Photostat copying is a work-and-labour service, not a taxable sale, where the customer seeks the service itself.

Supply of photostat copies through a xerox machine was treated as a contract for work and labour or service, not a sale taxable under the Karnataka Sales Tax Act, because the customers primarily sought copying work and not the purchase of paper or ink as chattels. Applying the test of the primary object and intention of the parties, the court held that mere transfer of materials used in the process did not convert the service into a sale. The assessment was therefore not sustainable, and the penalty under section 12-B(2) also could not stand.

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Issues: Whether the supply of photostat copies made with the petitioner's xerox machine amounted to a sale taxable under the Karnataka Sales Tax Act, 1957, and whether the penalty levied under section 12-B(2) was sustainable.

Analysis: The decisive question was the true nature of the transaction. The customers did not go to the establishment to purchase duplicate documents as chattels; they went to obtain copies of their documents through the petitioner's skill, labour, materials, and machine. Applying the settled test that the court must find the primary object of the transaction and the intention of the parties, the transaction was held to be one of work and labour or service. Mere passing of paper and ink used in the process did not convert the service into a sale. The authorities below, therefore, were not justified in treating the turnover as taxable sales turnover.

Conclusion: The transaction was not a contract of sale but a contract of work and labour or service, and the assessment and penalty could not stand.

Final Conclusion: The revision petitions succeeded and the orders of the authorities below were set aside.

Ratio Decidendi: A transaction is not a sale merely because materials used in performing a service pass to the customer; where the primary object is the rendering of work and labour or service, the contract is not taxable as a sale.

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