BHARAT OFFSET Vs. TAMIL NADU TAXATION SPECIAL TRIBUNAL

JUDGEMENT

(1.) These writ petitions have been filed for a declaration that G. O. Ms. No. 66, Commercial Taxes (B1) dated August 16, 2001 of the second respondent herein subjecting all the printed materials executed on specific orders exigible to sales tax under Section 3 of the Tamil Nadu General Sales Tax Act, 1959 (TNGST) as that of sale, is outside the purview of the powers of the State Legislature and violative of the consistent principles of law laid down by the honourable High Court of Madras reported in Gannon Dunkerley & Co. (Madras) Ltd. v. State of Madras, 1954 5 STC 216 State of Tamil Nadu v. Anandam Viswanathan, 1977 39 STC 226, Deputy Commissioner (C.T.), Coimbatore Division, Coimbatore v. Karthikeya Press, 1982 51 STC 28, Court Press Job Branch, Salem v. State of Tamil Nadu, 1983 54 STC 382, State of Tamil Nadu v. Gunasundari Modern Art Printers,1995 97 STC 489 and those by the Supreme Court reported in State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd., 1958 9 STC 353 , Government of Andhra Pradesh v. Guntur Tobaccos Ltd., 1965 16 STC 240, Commissioner of Commercial Taxes, Mysore, Bangalore v. Hindustan Aeronautics Ltd., 1972 29 STC 438, State of Himachal Pradesh v. Associated Hotels of India Ltd., 1972 29 STC 474 , State of Tamil Nadu v. Anandam Viswanathan, 1989 73 STC 1and Hindustan Aeronautics Ltd. v. State of Karnataka, 1984 55 STC 314 (SC).

(2.) G.O. Ms. No. 66, Commercial Taxes (B1) Department, dated February 16, 2001, reads as follows:

(3.) The learned Counsel for the writ petitioners submitted that the inclusion of the above sub-items in the entry is unconstitutional. The learned Counsel submitted that by just amending the entry by an inclusion of a sub-item, the State cannot bring to tax what is otherwise non-taxable. The learned Counsel submitted that in a works contract, the transfer of goods is only incidental and, when goods are made to order according to the specifications of the customers and the materials are so printed, there is no transfer of goods. The Legislature has attempted to treat as "sale of goods", what is really a transaction in the nature of "a works contract". The learned Counsel referred to Article 366 (29A) of the Constitution of India and section 3B of the TNGST Act and the definition of "sale" in Section 2 thereof. The learned Counsel submitted that the fact that the "works contract" is a "deemed sale" will not give the State the power to tax it as if it was a contract for sale of goods. The learned Counsel submitted that the State cut into the scope of Section 3B of the TNGST Act by a mere amendment of the Schedule. The learned Counsel submitted that the entries in the Schedule cannot control or prevail over the provisions of the Act. The learned Counsel further submitted that the Supreme Court had repeatedly held that it is not open to the State to define a "sale" in a manner as to make a sale outside its territory into a sale within its territory. Similarly, the State cannot by this G. O. enlarge its power to tax what is really a works contract as though it is sale of goods.