The Supreme Court (SC) on Tuesday upheld the levy of trade tax on ink and processing materials used by a firm in printing lottery tickets, while deciding an over 25-year-old matter.
A bench comprising Justices J B Pardiwala and K V Viswanathan held that ink and processing materials used in printing lottery tickets form part of the goods transferred in the execution of a works contract under Section 3F of the Uttar Pradesh Trade Tax Act, 1948.
The verdict came on an appeal of Ghaziabad-based printing company, M/s Aristo Printers Pvt Ltd, against a 2010 verdict of the Allahabad High Court which had allowed the revenue department’s revision petitions and restored the tax demand. The firm undertook printing of lottery tickets using paper supplied by its clients and procured its own ink, processing chemicals and other materials for carrying out the printing work.
The Trade Tax Officer, Ghaziabad, had in assessment orders dated October 28, 1999, levied trade tax on the value of ink, chemicals, and packing materials used by the firm during assessment years 1996–97 and 1997–98.
The levy was made under Section 3F of the U.P. Trade Tax Act, which imposes tax on the transfer of goods involved in the execution of a works contract.
After an appeal was filed, the Deputy Commissioner (Appeals) deleted the tax on ink and chemicals, holding that these materials were not transferred to the clients but only used in the printing process.