Judgment · High Court · 2011

1BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED: 23.03.2011CORAM:THE HONOURABLE MS.JUSTICE K.SUGUNAANDTHE HONOURABLE MR.JUSTICE A.ARUMUGHASWAMYW.A.(MD).Nos.158 and 330 of 2011and M.P.Nos.1 and 1 of 2011 The State of Tamil Nadu, Represented by Deputy Commissioner (CT),Tirunelveli Division, Tirunelveli.: Appellant in both Writ AppealsVs.

Tvl. Kavitha Offset Printers, 12/H, AVT South Street, Sivakasi, Virudhunagar District.

The Secretary, The Tamil Nadu Sales Tax Appellate Tribunal, (Additional Bench), Madurai 20.: Respondents in W.A.(MD).No.158 20111.Tvl. Sahadevan Offset Printers, 42/A, Velayutha Rastha Road, Sivakasi, Virudhunagar District. 2. The Secretary, The Tamil Nadu Sales Tax Appellate Tribunal, (Additional Bench), Madurai 20.: Respondents in W.A.(MD).No.330 2011PRAYER: Writ Appeals are filed under Clause 15 of the Letters Patentagainst the Order dated 08.06.2007 made in W.P.(MD).Nos.3771 and 3922 of2004 respectively on the file of this Court. Petitions under Section 226 of Constitution of India to issue a Writof Certiorari calling for the records of the second respondent the TamilNadu Sales Appellate Tribunal (Additional Bench), Madurai relating to itsorder made in MTSA.No.543 of 2000, dated 26.02.2001, MTSA.No.353 of 1999dated 6.1.2000 respectively and quash the same. For Appellant: Mr.S.C.Herold Singhin both Appeals Government AdvocateFor Respondent1: Mr.R.D.Ganesan in both Appeals https://hcservices.ecourts.gov.in/hcservices/ 2COMMON JUDGMENT***********************[Common Judgment of the Court was delivered BY K.SUGUNA, J]These Writ Appeals have been filed as against the order dated08.06.2007 passed in W.P.(MD).Nos.3771 and 3922 of 2004.2.

According to the learned Government Advocate appearing for theappellant – State, as per the settled principles, printed labels have tobe treated as "works contract" and if no materials have been placed bythe customer, who has placed an order, then it has to be treated as a"out – right sale" and not as "works contract". According to the learnedGovernment Advocate, as far as the case in hand is concerned, as per theorders of the Tamil Nadu Sales Tax Appellate Tribunal, the burden lies onthe appellant to prove, since no materials have been placed by thecustomer, who has placed order, so as to treat the same as "outrightsale". Relying on Section 10 of the Tamil Nadu General Sales Tax Act,1959, it is the stand of the learned Government Advocate that the burdenlies only on the assessee and not on the appellant – State. When an orderof assessment has been made treating the entire turnover as taxable asout – right sale under the Act, both the Appellate Assistant Commissioner(CT), Virudhunagar and the Tamil Nadu Sales tax Appellate Tribunal, https://hcservices.ecourts.gov.in/hcservices/ 3(Additional Bench), Madurai, without giving any finding as to how it canbe treated as "works contract" and also without giving any finding withregard to the fact as to whether materials have been placed by thecustomer, who has placed an order or the assessee himself has used hisown materials, have come to the conclusion that it has be to treated as"works contract".

On the other hand, it is the stand of the learned counselappearing for the first respondent that as far as the printed labels areconcerned, it can be sold only to the customer, who has placed an orderand not in the open market and there cannot be any general sale for thesame, consequently, according to the learned counsel for the firstrespondents, this has to be treated only as "works contract",irrespective of the fact as to whether materials have been placed by thecustomer, who has placed order or the assessee himself has used his ownmaterials.

In support of his contention, the learned counsel for the firstrespondents has relied on a Judgment of a Division Bench of this Court inthe State of Tamil Nadu vs. Premier Litho Works and another reported in2009 (26) VST 205. Apart from this, according to the learned counsel forthe first respondents, as far as the issue in question is concerned, thework undertaken by the first respondents to print labels and calendars, which are not saleable in open market, should be considered as "workscontract" and the same can be supplied only to the specific customer, whohas placed orders, consequently, according to the learned counsel for thefirst respondents, irrespective of the fact of supply of materials, thishas to be treated only as "works contract" and not as "out – right sale".

We have considered the above submissions made by the learnedcounsel on either side.

Admittedly, there is no whisper in the Judgment relied on by thelearned counsel for the first respondents to the effect that thoughirrespective of the fact of supply of materials by the customer, who hasplaced order or the assessee himself has used his own materials, if theyare printed labels or calendars, it has to be treated as "workscontract". However, no other Judgment is brought to our notice by thelearned counsel for the first respondents in support of the stand takenby him. A perusal of the orders passed by the Appellate AssistantCommissioner (CT), Virudhunagar as well as the order passed by the TamilNadu Sales tax Appellate Tribunal, (Additional Bench), Madurai, revealsthat in the said orders, there is no finding with regard to this, andtherefore, we are of the considered view that a portion of the orderi.e., to treat the transaction as "works contract", passed by the Appellate Assistant Commissioner (CT), Virudhunagar, which was confirmedby the Tamil Nadu Sales tax Appellate Tribunal, (Additional Bench),Madurai, has to be set aside.

Accordingly, the order dated 08.06.2007 made in W.P.(MD).Nos.3771and 3922 of 2004 is set aside, consequently, the orders dated 19.01.1998and 06.01.2000, insofar as they relate to a portion i.e., "to assess thetransaction as "works contract", which was confirmed by the Sales TaxAppellate Tribunal, are set aside and the Assessing Authority is directedto decide the issue as to whether the transaction has to be treated as https://hcservices.ecourts.gov.in/hcservices/ 4"works contract" or as "out – right sale" basing on the fact as towhether the materials have been supplied by the customer, who has placedorder or the assessee himself has used his own materials.