1. Facts of the Case
- Mr. A is a publisher of a newspaper.
- He prints and distributes newspapers to subscribers and vendors.
- Not all newspapers are sold; some remain unsold at the end of the day.
- These unsold copies are sold as waste paper (scrap) in bulk.
- The issue arises whether such sale of unsold newspaper copies as waste is liable to VAT under the applicable tax laws.
2. Issues in the Case
- Is the sale of unsold newspapers as waste paper considered a taxable sale of goods under VAT law?
- Do newspapers or waste paper fall under any exempted category under VAT schedules?
- Is the character of goods changed from being printed newspapers (exempt) to waste paper (taxable) upon being unsold?
3. Legal Principles Covered to Support Case Proceedings and Judgements
A. Definition of ‘Goods’ and ‘Sale’ under VAT
- Under VAT laws, “goods” includes every kind of movable property.
- “Sale” includes transfer of property in goods for consideration.
- Therefore, sale of waste paper qualifies as a sale of goods under VAT.
B. Exemption for Newspapers
- Printed newspapers are generally exempt from VAT under state VAT schedules, as per their classification under the First Schedule (Exempted Goods).
- However, this exemption applies only to newspapers sold as such (i.e., for reading purposes).
C. Nature of Waste Paper
- Once newspapers remain unsold, and are sold as scrap or waste, they are not sold as newspapers, but as waste paper.
- Waste paper is distinct in nature and not covered under the newspaper exemption.
- Most state VAT laws do not provide an exemption for sale of waste paper, making it taxable.
D. Judicial Precedents
- Courts have held in various cases (e.g., Commissioner of Sales Tax vs. Bharat Newspaper Ltd.) that: “Sale of waste paper is not the same as sale of newspaper and is liable to tax unless specifically exempted.”
- The sale of unsold newspapers as waste has been treated as sale of scrap, thus falling under taxable turnover.
4. Possible Judgement
Based on the facts and legal principles:
- The sale of unsold newspapers as waste paper by Mr. A is a separate commercial activity distinct from the business of publishing.
- While newspapers are exempt from VAT, waste paper is not, unless there is a specific exemption in the respective state VAT schedule.
- Since the nature of the goods sold is not “newspapers” but “waste paper”, VAT is applicable on the sale of such scrap.
- Mr. A is liable to pay VAT on the turnover arising from the sale of unsold copies treated as waste.
