Case Note & Summary
The case involves a Sales Tax Reference under Section 61 of the Bombay Sales Tax Act, 1959, at the instance of the Commissioner of Sales Tax, Maharashtra State, against Hari and Company, the respondents. The respondents were engaged in comb-binding, electric or electronic typing, computerised art work, and taking out duplicate copies by photocopying. On 10th June 1988, they applied under Section 52 of the Bombay Sales Tax Act read with Section 9 of the Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contract (Re-enacted) Act, 1989 (Works Contract Act) to the Additional Commissioner of Sales Tax to decide whether they fall within the ambit of 'dealer' under the Works Contract Act. The Additional Commissioner held that the respondents were dealers and liable to pay tax. On appeal, the Maharashtra Sales Tax Tribunal reversed this decision, holding that the respondents were not dealers under the Works Contract Act. The Commissioner then filed this reference. The core legal issue was whether the activity of taking out xerox copies constitutes a 'works contract' and whether the person doing so is a 'dealer' under Section 2(1)(d) of the Works Contract Act. The Court analyzed the definition of 'dealer' and 'works contract' and concluded that photocopying does not involve transfer of property in goods; the customer receives only copies, not the original, and the activity is essentially a service. Therefore, the respondents were not dealers under the Act. The Court answered the question in the affirmative, holding that the Tribunal was justified in its decision.
Headnote
A) Sales Tax - Works Contract - Definition of Dealer - Section 2(1)(d) of Maharashtra Sales Tax on Transfer of Property in Goods involved in Execution of Works Contract (Re-enacted) Act, 1989 - The issue was whether a person engaged in photocopying is a 'dealer' under the Act. The Court held that photocopying does not involve transfer of property in goods as the customer receives only copies, not the original, and the activity is a service, not a works contract. (Paras 1-3)
Issue of Consideration
Whether the activity of taking out xerox copies on a xerox machine constitutes a 'works contract' under the Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contract (Re-enacted) Act, 1989, and whether the person carrying out such activity is a 'dealer' under Section 2(1)(d) of the said Act.
Final Decision
The Court answered the question in the affirmative, holding that the Tribunal was justified in law in holding that the respondents are not liable to pay tax under the Works Contract Act on their transaction of taking out xerox copies and that they are not 'dealers' under Section 2(1)(d) of the said Act.
Law Points
- Interpretation of 'dealer' under Section 2(1)(d) of Maharashtra Sales Tax on Transfer of Property in Goods involved in Execution of Works Contract (Re-enacted) Act
- 1989
- Photocopying as works contract
- Section 9 read with Section 6(1) of Bombay Sales Tax Act
- 1959
Case Details
2006 LawText (BOM) (03) 53
Sales Tax Reference No.42 of 1998 in Reference Application No.13 of 1992
Dr. S. Radhakrishnan, J.P. Devadhar
Mr. Niranjan Pandit for the Applicants, Mr. P.C. Joshi for the Respondents
The Commissioner of Sales Tax, Maharashtra State, Mumbai
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Sales Tax Reference under Section 61 of the Bombay Sales Tax Act, 1959, arising out of an order of the Maharashtra Sales Tax Tribunal.
Remedy Sought
The Commissioner of Sales Tax sought determination of a question of law regarding whether the respondents are liable to pay tax under the Works Contract Act on their photocopying transactions.
Filing Reason
The Commissioner disagreed with the Tribunal's decision that the respondents were not dealers under the Works Contract Act.
Previous Decisions
The Additional Commissioner of Sales Tax held that the respondents were dealers and liable to pay tax. On appeal, the Maharashtra Sales Tax Tribunal reversed that decision, holding that the respondents were not dealers.
Issues
Whether the activity of taking out xerox copies on a xerox machine constitutes a 'works contract' under the Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contract (Re-enacted) Act, 1989?
Whether the person carrying out such activity is a 'dealer' as defined under Section 2(1)(d) of the said Act?
Submissions/Arguments
The Commissioner argued that the respondents are dealers under the Works Contract Act and liable to pay tax on their photocopying transactions.
The respondents argued that photocopying is a service and does not involve transfer of property in goods, hence they are not dealers under the Works Contract Act.
Ratio Decidendi
The activity of photocopying does not involve transfer of property in goods as the customer receives only copies, not the original, and the activity is essentially a service, not a works contract. Therefore, the person carrying out such activity is not a 'dealer' under Section 2(1)(d) of the Maharashtra Sales Tax on Transfer of Property in Goods involved in Execution of Works Contract (Re-enacted) Act, 1989.
Judgment Excerpts
The present Sales Tax Reference has been made u/s.61 of the Bombay Sales Tax Act, 1959 at the instance of the Commissioner of Sales Tax of the Maharashtra Sales Tax Tribunal, to this Court for the determination of the question of law which arises out of the order passed by the Tribunal dated 11th October, 1991.
The question arises under Section 9 of the Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contract (Re-enacted) Act 1989, read with Section 6(1) of the Bombay Sales Tax Act, 1959.
Procedural History
On 10th June 1988, the respondents applied under Section 52 of the Bombay Sales Tax Act read with Section 9 of the Works Contract Act to the Additional Commissioner of Sales Tax to decide whether they are dealers. The Additional Commissioner held they were dealers. The respondents appealed to the Maharashtra Sales Tax Tribunal, which on 11th October 1991 reversed the decision. The Commissioner then filed a reference application under Section 61 of the Bombay Sales Tax Act, leading to this Sales Tax Reference No.42 of 1998.
Acts & Sections
- Bombay Sales Tax Act, 1959: Section 6(1), Section 52, Section 61
- Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contract (Re-enacted) Act, 1989: Section 2(1)(d), Section 9
