1984 (6) TMI 204 - HC - VAT and Sales Tax

Summary

Issues involved: Whether photostat copies taken from a xerox machine and supplied to customers amount to sale under the Karnataka Sales Tax Act, 1957.

Summary:
The judgment of the Karnataka High Court, delivered by JAGANNATHA SHETTY, J., addressed the issue of whether supplying photostat copies from a xerox machine constitutes a sale under the Karnataka Sales Tax Act, 1957. The petitioner, the owner of a xerox machine, provided copies of documents to customers for a fee. The tax authorities assessed the turnover as taxable, considering it as a sale transaction, leading to penalty imposition under section 12-B(2) of the Act due to irregular tax payments. The petitioner's appeals were dismissed by the Commercial Tax Officer, Additional Deputy Commissioner of Commercial Taxes (Appeals), and the Appellate Tribunal.

Upon review, the Court observed that the turnover comprised charges for labor and material used in producing photostat copies. It emphasized that customers visited the xerox establishment to obtain copies of their documents, not to purchase duplicates outright. The Court cited the Supreme Court's stance that the primary object of a transaction determines its nature, distinguishing between contracts for work or service and contracts for sale. Relying on the principles outlined in Hindustan Aeronautics Ltd. v. State of Karnataka, the Court concluded that the transactions in question were contracts for work and labor, not for sale. It differentiated the case from S.R.P. Works and Ruby Press v. State of Andhra Pradesh, where specific orders were placed for printed tickets, highlighting the unique circumstances.

In light of these findings, the Court allowed the revision petitions, overturning the decisions of the lower authorities. No costs were awarded in this matter.