Printing On Piece Rate Basis Is Not ‘ Contract For Sale’ Of Books And Periodicals; Telangana High Court Dismisses Claim For Exemption

"That the petitioner is not paid the value of the product, but is only paid based upon the quantity of materials printed that too on piece rate basis i.e. the charges for one textbook or one magazine, as would be the case. Coming to the G.O.Ms.No.625, the said G.O. grants exemption only for the sale of the entire book. The sale price of the textbook or the magazine is entirely different than the cost of the printing of the books and magazines."

The Division Bench of Justice P. Sam Koshy and Justice Laxmi Narayana Alishetty, noted that if the claim of the petitioner was allowed, there would be no distinction between various kinds of printing work, as all printing work would have to be considered as sale.

"If the contention of the learned counsel for the petitioner is to be accepted, then there shall be no distinction between the printing of textbooks, magazines and periodicals and the printing works of letter heads, bill books, account books, leaflets etc., as any printing carried on by the printer would have to be treated as sale upon which G.O.Ms.No.625 would become applicable. "

The revisions have been filed assailing the order passed by the Sales Tax Appellate Tribunal (for short ‘the Tribunal’) contending that the Tribunal was not justified in holding that the nature of the job undertaken by the petitioner would fall within the purview of ‘works contract’ and not ‘sale’ as defined under the APGST ACT, 1957.

The main contention of the petitioner company was that it was a printing press registered under the Companies Act, 1956, which provided printed books of CD/Zip and was entitled to tax exemption on the sale of printed books of CD/Zip as per GOMs 625 Rev. (CT-II) dated 31.07.1996.

By way of GOMs 625, the Governor for the State of Erstwhile Andhra Pradesh had exempted the sales tax payable under the APGST Act on the sales of Periodicals and printed books for reading.

It contended by the counsel for the printing press, that the contract entered into between a publisher and the petitioner company, evidently fell under the ambit of 'sale' as defined under section 2(n) of the APGST, 1957. That, the printed material was handed over to the publisher only after a sale consideration was paid and until then it is the petitioner who was the absolute owner of the property. Adding to that, it was stated, that none of the raw material was provided by the publisher and hence the contract could not be considered a labour contract.

On the other hand, the State contended that the petitioner entered into an agreement, and printed books/ periodicals only as per the demand stipulated in the agreement, and moreover, it was the publisher who had exclusive rights to sell the books in the open market and not the petitioner; thus the petitioner could not be the owner of the good.

The Bench ruled that the petitioner did not have the exclusive right to sell either the raw material or the printed books. In fact, to the contrary was collecting charge on a piece-per-rate basis, which is only the charge of printing, and hence could not avail of tax exemption under the G.O.

The claim of the petitioner was dismissed upholding the orders of the Tribunal.

"In view of the same, we are of the considered opinion that no strong case for interfering with the impugned order of the Tribunal has been made out."

TRC 83 & 84 of 2005

Counsel for Petitioner: Dantu Srinivas

Counsel for respondent: K. Raji Reddy, Senior Standing Counsel for Commercial Taxes

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