Real nature of the bargain controls tax treatment of printed job work, with completed articles treated as sales rather than paper alone.

Printed-to-order job work under the U.P. Sales Tax Act was analysed by the real nature of the bargain: where the completed article itself was sold, the transaction was treated as a sale of the finished product and not merely of paper. On that basis, receipt books, registers, forms, visiting cards and handbills printed to order were regarded as taxable sales of completed articles, while letter heads were treated differently because writing paper with a printed heading remained paper and fell within the paper exemption. If paper was first sold in a separate transaction and printing or binding followed under a distinct contract, the paper sale would remain exempt. The substance of the contract, not the material alone, controlled classification.

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Issues: Whether printed-to-order job work such as receipt books, registers, forms, letter heads, visiting cards and handbills was assessable to sales tax under the U.P. Sales Tax Act, and whether the exemption for paper covered those transactions or the underlying contracts were merely contracts for work and labour.

Analysis: The decisive question was what was sold in each transaction. Paper as a material was exempted by the relevant notifications, but exemption depended on the character of the sale. Where the completed articles were sold as such, the transaction was a sale of the article and not merely of paper. On that approach, receipt books, registers, forms, visiting cards and handbills printed to order were treated as sales of the completed articles, not sales of paper. Letter heads stood on a different footing because writing paper with a printed heading remained paper sold for writing or printing purposes and therefore fell within the exemption. The Court also distinguished between a single composite transaction and two separate contracts. If the paper was first sold and thereafter printing or binding was done under a distinct contract, the paper transaction would be exempt. Applying the test of the substance of the bargain, the Court held that even on a single contract the orders were contracts of sale and not merely contracts for work and labour.

Conclusion: The answer was in the negative for letter heads, in the affirmative for visiting cards, and in the affirmative for receipt books, registers, forms and handbills where the sale was of the completed articles; if, however, the paper sale was a separate transaction from the printing or binding work, exemption would apply to the paper sale. The transactions were not confined to contracts for work and labour.

Ratio Decidendi: In determining taxability of printed articles, the real nature of the bargain controls: a sale of a completed article is not transformed into a sale of paper merely because paper is its material, and a contract is one of sale rather than work and labour where its substance is the production of an article to be sold to the customer.

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