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Informist, Tuesday, Oct. 7, 2025

 

NEW DELHI – The Supreme Court Tuesday held that inks and processing material used in printing of lottery tickets are liable to be taxed under Section 3F(1)(b) of the Uttar Pradesh Trade Tax Act, 1948. So saying, it dismissed a petition by Aristo Printers Pvt. Ltd. against an order of the commissioner of trade tax, Lucknow, to levy the tax on the value of ink and processing material used by the petitioner to print lottery tickets.

 

The court said that to sustain a levy of trade tax under the 1948 Act, three conditions must be met--there must be a works contract, the goods should have been used in the execution of the works contract, and the property in those goods must be transferred to a third party either as goods or in some other form.

 

It noted the petitioner's admission that the contract for printing lottery tickets was a "works contract". Further, it said it was clear that the inks, chemicals, and other processing material were used in the printing of the tickets. Besides, there was a transfer of property in the inks and chemicals used in the printing of the tickets, it said. The works contract in this instance was for printing of lottery tickets and "the works" refers to the final, tangible, printed tickets, it added.

 

"The taxable event, or the 'deemed sale', occurs at the precise moment the ink is applied to the paper," a bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan said. "This act constitutes 'incorporation in the works', as the ink and the chemicals (with which the ink is mixed) are involved in the execution of the works contract and become a part of the lottery ticket." In this process, there is a tangible transfer of the diluted ink, a composite good comprising both the ink and the processing chemicals, the bench said. It further said all three conditions required to sustain a levy of tax under Section 3F(1)(b) of the 1948 Act were fulfilled. 

 

Aristo Printers was engaged in the business of printing lottery tickets for some parties. It would undertake the work of printing on paper supplied to it by the parties. The inks and processing material, including the necessary chemicals used in the process of printing, were procured by the appellant company. In 1999, the tax officer levied trade tax on the value of ink, processing material, and packing material used by Aristo Printers to execute the printing work for the assessment years 1996-97 (Apr-Mar) and 1997-98.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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