State Act by the Haryana legislature would not permit the levy of sales tax.
Issues: 1. Does the printing of lottery tickets amount to the execution of a works contract? 2. Is the State of Haryana competent to levy sales tax on "transfer of property in goods involved in the execution of a works contract" where the order for printing of lottery tickets has been placed by another State?
Ratio Decidendi: 1. The Court held that the printing of lottery tickets involves not only skill and expertise but also confidentiality and security. Every printer may not be able to do the job. The use of paper and ink are only incidental in case of a works contract. The printing of lottery tickets also involves not only expense but also confidentiality. The supply of paper and ink in the circumstances of this case was only incidental. As a result the amount charged by the petitioner for the printing of lottery tickets from different customers could not be included in the taxable turnover. 2. The Court held that the State Legislature is not competent to provide for the levy of tax on such a fictional sale when it takes place in the course of interstate trade and commerce.
Final Decision: The Court allowed the review application filed by the petitioner and set aside the order of assessment dated January 14, 1992. The Court also dismissed the review application filed by the State of Haryana. The Court allowed the writ petitions filed by the petitioner and set aside the orders of assessment impugned in the writ petitions. The cases were remitted to the assessing authority for a fresh decision in accordance with law and the conclusions recorded by the Court.
Jawarhar Lal Gupta, J.
1. Does the printing of lottery tickets amount to the execution of a works contract? Is the State of Haryana competent to levy sales tax on "transfer of property in goods involved in the execution of a works contract" where the order for printing of lottery tickets has been placed by another State? These are the two primary questions that arise in the two review applications and the three Civil Writ Petitions that have been listed before this Bench.
2. M/s. Thomson Press (India) Pvt. Ltd. Faridabad, is a registered dealer under the Haryana General Sales Tax Act, 1973 (20 of 1973) and the Central Sales Tax Act, 1956. It is engaged in printing of books, periodicals, magazines, annual reports of the companies, brochures, folders and lottery tickets etc. The work undertaken by the petitioner involves use of advanced technology, sophisticated machinery and technically trained personnel. The petitioner is required to maintain a high degree of confidentiality to the satisfaction of its customers. The petitioner filed its sales tax returns. it claimed deduction of certain amounts on the ground that lottery tickets were exempt from the payment of sales tax. Its claim for exemption was allowed. Later on, the Revisional Authority-cum-Deputy Excise and Taxation Commissioner, re-opened certain assessments and issued notices under the State Act as also under the Central Act. It was observed that printing of tickets did not amount to sale of lottery tickets. The petitioner was, therefore, called upon to show cause why the assessment order be not revised. In respect of the assessment year 1986-87, the assessing authority has framed the assessment and held that the petitioner was liable to pay Rs. 30,12,159/- under the State Act and Rs. 31,01,917/-under the Central Act. The petitioner filed Civil Writ Petition No. 337 of 1992. A copy of the assessment order dated January 14, 1992 passed by the assessing authority was placed on record as Annexure P-l. The petitioner filed five other writ petitions. In all these petitions, the provisions of the amending Act and the notices issued by the revisional authority were challenged. In Civil Writ Petition No. 337 of 1992, even the validity of the amending Act and the notices issued by the revisional authority were challenged. All these six writ petitions filed by the petitioners were listed for hearing alongwith a bunch of other writ petitions filed by different petitioners including the East India Cotton manufacturing company, Faridabad. The petitions were disposed of by the full Bench to which two of us (Jawahar Lal Gupta, and N.K. Sodhi, JJ.) were parties. The Bench inter alia held that the impugned provisions were inter vires, the value of goods falling within the purview of various clause of Clause (j) and (1) of Section 2 of the Haryana General Sales Tax Act, 1973 is exigible to tax; the inter state sale is outside the scope of State Act for the purposes of levying of tax and that the particular activity of processing of grey cloth by the East India Cotton Manufacturing Company amounted to inter-State sale in the facts and circumstances of the case. The matter was remitted to the assessing authority for fresh decision. The petitioner has filed a review application No. 147 of 1993 with the prayer that the order of assessment be set aside and directions be given to the assessing authority to re-decide the case.
3. The State of Haryana has also filed a Review Application No. 205 of 1993. It has been prayed that the conclusion recorded by the Bench that the activity "of processing of grey cloth into finished cloth by the East India Cotton Manufacturing Company in the facts and circumstances of the case amounts to inter-state sale" suffers from an error apparent on the record and be rectified.
4. Civil Writ Petition No. 14757 of 1993 has been filed against a notice received by M/s. Thomson Press (India) Pvt. Ltd. Two other petitions viz. Civil Writ Petitions Nos. 14758 of
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
