Supreme Court upholds taxability of ink and processing materials in printing lottery tickets

Case Name: M/s. Aristo Printers Pvt. Ltd. v. Commissioner of Trade Tax, Lucknow, U.P.
Date of Judgment: October 07, 2025
Citation: 2025 INSC 1188, Civil Appeal Nos. 703 & 705 of 2012 (arising out of SLP (C) Nos. 15476 and 15478 of 2011)
Bench: Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Mr. Justice K.V. Viswanathan.

Held: The Supreme Court dismissed the assessee’s appeals and upheld levy of trade tax on ink, chemicals, and other processing materials used to print lottery tickets, holding that these are not mere consumables but are transferred in tangible form to the printed tickets; the tax is on goods involved in execution of the works contract under Section 3F(1)(b) of the Uttar Pradesh Trade Tax Act, 1948, not on the lottery tickets themselves (which are actionable claims).

Summary: The assessee printed lottery tickets on paper supplied by clients, procuring ink and processing chemicals itself. The assessing authority taxed the value of ink and chemicals under Section 3F; the first appellate authority and Tribunal removed this levy; the High Court restored it on the basis that diluted ink (ink + chemicals) is passed onto the printed paper. Before the Supreme Court, the assessee argued lottery tickets are actionable claims and that ink/chemicals are consumed, so no property is transferred; the State maintained printing is a works contract and diluted ink becomes part of the ticket. Tracing the works-contract framework post the Forty-Sixth Amendment and decisions such as Gannon Dunkerley, Builders Association, and Larsen & Toubro, the Court reiterated that indivisible contracts are bifurcated by legal fiction into goods and services; here, ink and chemicals are goods involved in execution and their property transfers “in some other form” upon incorporation into the printed ticket.

Decision: The Court held the dispositive test under Section 3F(1)(b) is whether property in goods transfers—either as goods or in another form—during execution of the works contract. On facts, the diluted ink (ink plus chemicals) incorporates into the ticket at the moment of printing, amounting to a deemed sale; therefore trade tax applies. The Allahabad High Court’s view was affirmed and the assessee’s appeals were dismissed.