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The fact, that the assessee is within the ambit of Section 194C is further strengthened by the decision of Pune Bench of Tribunal. Learned Tribunal has opined in BDA Ltd. v. ITO (supra) that supply of printed material as per specification supplied by the buyer is not a sale but a work contract. In this case, buyer who was dealing in the liquor placed orders for supply of labels as per specifications and printing as instructed was required to be done on. the labels, whose size, design, and other specifications were supplied by the buyer. It was held that the contract is a. works contract and not a contract for sale because the principal object of the buyer was to get the material printed as per the prescribed specifications and not to purchase printed material as available in the market and in case printing of labels if not done strictly in accordance with the specifications supplied by the buyer, neither that material could be used by the buyer nor the supplier of the label could use the same for any other purposes. Elaborating the reasons for the judgment the Tribunal held that the intention of the parties was most material. It held that such printed labels were not standard goods and were not capable of any use to anyone else and, thus, had no commercial value.

It is asserted that the Board Circular No. 715, dt. 8th Aug., 1995 (supra) is not at all applicable to the appellant-company because no printing contract is involved. On the other hand reliance is placed on Board Circular No. 681, dt. 8th March, 1991 (supra), wherein it is stated that where the contractor undertakes to supply any article or thing fabricated according to the specifications given by Government or any other specified person and the property in such article or thing passes to the Government or such person only after such article or thing is delivered, the contract will be a contract for sale and as such outside the purview of Section 194C. It is explained that the term "carrying out" in the said section suggests executing the contract rather than a transfer of goods or a mere supply or sale of goods. If a person engages services of another and gives a job to manufacture goods or articles and for the purpose supplies him raw material it could be a case of contract of work. In such cases, the provisions of Section 194C would undoubtedly be applicable. But, if on other hand, a manufacturer, on his own purchases material and manufactures product which he sells to the assessee, and it may be that such product be customer specific, it is still a case of sale and not carrying out of any work. In such sale which is customer specific, the fact that the goods manufactured are according to the requirement of the customer does not mean or imply that any work has been carried out on behalf of the contractee. A distinction between a sale and work contract is very significant particularly under the sales-tax laws.

The priming work was not being carried out in the premises of the assessee. This supply of printed labels cannot be compared and equated with the supply of printed question papers to the universities and educational institutions. M/s Mudramka would not print such labels with the specifications of the assessee beyond the quantity specified in the purchase order, and therefore, it was wrong on the part of the Tribunal to hold that, the printed by M/s Mudranika to supply to the assessee could not be sold to any other establishment in the market. This finding regarding no market ability is based on a fallacious premise that, M/s Mudranika was printing unlimited number of labels, When the printing work was being carried in the premises of M/s Mudranika, though as per the specifications of the assessee, the supply was limited to the quantity specified in the purchase order and it would not do such printing beyond the numbers specified in the same. There is nothing on record to show that, all other ancillary costs like the labels, ink, papers, screen-printing, screens, etc. were being supplied by the assessee to M/s Mudranika. In the fact of this case, the supply of printed labels by M/s Mudranika to the assessee was a 'contract of sale' and it could not be termed as a "works contract". The Tribunal has rightly held in the case of Wadilal Dairy International Ltd., (supra) that, supply of printed packing labels accounted to a "sale contract" and not a "works contract" and the same ratio is applicable in the instant case, as well. The single Bench of the Tribunal thus fell in gross error in holding that subject transaction was a "works contract" and, therefore, TDS was required to be deducted by the assessee under Section 194C of the Act.

Where, however, the contractor undertakes to supply any article or thing fabricated according to the specifications given by Government or any other specified person and the property in such article or thing passes to the Government or such person only after such article or thing is delivered, the contract will be a contract for sale and as such outside the purview of this section.

11. We have considered the facts of the case. The AO mainly relied upon the decision in the case of BDA Ltd. v. ITO (supra), where it has been held that supply of printed material as per specification supplied by the buyer is not a sale but a work contract. The said decision has been decided against the Revenue by the Hon'ble Bombay High Court as pointed out by the counsel of the assessee. The AO has relied upon Circular No. 715, dt. 8th Aug., 1995, where the CBDT has given the answer in affirmative to the question whether Section 194C would apply in respect of supply of printed material as per prescribed provisions. The said circular is for printing contract. The counsel for the assessee has also pointed out Circular No. 681, Clause (vi.) Sub-clause (b) where it has been clarified by CBDT in view of judgment in case of Associated Cement Co. Ltd. v. CIT (supra) that where however the contractor undertakes to supply any article or thing fabricated according to the specifications given by the Government or any other specified person and the property in such article or thing passes to the Government or such person only after such article or thing is delivered,, the contract will be a contract for sale and, as such, outside the purview of this section i.e., Section 194C of IT Act.