Specialised printing contract treated as work and labour, not sale of goods, where materials transfer is only incidental.

A transaction for specially designed printed receipt books, prepared to the customer's specifications and lacking general commercial marketability, is treated as work and labour rather than a sale of goods. The decisive factor is the dominant object of the contract: where specialised printing is undertaken under a composite job-work charge and any passing of paper or ink is merely incidental to execution, there is no transfer of a chattel as such. The Bombay HC applied the settled distinction between a contract of sale and a contract for work and labour and concluded that the supply was a works contract outside the sales tax charging provision.

---

---

Issues: Whether the supply of specially designed printed receipt books to the Electricity Board was a sale of goods liable to sales tax or a works contract outside the charging provision.

Analysis: The decisive test was the nature of the transaction and the intention of the parties. The printed books were specially prepared to the customer's specifications, had no general commercial use, were not marketable to others, and were supplied under a composite charge for job-work. Although paper and ink passed to the customer in the course of execution, such passing of property was only incidental to the printing work and not a transfer of a chattel as such. The authority applied the settled distinction between a contract for sale and a contract for work and labour, holding that where the finished product has no independent marketability and the dominant object is specialised work, the transaction is not a sale.

Conclusion: The supply was a works contract and not a sale of goods, so it was not liable to sales tax.

Ratio Decidendi: Where the dominant object of the transaction is specialised work done to the customer's specifications and the transfer of materials is merely incidental, the contract is one of work and labour, not a sale of goods.

---