TMI Blog2010 (1) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to sale and the goods are not subjected to tax. Equally the raw materials purchased by the assessee are not used as such in the execution of the works contract, but the raw materials undergo a different form, namely, printing ink which alone is used in the execution of the works. In that view, the levy of tax under Section 3-B cannot be found fault with. Accordingly, the tax revision case stands dismissed and the issue is answered in favour of the revenue, but against the assessee. - Tax Case (Revision) No.2004 of 2006 - - - Dated:- 22-1-2010 - D. Murugesan And P. P. S. Janarthana Raja,JJ. For the Petitioner : Mr. V. Sundareswaran For the Respondent : Mr. Haja Naziruddin Special Government Pleader (T) ORDER D. Murugesan, J. The above tax case revision was admitted on the following substantial questions of law:- 1. Whether the Appellate Tribunal was justified in overlooking the jurisdictional point raised by the petitioner that there is no transfer of property in "goods" as defined under Section 2(u) in the form of "ink" in the printing contract undertaken by the petitioner for the imposition of sales tax on the deemed sale as defined under Section 2(u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier stage. When the printing ink is used, it amounts to transfer of property and the printing ink is visible and tangible even after printing and accordingly the printing ink is liable to sales tax at 8%. With the said finding, the assessing officer levied the tax. 4. The said order was carried in appeal before the Appellate Assistant Commissioner (CT). The Appellate Assistant Commissioner concurred with the finding of the assessing officer as to the liability for tax in respect of printing ink, but remanded the matter to the assessing officer, as the assessing officer did not ascertain the value of ink transferred in the execution of works contract. Hence he held that the assessment made under Section 3-B cannot be sustained. This order was again taken on appeal by the assessee before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai and the Tribunal confirmed the order of the appellate authority. These proceedings have given rise to the present revision case. 5. The core question is as to whether in the given facts and circumstances of the case, printing ink could be construed to be a consumable one or not and whether such printing ink when used for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India v. Union of India (1989) 73 STC 370, where the Apex Court had observed as follows:- "...It is true that in the State of Madras v. Gannon Dunkerley Co.(Madras) Ltd. (1958) 9 STC 353 SC); (1959) SCR 379 this Court held that a works contract was an indivisible contract and the turnover of the goods used in the execution of the works contract could not, therefore, become exigible to sales tax. It was in order to overcome the effect of the said decision Parliament amended article 366 by introducing sub-clause (b) of clause (29A). Sub-clause (b) of clause (29A) states that 'tax on the sale or purchase of goods', includes among other things a tax on the transfer of property in the goods (whether as goods or in some other form) involved in the execution of a works contract. It does not say that a tax on the sale or purchase of goods included a tax on the amount paid for the execution of a works contract. It refers to a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. The emphasis is on the transfer of property in goods (whether as goods or in some other form). The latter part of clause (29A) of artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociated Cement Companies Ltd. v. Commissioner of Customs (2001) 124 STC 59 (SC), where the Apex Court has held as follows:- "....The Forty-sixth Amendment was made precisely with a view to empower the State to bifurcate the contract and to levy sales tax on the value of the material involved in the execution of the works contract, notwithstanding that the value may represent a small percentage of the amount paid for the execution of the works contract." 13. The 46th amendment to the Constitution of India came into force with effect from 2nd February, 1983 by insertion of clause (29A) in Article 366. That amendment was necessitated, as there was no provision subjecting to tax the sale of goods involved in the execution of works contract such as roads, buildings, etc., unless the agreements between the parties provide otherwise. By virtue of the above Constitutional amendment, the States were also empowered to levy tax on the sale of goods involved in the execution of all works contract, whether such sale of goods involved in the execution of all works or not and whether the goods retained in their original identity after the work was executed or has been merged, integrated or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s completed. 16. The question is, therefore, whether the printing ink is a consumable one and whether such usage of printing ink on the material papers would amount to transfer of property in goods? The printing ink by itself is a property. To be precise, it is a property as defined under Section 6 and it can be sold in open market. It will not lose its character as a property when it is used for printing. When the printing ink is transferred on the papers, it is tangible and without which the works contract cannot be completed. By virtue of sub-clause (b) of clause (29A) of Article 366 of the Constitution, a deeming transfer of property can be presumed resulting in printing ink used on printing materials, which is liable to be taxed under Section 3-B of the TNGST Act. In that context, the printing ink cannot be considered to be one of consumable. 17. The learned counsel for the assessee relied upon a judgment of the Apex Court in The Government of Andhra Pradesh v. Guntur Tobacco Ltd., (1965) XVI STC 240 (SC) and contended that in the execution of contract for work some materials are used and when property in the goods so used passes to the other party, the contractor undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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