IMPORTANT POINT
The making of photostat copies with the use of a xerox or other machine and delivering the copies so taken to the customer on receipt of payment does not amount to a sale of goods exigible to tax under the Tamil Nadu General Sales Tax Act, 1959.

ORDER

The appellant runs a photocopying business. It has been assessed to sales tax for the Assessment Year 1978-79 (in Civil Appeal No.5339/92) and the Assessment Year 1979-80 (in Civil Appeal No.2672/92) on the basis that there was a sale by it of the photocopied or xeroxed document to the customer. The question that we are concerned with, therefore, is whether the making of photostat copies with the use of a xerox or other machine and delivering the copies so taken to the customer on receipt of payment amounts to a sale of goods exigible to tax under the Tamil Nadu General Sales Tax Act, 1959.

2. Section 2(n) of the Tamil Nadu General Sales Tax Act, 1959 read as under at the relevant time :

" Sale with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge."

3. It is the case of the appellant that no sales tax is involved in that the contract that he enters into with the customer is only a works contract. It is the case of the respondents that the contract is of sale of the photocopies.

4. The Karnataka High Court, in B. Girija and Anr. v. State of Karnataka1, considered the question that arises in these appeals and observed that the turnover of the assessee was made up of amounts collected from customers as labour charges towards developing and printing of photostat copies and the cost of the material used for taking such copies. It was a matter of common experience that persons went to a xerox establishment not with a view to buy duplicates of their documents but to get copies made of their documents. It was no less true in the case of the assessee. The assessee utilised her own papers and ink and, by the use of the xerox machine, turned out copies of documents brought to her. The assessee charged for the service rendered in addition to the cost of the material used. On these facts, it had to be found what the primary object of the transaction was and the intention of the parties, namely, whether it was a contract purely of work or service or a contract of sale. The High Court noticed the decision of this Court in Hindustan Aeronautics Ltd. v. State of Karnataka2, wherein it was held :

"......Mere passing of property in an article or commodity during the course of performance of the transaction in question does not render the transaction to be transaction of sale. Even in a contract purely of work or service, it is possible that articles may have to be used by the person executing the work, and property in such articles or materials may pass to the other party. That would not necessarily convert the contract into one of sale of those materials. In every case, the court would have to find out what was the primary object of the transaction and the intention of the parties while entering into it......."

As has been noticed, the High Court stated that no person went to the assessee for buying duplicates of his documents. He went to ask whether he could get xerox copies of his documents. The assessee undertook to get the documents duplicated and collected a certain charge. This was essentially a contract of work or labour or service and not a contract of sale. The distinction had been explained in the Hindustan Aeronautics s case (supra) thus :

".....A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where however the main object of work undertaken by the payee of the price was not the transfer of chattel qua chattel, the contract is one of work and labour. The test is, whether or not the work and labour bestowed and in anything that can properly become the subject of sale; neither the ownership of the materials, nor the value of the skill and labour as compared with the value of the materials, in co