TMI Blog2004 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... urangabad and purchases materials required for bottling and marketing the foreign made Indian liquor, including the printing and packing material. M/s. Mudranika, another establishment was supplying the printed labels to be wrapped on the bottles to the assessee. The Income-tax Officer (TDS) visited the factory premises of the assessee by exercising powers of survey under section 133A of the Income-tax Act, 1961 ("the Act", for short), and served summons to produce books of account in relation to the TDS for the financial years 1995-96 and 1996-97 on October 8, 1997, and more particularly payments made to M/s. Mudranika, the supplier of printed material from whom printed labels were purchased. Notice of hearing was given on the same day and the date for the same was fixed as October 9, 1998, during the course of which the assessee submitted all the required documents along with books of account and denied the liability of TDS for the financial years 1995-96 and 1996-97 under section 194C of the Act in respect of the printed labels purchased from M/s. Mudranika. It had contended that the transaction with M/s. Mudranika was a contract for sale and not works contract. However, the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught on record, but without making any formal application for addition, which was prohibited as per rule 29 of the Income-tax Appellate Tribunal Rules. The Tribunal also observed that, the point of jurisdiction was required to be raised when the appeal was being heard by the single Bench and it could not have been so done by way of a review application subsequently. The assessee had submitted to the jurisdiction of the Tribunal, and it was not entitled to object to the same after the appeal was dismissed. In this regard, the Tribunal relied upon the decision of the Rajasthan High Court in the case of Jaipur Udhyog Ltd. v. CIT [1992] 198 ITR 282. The following issues of law arise for our consideration in these two appeals. (a) Whether the supply of printed labels by M/s. Mudranika to the assessee amounted to contract for sale, or works contract? (b) Whether the single Bench of the Tribunal had jurisdiction to hear and decide the appeal for the financial year 1995-96? and (c) Whether the Tribunal was right in ignoring the appeal for the financial year 1996-97 on the ground that, no separate appeal was filed and fees was not paid for the said year? Shri Sharma, learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee could have removed such objections within the time period granted. No such objection was ever raised till the appeal was decided for only one year and it was ignored for the second year. Even when the review application was filed, the assessee could have been called upon to remove the office objections and the appeal for the second year could have been decided on the merits, urged learned counsel for the assessee. Shri Sonawane, learned standing counsel for the Revenue, referred to the affidavit-in-reply filed in Tax Appeal No. 44 of 2003, and submitted that, the view taken by the Tribunal in dismissing the appeal and holding that the transaction for supply of printed labels amounted to "works contract", is well supported by a catena of decisions and, therefore, no interference is called for in the said view. In support of these submissions, he has relied upon the following decisions of this court: (i) Sarvodaya Printing Press v. State of Maharashtra [1994] 93 STC 387; [1994] 2 Mah LJ 1322 [FB]; and (ii) Sunflag Iron and Steel Co. Ltd. v. Addl. CCE [2001] 3 Mah LJ 532. On the other hand, Shri Sharma, learned counsel for the assessee has relied upon the following d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pune) and took the view that, if a manufacturer purchases material on his own and manufactures a product as per the requirement of a specific customer, it was a case of sale and not a contract for carrying out any work. The fact that the goods manufactured were according to the requirement of the customer did not mean or imply that any work was carried out on behalf of that customer. Supply of printing and packing material to M/s. Wadilal Dairy International Limited was held to be a contract for sale and not a works contract, as the main purpose in buying packing material was to obtain goods for the purpose of packing and the fact that incidentally some printing was required to be done by the supplier was of no consequence. There was no works contract involved and accordingly, the provisions of section 194C of the Act were not applicable. The appeal of the assessee was allowed and the view taken by the Revenue was set aside. The case of State of Himachal Pradesh, AIR 1972 SC 1131; [1972] 29 STC 474 (SC) came to be decided by a Constitution Bench. In para. 9, the court observed thus: "The difficulty which the courts have often to meet with in construing a contract of work and la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork or even service, parties might enter into separate agreements, one of work and service and the other of sale and purchase of materials to be used in the course of executing the work or performing the service. But, then in such cases the transaction would not be one and indivisible, but "would fall into two separate agreements, one of work or service and the other of sale." In the case of State of Tamil Nadu v. Anandam Viswanathan [1989] 73 STC 1 (SC), the assessee had supplied printed question papers to universities and other educational institutions in the country. The question was whether it was a "works contract", or "contract for sale" for the purposes of payment of sales tax under the Tamil Nadu General Sales Tax Act. In para. 27, the court stated: "In our opinion, in each case the nature of the contract and the transaction must be found out. And this is possible only when the intention of the parties is found out. The fact that in the execution of a contract for work some materials are used and the property in the goods so used, passes to the other party, the contractor undertaking to do the work will not necessarily be deemed, on that account, to sell the materials. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specifications of the assessee beyond the quantity specified in the purchase order, and therefore, it was wrong on the part of the Tribunal to hold that, the labels printed by M/s. Mudranika to supply to the assessee could not be sold to any other establishments in the market. This finding regarding no marketability is based on a fallacious premise that, M/s. Mudranika was printing an unlimited number of labels. When the printing work was being carried in the premises of M/s. Mudranika, though as per the specifications of the assessee, the supply was limited to the quantity specified in the purchase order and it would not do such printing beyond the numbers specified in the same. There is nothing on record to show that, all other ancillary costs like the labels, ink, papers, screen-printing, screens, etc., were being supplied by the assessee to M/s. Mudranika. In the facts of this case, the supply of printed labels by M/s. Mudranika to the assessee was a "contract of sale" and it could not be termed as a "works contract". The Tribunal has rightly held in the case of Wadilal Dairy International Limited [2002] 81 ITD 238 (Pune) that, the supply of printed packing labels amounted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the appellant had not taken objection to the jurisdiction of the Tribunal, and on the other hand, it had in its review application contended that, the appeal would not have been listed before the single Bench, as its assessed income for the relevant year exceeded rupees five lakhs. The objection was more on procedural requirements, and more particularly on the single Bench's powers. Along with the review application, a photocopy of the assessment order for the relevant year was brought on record by the assessee, and it was necessary to take cognizance of the same, while deciding the review application. The reasoning given by the Tribunal in rejecting the review application does not impress us. Under the circumstances, we answer the second issue in the affirmative. Coming to the third issue, we find that, the approach of the Tribunal has been too technical. As observed a little while ago, it was necessary for the Tribunal's registry to notify the deficiencies, if any and such deficiencies would be even regarding the remittances of court fees or filing separate set of copies in view of subsequent procedural amendments, and more so, these amendments were not brought before us w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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