Chandra Reddy, CJ. - (1.) The question to be determined in this revision petition filed by the Government against the Order of the Sales Tax Appellate Tribunals whether the supply of some printed material to a customer at an agreed price would amount to a sale of goods or would constitute a works contract. The respondent is running a printing press called Sri Krishna Power Press at Vizianagaram. His business consisted, among other things, in printing to the order of individual customers stationery of a business character such as letter-heads, bill-books and account-books at an agreed price. For the year 1953-54, he was assessed to sales-tax on a turnover of Rs. 12,580. The respondent objected to the assessment on the ground that the furnishing of the printed goods by him to his customers was in the nature of a works contract and, as such, he is entitled to a deduction of 30 per cent., from the gross turnover, and, since the turnover after this deduction falls short of Rs.10,000, he is exempt from taxation under section 3 (3) of the Madras General Sales Tax Act which corresponds to section 5(1) of the Andhra Pradesh General Sales Tax Act. This plea did not prevail with the taxing authority. On appeal, the Deputy Commissioner of Commercial Taxes confirmed the assessment. The further appeal filed by the assessee before the Sales Tax Appellate Tribunal succeeded. The Tribunal accepted the foregoing contention of the respondent, following a judgment of Govinda Menon, J., in The State of Madras v. Vijayaraghavan, (1955) 2 M.L.J. 423 : 6 S.T.C. 237. It is to revise this order that the present revision petition is brought by the Sate Government.
(2.) In support of the petition, it is urged that transactions such as these have to be regarded only as sales and not as works contracts and that The State of Madras v. Vijayaragahvan, does not embody the correct law and has to be dissented from. Reliance is placed on some decided cases to substantiate this proposition. Before we discuss the rulings cited to us on either side, we will read the material provisions of the Madras General Sales Tax Act, 1939. Section 2 (h) of the Madras General Sales Tax Act, which corresponds to section 2 (n) of the Andhra Pradesh General Sales Tax Act, omitting the unnecessary portion, reads : "'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 and includes also a transfer of property in goods involved in the execution of a works contract or in the supply or distribution of goods by a co-operative society, club, firm or any association to its members but does not include a mortgage, hypothecation, charge or pledge." 'Works Contract' is defined as : "any agreement for carrying out for cash or for deferred payment or other valuable consideration the construction, fitting out, improvement or repair of any building, road, brdge or other immoveable prqperty or the fitting out, improvement or repair of any moveable property."
(3.) It is also useful to refer to the relevant rule of the Madras General Sales Tax (Turnover and Assessment) Rules. Rule 3 provides : "For the purpose of sub-rule(1), the gross turnover of a dealer shall in relation to works contract, be deemed to be the amount payable to the dealer for carrying out such contract less a sum not exceeding such percentages of the amount payable as may be fixed by the Board of Revenue, from time to time for different areas representing the usual proportion in such areas of the cost of labour to the cost of materials used in carrying out such contract, subject to the following maximum percentages: (cc) in the case of textile dyeing and printing works contract : 50 per cent." Prima facie, the transactions in question attract the definition of 'sale' since all the ingredients contemplated by the section are present. This is not seriously disputed but what is urged is that nonetheless they fall within the ambit of 'works contracts'. This argument is mainly based on The State of Madras v. Vijayaraghavan, which is on all fours with the present case. In that case, the assessee supplied articles of stationery like bill-books, account-books, and other things to his customers, the customers not supplying the paper for making these books. The learned Judge held that it was only a works contract. In his opinion, when a person entrusts a press to print stationery articles like letter-paper or visiting cards and the press itself supplies the material, the transaction is nothing but a works contract. In support of this view he cited Clay v. Yales, 108 R.R. 461 : 25 L.J. Ex. 237, (Vide Benjamin on Sale, 8th edition, page 159.);