October 8, 2025

In a striking decision, the Supreme Court on Tuesday confirmed that the inks and chemicals used to print lottery tickets attract trade tax under Section 3F(1)(b) of the Uttar Pradesh Trade Tax Act, 1948. The case involved Aristo Printers, a company that prints lottery tickets using paper supplied by others but inks and processing materials bought by themselves. The apex court outlined that three strict conditions must be met to levy trade tax under this law. First, there should be a works contract. Second, the goods in question (here inks and chemicals) must be used during the execution of this contract. Third, the ownership of these goods must be transferred to a third party in some form. In this matter, the 'works contract' refers to the printing of lottery tickets, and "the works" means the final, physical printed tickets. The Bench led by Justice JB Pardiwala explained vividly, "The taxable event, or the 'deemed sale,' occurs at the precise moment the ink is applied to the paper." This moment is key because the ink and chemicals are mixed and become part of the lottery ticket. There is a real, tangible transfer of this composite good—the diluted ink along with the processing chemicals. The court found that all three conditions for taxing under Section 3F(1)(b) were perfectly fulfilled. The history goes back to 1999, when the tax officer demanded trade tax on the value of inks, processing, and packing materials for the financial years 1996-97 and 1997-98. Aristo Printers challenged this tax demand but the Supreme Court rejected their appeal. This ruling sends a clear message: when it comes to printing lottery tickets, every drop of ink and every chemical in the process is part of the taxable work, making firms like Aristo Printers liable to pay trade tax. No shortcuts here!

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Tags: Supreme court, Trade tax, Lottery tickets, Uttar pradesh, Aristo printers, Works contract,