Heard Sri Pradeep Agarwal, learned counsel for the revisionist and Sri Sanjieva Shankhdhar, learned counsel for the revenue.
The above revisions have been filed by the revisionist aggrieved by the common order of the Commercial Tax Tribunal, U.P., Lucknow dated 7.7.2010. TTR Defective No.133 of 2012 has been filed by the proprietor of the Firm where as TTR No.108 of 2012 has been filed by the Firm.
Briefly stated the case of the revisionist is that he is the approved printer by the Indian Books Association and in terms of the contract executed between the revisionist and the Pathya Pustak Adhikari, U.P., Lucknow he has been authorized to print the title covers of Nationalised Text Books to be used for class I to VIII. The case of the revisionist is that the title covers of the books are printed as per the specific design provided by the Pathya Pustak Adhikari, Department of Education, U.P. Lucknow and he has to print on the paper, the specific quality of which is also mentioned in the terms and conditions of the contract. After the covers are printed he is required to supply the same to the list of publishers provided by the Pathya Pustak Adhikari, Department of Education, U.P. Lucknow and each cover bears a security number and the publisher can only print the books in the number of covers assigned to him and he is not free to sell the covers in the open market. It is, therefore, contended that the title covers of Pathya Pustak cannot be termed as goods as it cannot be sold independently being an incomplete commodity and likewise the Pathya Pustak cannot be sold independently without the title cover.
The dispute in the present case arose when an opinion was sought from the Commissioner of Commercial Tax, U.P., Lucknow under Section 59 of the U.P. VAT Act, 2008 as to whether the title covers published under the directions of the Pathya Pustak Adhikari, U.P. Lucknow, which is printed for Nationalized Text Books, fall under the category of Pathya Pustak and will be exempted from tax or not. The application which was filed by the revisionist was numbered as Application No. 14 of 2010 and the Commissioner by order dated 12.5.2010 opined that none of the entries under the U.P. VAT Act deals with title covers and, therefore, title covers are liable to be taxed under Entry 100 of the Schedule II, Part A of the U.P. VAT Act, 2008. Entry 100 of the Schedule II, Part A of the U.P. VAT Act reads as follows:-
Printed materials including diary and calendars.
Aggrieved by the order dated 12.5.2010, the revisionist preferred an appeal before the Commercial Tax Tribunal, U.P., Lucknow and the Tribunal has also endorsed the view taken by the Commissioner and held that the covers printed by the revisionist to be printed material taxable at 4% under Entry 100 of the Schedule II, Part A of the U.P. VAT Act, 2008.
Learned counsel for the revisionist submitted that no book is complete without its cover and one cannot conceive of a book as existing which does not have cover and therefore, the cover is a part of the book and its identity cannot be treated as disparate from that of the rest part of the book. He further submitted that the revisionist is a printer, who prints the title cover of the Pathya Pustak under a contract executed between him and the Pathya Pustak Adhikari, Department of Education, U.P. Lucknow and under the terms and conditions of the contract between the parties he has to print the title cover in the manner and according to specification as provided in the contract. Moreover the printer, under the terms of the contract is restrained from selling the title covers to anyone except the Government and therefore, the title cover must be held to form part of the books of the Nationalized Text Books to be used for Class I to VIII.
Sri Pradeep Agrawal further submits that no book is complete without its cover and therefore, the cover with all the material printed on it must necessarily be treated to be part of the book and following that premise since books are exempted from tax under Entry 7 of Schedule-1 of the U.P.VAT Act, the title covers must be treated as exempted from tax.
Entry 7 of Schedule-1 of the U.P.VAT Act reads as under:-
[7. Books and periodicals & journals including braille books; maps; charts & globe; work books bearing the name of author thereon or prescribed in the syllabus of any educational board or council;] Sri Sanjieva Shankdhar, learned counsel for the Revenue on the other hand submitted that what the revisionist is printing is only a title cover and not the book itself and, therefore, the Commissioner has rightly on the revisionist's own application under Section 59 of the U.P.VAT Act, 2008 held the text cover to be taxable at 4% treating the same to be printed material under Entry 100 of the Schedule II, Part A of the U.P. VAT Act, 2008.
What is not disputed between the parties is that the revisionist prints the title cover under the terms and conditions of a contract executed between him and the Pathya Pustak Adhikari, Department of Education, U.P. Lucknow for Nationalized Text Books for class I to VIII. The revisionist is not authorised to sell the title covers to anyone outside or in the open market. This clearly demonstrates that the entire purpose of printing the title cover is only for purposes of the Nationalized Text Books for use by the Government for Class I to VIII. In the circumstances supply of the title cover printed under a contract to the Pathya Pustak Adhikari, Department of Education, U.P. Lucknow cannot be treated to be a sale. Besides no book is complete without its cover. By way of illustration one may ask if one goes to buy the U.P. VAT Act in a Law Book Shop, he would be able to identify the book by its title cover which discloses that it is the U.P.VAT Act and the purchase would not be expected flip through the books pages before coming to conclusion that he is actually purchasing the U.P. VAT Act. Similarly a person purchasing the Constitution of India or for that matter any other book say the Grays Anatomy would not do so unless he sees the cover of the book which discloses that the book in question which he intends to purchase is actually the Constitution of India or the Grays Anatomy. A book which does not disclose from its title cover what the book is of little value to the ordinary purchaser, user or reader. It may at the most be a jumble of printed papers of value to an antiquarian or a collector of ancient texts.
The Full Bench decision of the Punjab & Haryana High Court in the case of Thomson Press (India) Ltd. vs. State of Haryana (1996) 100 STC 417 has held that when stationary is printed and sold as such, the transaction would amount to sale of goods. However, where the end-product is not a commercial commodity and cannot be sold as such to anyone or everyone in the market by the printer, the transaction would not normally amount to sale of goods but would be execution of a works contract.
In (1999) 114 STC 242, State of Maharashtra vs. Sarvodaya Printing Press Fine Art Printer the Supreme Court held that where Sarvodaya Printing Press (supra) entered into an agreement with the Madhya Pradesh Electricity Board for the supply of "revenue money receipt books" at the rate of Rs.8.88 per receipt book, the charge for the supply of the receipt book was of a composite nature and that only job work was done in the respondent's Printing Press and that the paper and ink used were the property of the respondent before printing but thereafter they became the property of the Board. The Supreme Court, therefore, held that it was not a case of sale but a works contract having regard to the job.
Therefore, in my considered opinion on a conspectus facts and law discussed above, the order of the Tribunal dated 7.7.2010 cannot be sustained and the title cover of the Pathya Pustak as printed by the revisionist must necessarily be held to be a part of the Pathya Pustak Nationalised Text Books to be used for Class I to VIII and the same would fall within Entry 7 of Schedule-1 of the U.P. VAT Act and would not be liable to be tax. Accordingly the order dated 7.7.2010 is quashed.
The revisions stand allowed.
Dated: 23rd September, 2014 Asha