Composite contract for printed materials: separate paper and printing charges did not prove divisibility, so full consideration was taxable.

A contract for supply of printed materials was treated as indivisible where the real bargain showed paper and printing formed one composite transaction. Separate entries in receipts for paper and printing charges were held insufficient, by themselves, to prove a divisible agreement. In the absence of reliable evidence of a distinct arrangement under which paper was separately supplied and printing was only labour work, the dealer's use of paper from its own stock supported the composite character of the supply. The entire consideration for the printed goods was therefore taxable as the sale value of the finished materials.

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Issues: Whether the contract for supply of printed materials was an indivisible composite contract so that sales tax was payable on the entire charges, or whether separate mention of paper and printing charges showed a divisible agreement taxable only on the paper component.

Analysis: The decisive question was the real nature of the bargain when the order was placed. Separate entries in receipts for paper and printing charges were not enough by themselves to establish a divisible contract. The record did not show any reliable agreement that paper was to be separately supplied and that printing was merely labour work. On the contrary, the materials indicated that the dealer supplied paper from his own stock and got the printed material prepared according to customer orders. In the absence of proof of a separate arrangement for paper, the transaction retained its composite character.

Conclusion: The contract was indivisible and sales tax was payable on the entire charges.

Final Conclusion: The reference was answered in favour of the Revenue, and the whole consideration for the printed materials formed part of the taxable sale value.

Ratio Decidendi: Where a contract for printed materials is composite and no reliable evidence proves a separate bargain for supply of paper, the entire consideration is taxable as the sale price of the finished goods.

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