The supply of additional prints of advertising films from negatives supplied by customers is a contract for work, labour and skill, not a contract for sale.

The judgment of the Court was delivered by

DR. B. P. SARAF, J. - By these references under section 61(1) of the Bombay Sales Tax Act, 1959, the Maharashtra Sales Tax Tribunal has referred the following common questions of law, which arise out of three orders passed by it in similar factual circumstances in three different cases, to this Court for opinion :

(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the supply of additional prints by the opponents to their customers from the negatives supplied by the customers was not a contract for sale but was a contract for work, labour and skill ?

(2) Whether, on the facts and in the circumstances of the case and on a correct interpretation of the provisions of the Copy Rights Act, 1957, the Tribunal was correct in its conclusion that there could be no sale of the additional prints by the opponents in favour of their customers as the customers themselves had the copy-rights in the prints ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in concluding that the finished products were not wholly owned by the opponents and, therefore, there could be no transfer of property by way of sale in the finished prints from the opponents to their customers ?

(4) Whether the Tribunal was wrong in holding that the ratio of the decision of the Supreme Court in B. C. Kame's case [1977] 39 STC 237, was applicable even in the case of additional prints ?

The following additional question has also been referred in Sales Tax Reference No. 31 of 1989 (Commissioner of Sales Tax v. Chopra Films) :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the opponents were not liable to pay purchase tax under section 13 of the Bombay Sales Tax Act, 1959, on their turnover of purchases amounting to Rs. 12,574 ?"

2. In so far as the above additional question is concerned, it is stated by Mr. A. J. Rana, learned counsel for the Revenue, that the revenue does not propose to press this question. The said question is, therefore, returned unanswered.

3. In so far as the other four questions are concerned, the learned counsel for the parties are agreed that the real controversy between the parties is brought out in question No. 1 and that being so, this Court may answer the said question only. It is not necessary to answer the other three questions. We shall, therefore, examine the facts of the case with a view to answering question No. 1 only.

4. The material facts of the three cases giving rise to the question referred to us are identical. We shall, therefore, set out the facts of one of these cases only, viz., Radio Advertising Services, who is the respondent in Sales Tax Reference No. 5 of 1989. The facts are as below :

M/s. Radio Advertising Services are producers and distributors of advertising films throughout India. They are registered as dealers under the Bombay Sales Tax Act, 1959 ("the Act"). They are engaged in (i) producing advertising films and supplying positive and negative prints thereof, and (ii) preparing positive prints in the same size from the negative brought by the customers and supplying the same to them. On 5th December, 1977 the assessee received an order from one M/s. Hindustan Thompson Associates Ltd., Bombay, for the production and supply of 75 feet of an advertising film "Halls Mentholyptus" with complete Hindi commentary which was produced and supplied by the assessee. Thereafter, on 16th February, 1978, the assessee received order from the same partly for production and supply of 550 prints of the said film. The assessee supplied 60 prints at the rate of Rs. 151 per film vide its bill dated 3rd March, 1978 of the same date. The assessee thereafter filed an application under section 52 of the Act before the Deputy Commissioner of Sales Tax for determination as to whether any tax was payable on the supply of 60 films made by it. It