Aristo Prints Private Limited vs Commissioner, Commercial Tax, U.P., Lucknow

Rajes Kumar, J.—These are three revisions u/s 11 of the U. P. Trade Tax Act, 1948 (hereinafter referred to as, "the Act") directed against the order of the Tribunal dated August 3, 2010 for the assessment years 1998-99, 1999-2000 and 2000-01 all under the Central Sales Tax Act, 1956 by which the Tribunal has confirmed the penalty levied u/s 10A read with section 10(d) of the Central Sales Tax Act, 1956 (hereinafter referred to as, "the Central Act"). The applicant was involved in printing of lottery tickets. It was registered both under the U. P. Trade Tax Act, 1948 as well as under the Central Sales Tax Act, 1956. In the registration certificate issued under the Central Act in the column of nature of business security lottery tickets printing is mentioned. In column B, the nature of the goods used in the manufacture or production is mentioned as per the list dated February 5, 1996. In the next page, in the column of the goods manufactured or produced, the security printing is mentioned. In the details of raw material, paper, ink, aluminium plates are mentioned. The lottery tickets have been printed on the basis of the orders received from the parties. In the execution of the contracts of printing of lottery tickets, the applicant had purchased paper, processing material, packing material, chemical and binding material, consumable stores, etc., On the purchases of the aforesaid materials, form C have been issued and the concessional rate of tax, has been availed of. The assessing authority treated the printing of lottery tickets as job-work and in the assessment orders, the amount received towards the job-work has been exempted from tax. The assessing authority had issued the show-cause notices u/s 10A of the Central Act to show cause why the penalty should not be levied u/s 10A read with section 10(d) of the Central Act on the ground that the raw materials for Rs. 25,76,850 had not been used in the manufacturing of goods for sale and used in the job-work. The applicant filed reply and submitted that the material purchased against form C have been used for the purpose for which the registration was granted and there is no violation of any of the condition of the registration certificate. It is submitted that at the time issue of form C, the details of the form C used earlier have been furnished, in which the items for which the form C have been issued, have been clearly disclosed and on the consideration of the entire facts, form C have been issued. The assessing authority has not accepted the plea of the applicant and levied the penalty u/s 10A read with section 10(d) of the Central Act. The order of the assessing authority has been confirmed in the first appeals and by the Tribunal in second appeals.

Heard Sri N. C. Gupta, learned counsel for the applicant and Sri B. K. Pandey, learned standing counsel.

The learned counsel for the applicant submitted that the applicant had been granted registration for the printing of lottery tickets and for the purchases of raw material, processing material, etc., as per list attached along with the registration certificate. The applicant had issued form C only in respect of those materials for which registration was granted and used such raw materials for the printing of lottery tickets for which registration has been granted and, therefore, it is not a case where the goods have been used for any other purposes than the purpose for which the registration has been granted. He further submitted that the assessing authority was fully aware that the goods in respect of which form C was issued, were being used in the printing of lottery tickets and without any objection form C have been regularly issued and, therefore, the applicant was always under the bona fide belief that form C were being rightly issued for the purchases of raw materials, etc., which were being used for the printing of lottery tickets.

Sri B. K. Pandey, learned standing counsel, submitted that the printing of lottery tickets has been held as works contract by the apex court in various decisions and by this court in the case of assessee itself, in Trade Tax Revision Nos. 106 and 121 of 2003 decided on December 8, 2010 (Commissioner, Trade Tax, U. P., Lucknow v. Aristo Printers Pvt. Ltd. [2011] 41 VST 102 (All)). He submitted that this court has held that the ink and the other material used in the printing are liable to tax, inasmuch as being transferred to the purchasers.

Having heard learned counsel for the parties, I have perused the impugned order.

In the case of assessee itself in Trade Tax Revision Nos. 106 and 121 of 2003 decided on December 8, 2010 (Commissioner, Trade Tax, U. P., Lucknow v. Aristo Printers Pvt. Ltd., Ghaziabad [2011] 41 VST 102 (All)), for the assessment years 1996-97 and 1997-98 this court has held the printing of lottery tickets as a works contract. It has been further held that the ink and the other materials, used in the printing have been passed on to the customers and, therefore, they are liable to tax u/s 3F of the U. P. Trade Tax Act. The applicant had been granted registration for printing of lottery tickets. Under the registration certificate, the applicant was also entitled to purchase the raw materials, etc., mentioned in the list attached to the registration certificate at the concessional rate of tax. Therefore, under the registration certificate, the applicant was entitled to purchase raw materials, etc., against form C and to use the same in the printing of lottery tickets, which the applicant had done. Whether the printing of lottery tickets is job-work, is not relevant for the purposes of levy of penalty. For the purpose of levy of penalty under clause (d) of section 10 of the Central Act, the relevant consideration is whether the goods purchased against form C have been used for the purpose for which registration has been granted or not. As stated above, the raw materials, etc., have been used for the printing of lottery tickets for which the registration was granted and, therefore, there was no violation of clause (d) of section 10 of the Central Act. In the result, all the three revisions are allowed. The penalty levied u/s 10A read with section 10(d) of the Central Act is hereby quashed.