TMI Blog1973 (7) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... to him, was doing job-works. The nature and detail of the works undertaken by the assessee are not clear. He claimed exemption for the entire turnover of Rs. 45,303.34, out of which a turnover of Rs. 8,501.91 was respecting judgments of courts printed by the assessee. The order of the Sales Tax Officer has been produced as exhibit P2 along with the original petition. The Sales Tax Officer had accepted the contention that what has been sold by the dealer are not paper products within the meaning of item 42 of Schedule I to the Kerala General Sales Tax Act, 1963. The officer, however, did not grant exemption for any part of the turnover. He taxed the whole turnover at the general rate of 3 per cent. This was the order that was impugned in O.P. No. 3445 of 1970[1972] 30 S.T.C. 260; 1972 K.L.T. 493. Issac, J., held that the judgments and other articles produced by the dealer are not paper products. The learned Judge also took the view that even in the case of printing of judgments where the printer supplied the paper, the cost of the paper is liable to be charged under the Sales Tax Act as if there was a sale of the paper which was used for printing judgments. But the learned judge als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8; 1967 K.L.T. 701. The matter may, therefore, be taken to be concluded that in such cases there is no question of applying the 5 per cent rate under Schedule I to the Act. 6.. This does not however solve the problem. The question will still arise whether there is sale of goods which can be taxed at all points at the reduced rate of 3 per cent. This is a more complicated question but it may be taken to be established that in order to spell out a contract of sale there must be an agreement which may be express or which may be inferred from the circumstances. That there must be an agreement to sell is established clearly by the decisions of the Supreme Court. 7.. The question here before us is even more complicated as to when it can be postulated that the agreement was for work and labour and when it is one for sale of goods. In a decision that was rendered as early as 3rd July, 1963, in Srinivasa Printing Works v. Sales Tax Officer1966 K.L.T. 1139., I ventured to say that the contracts in the cases of printing of letter heads, binding of books and supply of journal forms are contracts for sale; but it is impossible to say that the contract for printing of judgments of courts is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n variance with the principle that we have stated which we think has been accepted by the Supreme Court. The question must first be what essentially is the nature of the contract. For instance, if there is an agreement for printing judgments, essentially the contract is one for work and labour and if the contract is essentially for work and labour, there is no justification for bifurcating that contract and creating two different contracts which we think will be non-existent, one for cost of labour and the other for sale of paper. There are many activities which cannot be indulged in without material. It may be canvas in the matter of a painter and the paint that he uses, an example which will glaringly illustrate the mistake of applying the theory that in every such agreement, there is an agreement for the sale of the material used and an agreement for work and labour. If a painter has been commissioned to paint a portrait, he uses his own canvas and his own paint. To say when he supplied the painted portrait, there was an agreement for the sale of the canvas and for the paint and separate charges for work and labour for painting would be stretching a point too far, resulting in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s will bear their respective costs. Ordered accordingly. Appendix [The judgment of the Division Bench of the Kerala High Court consist- ing of T.C. RAGHAVAN and P. UNNIKRISHNA KURUP, JJ., in P.K. Dewer v. State of Kerala (T.R.C. No. 16 of 1968) delivered on 26th November, 1969, is printed below: ] The judgment of the court was delivered by RAGHAVAN, J.-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 remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale, 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. 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 a turnover resulting from the sale of "paper products". This appears to be what was pointed out by this court when this court remanded the case on the last occasion. The reasoning of the Tribunal may now be noted. The Tribunal says that paper, when it is printed upon, undergoes a process and when it undergoes a process or passes through a process what results is a product of paper. In other words, in the opinion of the Tribunal, since printing is a process, the paper which is printed upon-which undergoes the process of printing-is a paper product. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon parlance or in popular language. But, wider meanings are ascribed to the word in expressions like "court papers", "reading a paper" at a conference, "paper money", "paper credit", etc. These wider or extended meanings are special meanings; and in the Kerala General Sales Tax Act, with which we are dealing, the word "paper " is presumably used only in the first meaning, the meaning the word has in common parlance-the meaning the word has in popular language-and not in any wider or special connotation. The Shorter Oxford English Dictionary defines "product", inter alia, as "that which is produced by any action, operation, or work". If this meaning of the word "product" is applied to the case before us, it may certainly be said that the printed material is a "product"; it is a product of the action, operation, or work-the printing. But, can it be said that the printed material is a product of paper? Obviously the answer must be "no". If a renowned artist (painter) executes one of his masterpieces on a piece of paper, can it be said that the picture is a product of paper? Can it be said that the painting is a product of the paint used by the artist? The obvious answer that stri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to him to raise this question as regards these assessment years are concerned." This reasoning seems to suggest that exercise books, ledger books, printed forms, etc., may not be paper products, probably because they still retain the characteristic of paper. But, if a printer prints diaries of his own design and sells them as his products, can it be said that the diaries are still paper? And if they are not paper, are they not paper products? On the other hand, if a customer gives an order to a printer to print diaries of the customer's design and the printer executes the order on paper supplied by him, the diaries supplied by him may not be taxable as paper products in the hands of the printer and he may claim that the contract is only a works contract. But, are not the diaries paper products and their sales by the customer who got them printed taxable sales? This may probably be a border line case; and it may be a moot question whether the diaries are not paper products, though they still retain the characteristic of paper to some extent. However, we need not pursue the matter further in this case. In the same decision, the learned Judge has said that paper product means "an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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