(1.) These three Original Petitions raise a common question, namely, whether the amounts received by a printer for execution of job works is taxable under the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the Act). The parties are the same in all these cases. The petitioner is a printer and a dealer in certain kinds of stationery articles. Some of the articles which he deals with are text books, exercise books, ledger books, diaries, printed forms required for general purposes etc. He also prints judgments of courts for which the paper is supplied by the petitioner. O. P. Nos. 441 and 931 of 1966 have been filed to quash the orders of final assessments made against the petitioner for the years 1953-64 and 1964-65 respectively. O. P. No. 1450 of 1966 has been filed to quash the notice of provisional assessment and demand made for the year 1965-66. In all these assessments, petitioner claimed, among other things, that the amounts received by him on account of job works and printing of court judgments were not liable to tax under the Act. This claim was rejected as regards job works; while it was allowed as regards printing of judgments. The respondent held that receipts on account of job works fall under item 42 in the I schedule of the Act, and therefore, he assessed the same at 5%. This item reads as follows:
"paper (other than newsprint), card-boards, straw boards, and their products."
The goods falling under item 42 are taxable at 5% at the point of first sale in the State. The orders of assessment are sought to be quashed on the only ground that they levy tax on amounts received for the execution of job works. The petitioner's contention is that the execution of job works does not involve 'sale' of goods, and the amounts received thereby do not constitute 'turnover' as defined in the Act.
(2.) The execution of job works by a printer is of two kinds. One is that the customer gives to the printer the matter to be printed, and also the requisite paper. The printer executes the work and receives the charges for the same. The second kind is that the customer gives to the printer the matter to be printed; and the printer uses his own paper or buys paper for the printing, and gives the matter printed to the customer on such paper. The printer may bill the cost of paper and the charges for printing separately, or he may bill both items jointly. In either case, it makes no difference on the true character of the transaction. What he receives from the customer is the cost of the paper plus the charges for the printing. It is the substance of the transaction that matters and not the form in which it is done.
The form may be helpful in determining the nature of the transaction. In the case of a consolidated bill, the cost of paper and the charges for the printing have to be determined separately, if need arises. This is what is being done, and it is an accepted mode of determining the taxable turnover, when goods exempted from sales tax are sold in valuable containers under a consolidated bill, or when the goods sold together with their containers under a consolidated bill are subject to different rates of sales tax. "Paper" falls under item 42 of schedule I to the Act; and it is taxable only at the point of first sale in the State. Admittedly, the petitioner in this case is not an importer or manufacturer of paper, and the sales by him are not the first sales in the State. So, in the case of job works, whether it may be of the first kind or of the second kind, the only question is whether the charges received by a printer for printing are taxable under the Act. Sub-section (xxi) of S.2 of the Act defines "sale" as follows:
" "sale" with all its grammatical variations and cognate expressions means every transfer of property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge."
(This sub-section has five explanations, and they are not extracted above being not relevant in the present context).
Sub-section (xxvii) of S.2 of the Act defines "turnover" as follows:
""turnover" means the aggregate amount for which goods are either bought or sold, or supplied or distributed, by a dealer, either directly or through another, on his own account or on account of others, whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, grown by himself or grown on any land in which he has an interest, whether as owner, usufructuary mortgagee, tenant, or otherwise, shall be excluded from his turnover."
(The explanations to this sub-section are omitted, as they are not relevant to the point under consideration.)
It is hardly possible to contend that the execution of job works involves "sale" or the amounts received by a printer on account of printing charges constitute "turnover" within the meaning of the Act.
(3.) The respondent has conceded the petitioner's claim in respect of the printing of court judgments. If charges received by the petitioner for printing of court judgments are not liable to be taxed under the Act, I fail to see how such a transaction can be differentiated from the printing of materials supplied by other customers. The respondent states in his order of assessment for the year 1964-65 that "printing of job works will attract the levy of sales tax as the transaction will come under item 42 of schedule I of the Act, and hence the exemption claimed is not allowable". Apparently, what he means is that the printed material, which the printer delivers over to the customer, after execution of the order for printing the matter supplied by the customer, is a product of paper falling within the above item. I have considerable doubt on this question. The point was not argued before me. The only objection taken by the petitioner in these cases relates to the levy of tax on the amounts received by him on account of job works. In view of my finding that the execution of job works does not involve any 'sale', and that the amounts received on account of printing charges do not constitute 'turnover', it is not necessary for me to decide whether a printed matter is a paper product. It is plausible to contend that newspaper is 'paper' falling within the above item. The same contention can be advanced with regard to printed books, exercise books, ledger books, diaries etc. They are all paper on which something has been done. It is doubtful whether they can be called a product of paper. It is also plausible to contend that such articles are not paper but something different from paper, and yet they are not paper products. It appears to me that the term 'their products' in item 42 of the I schedule to the Act reading:
"paper (other than newsprint), cardboards, straw boards and their products" means an article different from paper, cardboard or straw board, and something produced with or out of any of these articles. As has been held by the Supreme Court in Ramavatar Budhaiprasad v. The Assistant Sales Tax Officer, Akola and another (1961) 12 STC. 286, such words employed in a Sales Tax Act must be construed in their popular sense, namely, in the sense in which people conversant with the subject matter with which the statute is dealing would attribute to them. In other words, they have to be construed as understood in the common parlance, or in the common language. Applying the above test, it is doubtful whether a printed matter or exercise book or ledger book is a product of paper. In these cases, the sale of exercise books, ledger books, printed forms etc. has been taxed at 5% of the turnover as products of paper. The petitioner has not taken any objection to the said assessments; and it is not, therefore, any more open to him to raise this question as regards these assessment years are concerned.;