LexMIS. EVEREST COPIERS THROUGH R.A. PARTNER ETC. versus STATE OF TAMIL NADU
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MIS. EVEREST COPIERS THROUGH R.A. PARTNER ETC.
A
v.
STATE OF TAMIL NADU
JULY 25, 1996
[S.P. BHARUCHA AND K.T. THOMAS, JJ.]
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Tamil Nadu Ge11eral Sales Tax Act, 1959: Sectio11 2(11).
Sales Ta:i.-Sa/e !11gredie11ts of-Work or Seivice co11tract and co11tract
of sa/.,-Disti11ctio11 betwee11-Maki11g Photostat copies with use of a xerox or C
other machi11e--Deli1•e1y of copies to customers 011 payme11t-Levy of sales
tax-Chal/e11ge--Held the object of the w01k u11dC11ake11 by the operator of
xerox machi11e is 11ot the tra11sfer of pape1~17ie purpose is to make a xerox
copy for which the customer pays p1ice--171e paper upon which duplication
takes place is only incidental to the transactio1t-Object of payment is to get
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the docunzent duplicated and not to receive the pape~Held it is a contract
of work or service and not a contract of sale-Held not exigible to sales tax.
B. Gi1ija and Anr. v. State of Kamataka, (1984) 56 STC 297, approved.
Hi11dusta11 Aeronautics Ltd. v. State of Kamataka, (1984) 55 STC 314 E
= [1984) 2 SCR 248, referred to.
Assistant Sales Tax Officer & Ors. v. B.C. Kame, (1977) 39 STC 237
= (1977) 2 SCR 435, relied on.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2672 of F
1992 Etc.
From the Judgment and Order dated 12.11.91 of the Madras High
Court in T.C. No. 1416 of 1982.
T.L. Viswantha Iyer and R. Mohan, Ms. Indu Malhotra, V. Balaji, G
P.N. Ramalingam, V. Balachandran, A. Subba Rao, V. Krishnamurthy, T.
Harish Kumar and A. Mariarputham for the appearing parties.
The following Order of the Court was delivered :
The appellant runs a photocopying business. It has been assessed to H
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SUPREME COURT REPORTS (1996] SUPP. 4 S.C.R.
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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 photoslat copies with the use of a xerox or other
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machine and delivering the copies so taken to the customer on receipt of
payment amounts to a sale of goods exigible to lax under the Tamil Nadu
General Sales Tax Act, 1959.
Section 2(n) of the Tamil Nadu General Sales Tax Act, 1959 read as
under at the relevant time :
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~ale' \Vith all its grammatical variations and cognate expressions
means every transfer of the property in goods by 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."
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.
The Karnataka High Court, in B. Girija and Anr. v. State of Kar-
nataka, {1984) 56 STC 297, considered the question that arises in these
appeals and observed that the turnover of the assessee WdS 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
G 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 Kamataka, (1984) 55 STC 314 = (1984) 2 SCR
H 248, wherein it was held :
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EVEREST COPIERS v. STATE
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" ........ Mere passing of property in an article or commodity during A
. 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 Excerpt shown. Read the full judgment & AI analysis in Lexace.