Composite printing contracts: confidential question-paper work treated as labour, with only paper value taxable and block-making charges excluded.

Printing question papers under contracts with educational institutions was treated as a composite arrangement involving an express sale of paper and a distinct element of work and labour. Because the confidential nature of the printing made the main object the performance of labour rather than transfer of printed goods, only the paper value was exigible to tax. The block-making charges were also excluded from taxable turnover, as the blocks were destroyed after use and no property passed to the educational institutions.

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Issues: Whether the charges for printing question papers and block-making charges under contracts with educational institutions were includible in the taxable turnover as sales, or whether the transactions were contracts of work and labour with only the paper value exigible to tax.

Analysis: The contract was treated as a composite one, containing an express sale of paper and a distinct element of work and labour. The decisive feature was the confidential nature of printing question papers, which made the main object of the arrangement the performance of labour and not the transfer of printed materials as goods. Applying the distinction between a contract for sale and a contract for work, only the paper supplied under the express sale element could form part of the taxable turnover. The block-making charges were also held not taxable because the blocks were destroyed after use and no property in them passed to the educational institutions.

Conclusion: The printing charges and block-making charges were not includible in the taxable turnover, except to the extent of the paper value.

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