The judgment of the Court was delivered by

MADON, J. - The respondents carry on the business of producing documentary films and advertisement films according to the requirements of their customers. During the period 1st January, 1960, to 18th October, 1960, the respondents made certain advertisement films. In their assessment for the said period the Sales Tax Officer held that the contracts for the production of such films and the supply of the prints thereof to the respondents' customers by the respondents were indivisible and that the said transactions were sales as defined by clause (28) of section 2 of the Bombay Sales Tax Act, 1959, and assessed the full amount payable to the respondents thereunder to sales tax. In appeal, the Assistant Commissioner of Sales Tax confirmed the view taken by the Sales Tax Officer. In second appeal to the Sales Tax Tribunal, the Tribunal held that no tax was leviable on the contracts for production of processed films between the respondents and their customers as they were works contracts and not sales and, that sales tax was leviable only on sales of prints or copies of such prints by the respondents to their customers. There was produced before the authorities and the Tribunal a contract entered into between the respondents and one of their customers, Messrs. Aiyars Advertising and Marketing, recorded in a letter dated 20th July, 1961, from the respondents to their said customers as a specimen of the contracts which the respondents entered into with their customers for the production of such films and the supply of prints and copies thereof to their customers. The said specimen contract was for production of two 100-feet advertisement films in colour, advertising a hairdressing called "Brylcream". Under the said contract the total cost provided was Rs. 66,704, which was made up of six specified items, namely, production cost, puppet sequence, language versions, 327 prints, excise duty and sales tax. The dispute between the parties is with respect to the said items of production cost and for making language versions of the film. Arising out of the judgment delivered by the Tribunal, at the instance of the Commissioner of Sales Tax, this reference had been made to us under section 61(1) of the Bombay Sales Tax Act, 1959, and the question which has been referred to us is as follows :

"Whether, on the facts and in the circumstances of the case and on a proper interpretation of the terms of the contracts between the respondents and their customers, the Tribunal was justified in law in holding that the transaction for production and supply of documentary and advertising films by the respondents to their customers in implementation of their orders was not a transaction of sale liable to tax under the Bombay Sales Tax Act, 1959 ?"

The question as framed by the Tribunal does not correctly set out what the Tribunal decided in this case. The Tribunal held that the document embodying the contract between the parties really contained two contracts, one for the production of the processed films as per the terms of the contract and the other for the supply of the required prints of such films, and that the first part, namely, the production of the processed films was a works contract and was not taxable, while the other part, which was the supply of required prints of such processed films and copies thereof, was a sale of goods and therefore taxable, a position not disputed by the respondents. Accordingly, we reframe the question submitted to us by the Tribunal as follows :

"Whether, on the facts and in the circumstances of the case and on a proper interpretation of the terms of the contractors between the respondents and their customers, the Tribunal was justified in law in holding that the said contracts were divisible contracts consisting of two parts, one for the production of processed films and the other for the supply of prints and copies, and that the contracts of processed films were no