TMI Blog1995 (7) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, reopened 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. 30,02,159 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 P1. The petitioner filed five other writ petitions. In all these petitions, the provisions of the amending Act and the notices issued by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no ground to vary the order already passed by us. Consequently, the Review Application No. 205 of 1993 is dismissed. Reported as East India Cotton Manufacturing Company Limited v. Sate of Haryana [1993] 90 STC 221 (P H) [FB]. This brings us to the consideration of the contentions raised in the other cases. Mr. Chawla, learned counsel for the petitioner in Review Application No. 147 of 1993 as also the other writ petitions, has submitted that the Full Bench having not pronounced upon the validity of the assessment order, which was specifically challenged, the decision deserves to be reviewed. He has further submitted that the printing of lottery tickets as undertaken by the petitioner is execution of a works contract. The orders having been placed by different States other than Haryana and no amendment having been made by the Parliament in the Central Sales Tax Act, neither the goods involved in the execution of the work nor the end-product were exigible to the levy of sales tax under the State Act or the Central Act. Learned counsel placed strong reliance on the decision of their Lordships of the Supreme Court in State of Tamil Nadu v. Anandam Viswanathan [1989] 73 STC 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the position in case of composite contract could be different. As a necessary consequence, the State Legislatures were held to be not competent to levy sales tax on the materials involved in the execution of a works contract. The Law Commission considered the matter. It, inter alia, suggested the insertion of a wide definition of "sale" so as to cover the works contract in article 366 of the Constitution. As a result, clause (29A) was added in article 366 by the 46th Amendment of the Constitution. A legal fiction could be introduced and an indivisible contract made divisible. A contract for execution of work can now be fictionally divided into one for sale of goods and the other for supply of labour and services. However, the power of the Provincial Legislatures under entry 54 in List II remains subject to the provision in entry 92-A of List I of the Seventh Schedule whereunder Parliament alone has the power to levy "taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade and commerce". Wherever the sale or purchase of goods occasions the movement of goods from one State to another, it is deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present petition for review of the order passed by the Full Bench is competent. Re: (ii) According to Mr. Chawla, the printing of lottery tickets is not merely a simple process of printing of slips of paper. It involves a sophisticated and technical process, expertise and a high degree of confidentiality. It, thus, amounts to the execution of a "works contract". Mr. Sibal disputes this. It is the admitted position that the petitioner had entered into contracts with various State Governments or licensed agents for the printing of lottery tickets. The paper was either supplied by the customer or by the petitioner. According to the petitioner, one of the main features of the contract is maintenance of strict security and confidentiality. It involves a highly sophisticated and technical process. The petitioner prepares a live or ammonia proof of the ticket to be printed. After its approval by the customer, a chromoline proof with camera work, planning and scanner, is prepared. Thereafter, a processed plate is prepared and the tickets are printed. The defective tickets are destroyed under the supervision of the customer. They are numbered and thoroughly checked by the checkers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on papers for a university is not the same thing as printing of letterheads or account books, etc. Undoubtedly, paper and ink are necessary inputs in both cases. Still the former would be execution of a works contract while the latter would be sale of goods. The use of paper and ink are only incidental in case of a works contract. The printing of lottery tickets also involves not only skill and expertise but also confidentiality and security. Every printer may not be able to do the job. The rule in this behalf was initially enunciated by the Supreme Court in Government of Andhra Pradesh v. Guntur Tobaccos Ltd. [1965] 16 STC 240. The matter was again elaborately considered in State of Tamil Nadu v. Anandam Viswanathan [1989] 73 STC 1 (SC). The question that arose in this case was whether the charges for printing of question papers could be included in the assessable turnover of the assessee. On behalf of the assessee, it was pleaded that the contract was for work and labour and that he was not liable to pay sales tax thereon. The Government's stand was that the contract was for the sale of printed material to the respective educational institutions. The questions that their Lordsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract will continue to be a contract for work and labour and no liability to sales tax would arise in respect thereof. The High Court was, therefore, right in the view it took in Civil Appeals Nos. 2346-47 of 1978." Thus, one of the tests is-can the product be sold to any person in the market or has it to be supplied to the particular customer? If it cannot be sold in the market and has to be supplied to a particular customer, the transaction can normally be described as execution of a works contract. In such a case, the supply of material is just incidental. Similar appears to be the position in the present case. The petitioner could not have sold the lottery tickets in the market to any person. These had to be supplied to the customer. These involved not only expertise 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. It is undoubtedly true that in Anandam Viswanathan's case [1989] 73 STC 1 (SC), the cost of paper was included in the taxable turnover but this was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Haryana General Sales Tax Act in so far as these provide for the levy of sales tax on the inputs involved in the execution of a works contract, shall be applicable. However, when the petitioner prints the lottery tickets at the asking of a State other than Haryana, the position is different. The provisions of the Central Sales Tax Act have not been amended. The fiction of a deemed sale has not been introduced. As a result, the goods involved in the execution of the works contract cannot be said to have been fictionally sold. The question of levy of tax on the inputs under the State Act or the Central Act would not arise. Mr. Sibal submits that in view of the 46th Amendment, it was not necessary for the Parliament to amend the Central Act. We cannot accept this contention. The 46th Amendment only embodies a wider definition of "sale". It only introduces a fiction and enables the Legislature to make law on that basis. It does not ipso facto amend the provisions of the Act. Since the Parliament has not amended the Central Act, there is no fictional sale and as such, no tax can be levied. Accordingly, the third question is answered in the negative. Conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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