N.D Ojha, J.:— These two revisions under section 11(1) of the U.P Sales Tax Act (hereinafter referred to as the Act) have been filed by the Commissioner of Sales Tax, U.P, against the order dated 20th October, 1982, passed by the Sales Tax Tribunal, Agra Bench, Agra, allowing the opposite party's second Appeal No. 974 of 1981 in respect of the year 1973-74 and holding it non-taxable during that year as also allowing its second Appeal No. 975 of 1981 and remanding the case back to the Sales Tax Officer in respect of the year 1974-75.

2. The opposite party is a printing press and deals in paper and printing materials, etc. The opposite party during the years in question supplied printed letter pads, vouchers and bills, etc., to its customers as is apparent from the assessment order passed by the Sales Tax Officer in respect of the aforesaid years. A question arose before the authorities below as to whether the sale proceeds of the printed materials referred to above were taxable under the Act or not. It was admitted by the opposite party that the paper on which the aforesaid materials were printed was supplied by the opposite party itself and not by the customers. The case of the opposite party was that the paper used in printing the aforesaid materials was locally purchased and was not imported. It was nobody's case that the opposite party was a manufacturer of the paper.

3. Notification No. ST-II-332.X-1012-1971 dated 15th November, 1971, issued by the Governor in exercise of the powers under clause (a) of sub-section (1) of section 3-A of the Act read with section 21 of the General Clauses Act, 1904, contain “paper of all kinds including hand-made paper, whether meant for writing, printing, copying, packing or for any other purpose” at item No. 68. The point at which the tax is levied on this item is sale by the manufacturer in Uttar Pradesh or importer in Uttar Pradesh. It was urged on behalf of the opposite party that it, not being either manufacturer of the paper on which the aforesaid materials were printed or importer in Uttar Pradesh thereof, was not liable to pay any tax on the sale of the locally purchased paper. The Sales Tax Officer, however, took the view that what was sold by the opposite party was not paper but printed material which constituted a commodity other than paper and the sale proceeds of the printed materials were liable to be taxed under the category of unspecified goods. The opposite party admittedly did not produce any books of account and the Sales Tax Officer on the view that the sale proceeds of the printed materials mentioned above were liable to tax made best judgment assessment in respect of both the years, i.e, 1973-74 and 1974-75. The opposite party preferred two appeals before the Assistant Commissioner (J). One of the printed materials sold by the opposite party during the year 1974-75 was a magazine printed and supplied to the Kedar Nath Saksaria Girls Inter College, Agra. The sale proceeds of the magazine were held to be non-taxable. In regard to the remaining items, however, the Assistant Commissioner (J) upheld the order of the Sales Tax Officer but made certain reduction in the amount of the tax payable by the opposite party in respect of both the years mentioned above. The two second appeals filed by the opposite party were decided by the Sales Tax Tribunal by its order dated 20th October, 1982, under revision in the manner stated above. The Tribunal relying on the decision of a learned single Judge of this Court in Shikshak Bandhu Karyalaya v. Commissioner of Sales Tax (printed at page 313 infra), 1980 UPTC 610 held in respect of the year 1973-74 that the opposite party was not liable to be taxed during the year.

4. It also held that the paper used for printing various materials referred to above by the opposite party during the year 1973-74 had been locally purchased by it. In regard to the year 1974-75 the Tribunal, however, held that the opposite party had failed to produce any such evidence which may indicate that the paper used by it during that year was locally purchased. On this view the matter was remanded to the Sales Tax Officer with a direction to re-examine the case.

5. It has been urged by the standing counsel appearing for the applicant that the decision of this Court in the case of Shikshak Bandhu Karyalaya (printed at page 313 infra), 1980 UPTC 610 relied on by the Tribunal was clearly distinguishable and it has committed an error of law in allowing the second appeals preferred by the opposite party. Counsel for the opposite party on the other hand has urged that the view taken by the Tribunal was in conformity with the decision relied on by it. According to him the said decision was not distinguishable and that a similar view had been taken by some other learned single Judges also. These decisions will be considered at their appropriate places.

6. In The Kanpur Journals Ltd. v. Commissioner Of Sales Tax, U.P, [1956] 7 STC 661, the assessees were publishers and printers and in the course of their business as printers they accepted orders from customers for job-work such as receipt books, registers, forms, letter heads, visiting cards and handbills which were printed in accordance with the requirements of their customers on paper supplied by the assessee. The question which came up for consideration before a Division Bench of this Court in that case was “whether the turnover of receipt books, registers, forms, letter heads, visiting cards and handbills printed to order when all materials—paper, ink, etc., are supplied by the presses is assessable to sales tax?”. “Paper meant for writing and printing” was exempted from sales tax under a notification issued in this behalf. The question which was argued before the Division Bench was as to whether each of the items referred to above was paper within the meaning of the relevant notification. It was held that the fact that each of those items consisted of paper was not conclusive and the question which had to be answered was what was being sold? After pointing out that the purchase by a practising lawyer of the latest edition of Mulla's Transfer of Property Act would not be described by anyone as a purchase of a paper, but of a book, but the sale of an obsolete edition of the same work might be merely the sale of waste paper, it was held that the sale of receipt books, registers, forms, visiting cards and handbills which have been made or printed to the order of the customer was a sale of those articles as such and not a sale of paper. The sale of letter heads, by which was meant writing paper with a printed heading, was however, held to stand on a different footing. According to the Division Bench the sale of letter heads was the sale of paper. In this connection it was further held that the meaning of the phrase “paper meant for writing and printing” by itself was sufficiently clear. It meant paper which was sold for the purpose of being used as a medium for written or printed matter and that it would not be material that the paper at the time of the sale and had some printed or written matter on it provided that such paper could ordinarily be used for writing or printing purposes. The Bench further pointed out:

“There can we think be no doubt that if the purchase of the paper and the labour expended thereon of printing and binding are the subject of distinct contracts then the proceeds of the sales of the paper (subject to the meaning of the qualifying words ‘meant for printing or writing’ in the second notification) are exempt from sales tax. Whether there is one transaction or two can be determined only on an examination of the circumstances of each case. If the paper is purchased from a stationer and thereafter delivered to the printer for work to be done thereon no difficulty is likely to arise, but the position in law is in no way different if the printer holds stocks of paper and the purchase is made from him. The contract of sale becomes complete when the property in the paper is transferred from the seller to the buyer, and in the case of ascertained goods the property therein is transferred to the buyer when the parties intend it to be transferred. How that intention is to be ascertained is laid down in sections 19 and 24 of the Indian Sale of Goods Act. The problem of determining when the property in the paper passed to the customer may not be an easy matter, but we think a useful test question is, on whom will the loss fall if the paper is destroyed by fire while in the hands of the printer?”

7. In regard to the argument of the assessee's counsel that even if the transaction be one transaction the orders placed by the customers for job-work were not contracts for sale of goods at all but were contract for work and labour and were, therefore, outside the ambit of the Act, it was held:

“We think this argument to be misconceived. We think it now to be established that in order to determine the nature of a contract the court has to look at its substance. If the substance of the contract is the production of something to be sold to the customer—such as a suit of clothes—then that is a sale of goods. If, on the other hand, the substance of the contract is that skill and labour have to be exercised for the production of the article, and that it is only ancilliary to that that there will pass to the customer some materials in addition to the skill involved—as in the case of an oil painting—the contract will be one of work. This was so laid down in Robinson v. Graves, [1935] 1 KB 579 where the earlier cases including Clay v. Yates, 25 LJ Ex 237 relied upon by the assessees were considered. Applying this test, and assuming that there be only a single contract, we can entertain no doubt that they were contracts of sale.”

8. The answers to the question referred to the Division Bench in that case was given in the affirmatives as regards visiting cards and in the negative as regards letter heads. As regards receipt books, registers, forms and handbills the answer was in the affirmative if the sale was of those articles as such; it was in the negative if the sale of the paper of which such goods were composed was a transaction separate from the work of binding and/or printing.

9. In Sardar Printing Works v. Sales Tax Commissioner, [1958] 9 STC 75, the assessee who was a job printer sold stationeries to its customers. It was contended on behalf of the assessee that it issued separate cash and credit memos for papers and printing charges and this indicated the existence of two distinct contracts, one for the sale of paper and the other for printing. It was held by a Division Bench of the Madhya Pradesh High Court that in the absence of evidence to prove that the customers in fact entered into the two transactions with the assessee, it was not open to him to assail the finding of the fact arrived at by the taxing authorities that the supply of paper and printing was but one transaction. It was further held that the stationeries sold by a printer to his customers are “goods” within the meaning of the Madhya Bharat Sales Tax Act, 1950, and when a printer brings into existence printed stationery to the order of individual customer, he produces a commercial commodity which is capable of being sold or supplied. The printer in such a case is a manufacturer and when the printed material is sold to the customers, there is a sale of the finished goods to the customers. It was further held that it was not correct to say that the essential character of the work was the printing and not the supply of stationery and that in executing the printing work the paper came into existence and became the property of the client or customer only incidentally. It was pointed out that when a printer accepts orders from his customers for job-works, such as receipt books, registers, forms, letter heads, etc., and prints them in accordance with the requirements of his customers on paper supplied by the printer himself, the orders placed by the customers for such job-works are contracts for sale of goods and not contracts for work and labour.

10. In Saraswati Printing Press v. Commissioner of Sales Tax, [1959] 10 STC 286 a Division Bench of the Bombay High Court held that where the petitioner-press itself purchased the stationery and did printing work upon it according to the orders of individual customers and supplied the printed stationery to the customers the petitioners produced a commercial commodity which was capable of being sold or supplied and when the petitioner sold the printed stationery to its customers, it sold goods to the customers upon which sales tax was leviable. It was further held that the transactions done by the petitioner-press were not in the nature of works contracts but were sales of goods.

11. In State of Andhra Pradesh v. Krishna Power Press, [1960] 11 STC 498 a Division Bench of the Andhra Pradesh High Court held that where the assessee-press itself purchased stationery and did printing work upon it according to the orders of individual customers and supplied the printed stationery to the customers at an agreed price the transactions were sales liable to sales tax and not works contracts. The fact that the goods prepared by the assessee could not be exhibited for sale to the general public is not decisive of the matter: The only test is whether the contract is for the sale of finished products.

12. In Government of Andhra Pradesh v. Guntur Tobacco Ltd., [1965] 16 STC 240 (SC) it was held by the Supreme Court:

“The fact that in the execution of a contract for work some materials are used and property in the goods so used passes to the other party, the contractor undertaking to do the work will not necessarily be deemed on that account to sell the materials. A contract for work in the execution of which goods are used may take one of three forms. The contract may be for work to be done for remuneration and for supply of materials used in the execution of the works for a price; it may be a contract for work in which the use of materials is accessory or incidental to the execution of the work; or it may be a contract for work and use or supply of materials though not accessory to the execution of the contract is voluntary dr gratuitous. In the last class there is no sale because though property passes it does not pass for a price. Whether a contract is of the first or the second class must depend upon the circumstances; if it is of the first, it is a composite contract for work and sale of goods; where it is of the second category, it is a contract for execution of work not involving sale of goods.

It is true that in business transactions the works contracts are frequently not recorded in writing setting, out all the covenants and conditions thereof, and the terms and incidents of the contracts have to be gathered from the evidence and attendant circumstances. The question in each case is one about the true agreement between the parties and the terms of the agreement must be deduced from a review of all the attendant circumstances. But one fundamental fact has to be borne in mind that from the mere passing of title to goods either as integral part of or independent of goods it cannot be inferred that the goods were agreed to be sold, and the price was liable to sales tax.”

13. It was further held:

“Whether a contract for service or for execution of work, involves a taxable sale of goods must be decided on the facts and circumstances of the case. The burden in such a case lies upon the taxing authorities to show that there was a taxable sale, and that burden is not discharged by merely showing that property in goods which belonged to the party performing service or executing the contract stands transferred to the other party.”

14. In State of Orissa v. Ramanath Panda, [1971] 27 STC 98 a Division Bench of the Orissa High Court held that in the case of an assessee, a printer supplying printed materials, where the customers supply paper and the assessee does nothing except printing on it, the contract is one of labour and there is no sale. Where the customer enters into an agreement that he would separately pay for the paper and the assessee would merely print on it, then also there is no sale. Where the customer does not enter into any separate agreement but merely asks the assessee to supply the printed materials, the contract is indivisible and the supply of printed materials is a sale liable to sales tax. In such a case charging separately for the paper and printing in the bill issued to the customer does not alter the essential character of the agreement, which is for the purchase of printed materials.

15. In S.R.P Works and Ruby Press v. State of A.P, [1972] 30 STC 195 a Division Bench of the Andhra Pradesh High Court after referring to its earlier decision in the case of Krishna Power Press, [1960] 11 STC 498 held that the petitioner, which was running a printing press, supplied cinema tickets printed on paper of different colours to the customers in pursuance of orders giving specifications having been placed in this behalf had done so in pursuance of a contract for purchase of tickets and not for the purchase of paper and that the property in the goods passed to the customers only when the finished goods, i.e, the tickets, were delivered to the customers and not before. It was pointed out that the fact that break-up figures were given in the bills was not decisive or conclusive in determining the question whether there were two contracts—one for supply of paper and the other for printing—or whether it was a works contract or merely an order placed for supply of finished goods.

16. In Varghese v. State of Kerala, [1976] 37 STC 171 a Division Bench of the Kerala High Court after referring to the decision of the Supreme Court in the case of Guntur Tobaccos Ltd., [1965] 16 STC 240 (SC) upheld the view of the Sales Tax Tribunal based on relevant materials available to them that the sale of bill books, vouchers, receipt books, letter heads and notices was liable to be taxed as the sale of the aforesaid goods amounted to a sale of finished products. It was further held that it could not be said that printed materials such as bill books, vouchers, receipt books, letter heads, question papers and notices were mere paper or products of paper. After taking into consideration certain decisions it was also held:

“Only in respect of those goods to which title has passed as a result of contract, can it be said that the goods have been sold. Where a person buys a ‘Picasso’ or a ‘Ravi Varma’, he does not indent to buy or pay for the canvas or the paint, although canvas and paint are involved in the production of the painting, and title to such materials is transferred to him. But such transfer of title to the materials is not pursuant to any agreement for the sale of the materials as such. It would never have been in his mind to pay separately for the materials and for the labour. What the buyer buys is a finished product which is a work of art. On the other hand, when a person gets his manuscript printed as an article or a book of verses, the printer does no more than a mechanical or technical job. The printer does not create the article or the poem, but merely renders his services to print which is in the nature of a job-work. The manuscript as such is the result of the skill, industry and scholarship of the author. In such a case, there is no sale of the article or book by the printer, nor would it be possible in such a case to spell out an agreement for the sale of materials such as paper or ink, which may have been incidentally used in the production of the printed work. While the painter sells a finished product which is a work of art, quite distinct and different from the materials used in its production, the printer merely does a job-work involving no sale; one is the work of an artist who is endowed with the finer qualities of imagination and taste and the other that of an artisan who is trained as a mechanic or technician. A printer of judgments, for example, does not produce and sell them; his work is purely that of a technician. This Court has therefore held that printing of judgments is only a works contract. The work of a printer in certain Cases may involve more than printing; he may be a producer of finished articles such as bill books, vouchers and the like. When such articles are printed and sold to the cutomers, what is sold is not paper or paper products but printed materials which are finished products. Such contracts cannot be considered as contracts for the sale of paper coupled with an agreement to render service. The sale of paper had never been the subject-matter of the agreement between the parties. Like in the case of painting which is a finished product being a work of art, the bill books and vouchers are new products being printed materials; and the sale of such goods does not involve a composite contract which can be bifurcated into an agreement for the sale of goods—-be they canvas and paint or paper and ink—and an agreement for work.

In the light of the above decisions, we are of the opinion that the printed materials such as bill books or vouchers are not paper, but finished products other than paper products and as such, are liable to be taxed. In the case of question papers, as in the case of judgments, a distinction has to be drawn. The printing of question papers, in our opinion, is a contract for work and labour, for the questions as such have been prepared by persons of special learning and skill, and the printer merely puts them in print which involves work and labour. The use of materials such as paper and ink in such cases is only accessory or incidental. He does not produce and sell question papers or judgments (unlike in the case of bill books or vouchers); he merely prints what is prepared by others, as in the case of an article or a poem.”

17. The view taken by the Tribunal in the instant cases is apparently not in conformity with the law laid down in the aforesaid cases. In Shikshak Bandhu Karyalaya (printed at page 313 infra), 1980 UPTC 610 relied on by the Tribunal the question was whether printing and supplying of examination papers at fixed rates was a sale or works contract. It was held on the facts of that case the assessee was not taxable. That decision in my opinion is clearly distinguishable. It was a case of setting up of question papers, printing and supplying them to the schools who were inclined to order for the same. It was pointed out that the charges made by the assessees were not only for printing the papers but included various other items mentioned therein. It was not a case of supplying such printed materials as in the instant cases. The reasons recorded by the Kerala High Court in the case of Varghese, [1976] 37 STC 171 in regard to question papers also distinguish the aforesaid case from the instant ones.

18. Counsel for the opposite party placed reliance on Commissioner Of Sales Tax, U.P, Lucknow v. Kamta Press Press (printed at page 314 infra), 1979 UPTC 705. The facts of that case are not clear but from the answer given to the question referred it appears that it was a case where the assessee had received separate amounts towards costs of locally purchased paper and charges for printing. The question as to whether the whole transaction constituted a single contract and the sale of printed materials, was as such of finished goods does not seem to have been either argued or considered. The decision of the Division Bench of this Court in the case of Kanpur Journals Ltd., [1956] 7 STC 661 also does not appear to have been brought to the notice of the learned single Judge who decided this case.

19. Reliance was also placed by the counsel for the opposite party on Industrial and Commercial Service v. Commissioner of Sales Tax (printed at page 314 infra), 1984 UPTC 104. In that case the assessee was a dealer in diaries and books, etc. It had supplied printed labels and diaries. In regard to the printed labels the Sales Tax Officer in the assessment order had observed that the cost of one thousand labels was Rs. 3.50 out of which the price of paper was 0.75 only. On the facts of that case it was held as far as the labels were concerned that the main ingredient of the price of the labels was the labour expended in the preparation of the labels by the assessee. After referring to the decision of the Supreme Court in Assistant Sales Tax Officer v. B.C Kame, [1977] 39 STC 237 (SC) it was pointed out that the relative price of the material and the labour done on the materials was not decisive but it was a factor which was to be taken into account for judging as to whether there was a works contract or not. In regard to the diaries which were supplied by the assessee the Tribunal was required to redetermine the question as to whether the assessee could be subject to tax on the price of the diaries sold after considering inter alia the question as to whether the products supplied by the assessee were one for works and labour to be expanded on the material used or were for the sale of the diaries as such.

20. Reference was also made by the counsel for the opposite party to Agra University Press Paliwal Park v. Commissioner of Sales Tax (printed at page 317 infra), 1979 UPTC 1270 and Commissioner, Commissioner, Sales Tax, U.P v. Agra University Press Paliwal Park (printed at page 319 infra), 1981 UPTC 699. These were cases of supplying examination papers, mark-sheets and certificates, etc., along with envelopes. The arguments that the main business of the assessee was to print examination papers for the Agra and various other universities and educational institutions in India, that the entire work was of a confidential nature and utmost secrecy was required to be observed and consequently the question papers, etc., had to be sent in sealed envelopes and the packing of the examination papers in envelopes was incidental to the contract for the supply of printed examination papers was accepted. This being essentially a case of supplying printed examination papers is also distinguishable in view of the reasons given in the case of Varghese, [1976] 37 STC 171.

21. Counsel for the opposite party then placed reliance on the decision of the Supreme Court in Tungabhadra Industries Ltd., Kurnool v. Commercial Tax Officer, Kurnool, [1960] 11 STC 827 (SC) where it was held that hydrogenated groundnut oil continued to be “groundnut oil”, notwithstanding the proceedings which is merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume groundnut oil.

22. Reliance was also placed by the counsel for the opposite party on Mini Fertilizer (Pvt.) Ltd. v. Commissioner of Sales Tax, [1979] 44 STC 494 : 1979 UPTC 1063 where it was held that sulphur rolls are nothing but purified forms of rock sulphur and as such were taxable as minerals.

23. Counsel for the opposite party then brought to my notice the decision of the Supreme Court in Deputy Commissioner of Sales Tax v. Pio Food Packers, [1980] 46 STC 63 (SC) : 1980 Supp SCC 174 : AIR 1980 SC 1227 where it was held that processing of pineapple fruits into its slices for selling in sealed cans did not involve consumption of pineapples as a commodity in the process of manufacture of another commodity.

24. In my opinion all these cases are clearly distinguishable. Simply because hydrogenated groundnut oil continued to be groundnut oil or sulphur rolls continued to be rock sulphur in a purified form or that pineapple fruit has been treated at par with its slices for a particular purpose cannot constitute a ground for holding that whatever may be the nature of the printed materials, the printed material shall continue to be paper. The view which I take finds support from the decision of the Division Bench of this Court in the case of Kanpur Journals Ltd., [1956] 7 STC 661, and from the decisions of various other High Courts already referred to above.

25. Reliance was then placed by the counsel for the opposite party on Maharaja Book Depot v. State Of Gujarat , (1979) 1 SCC 295 : AIR 1979 SC 180 where it was held that the exercise books are covered by the expression “paper”. That decision also in my opinion is clearly distinguishable. There, after pointing out the dictionary meaning of the term “paper” it was held:

“In substance, therefore, paper, whether lined or blank, means a material on which writing, printing, drawing, etc., can be done. In the light of this meaning of the expression “paper” the question is whether an exercise book would be covered by that expression or not? It cannot be disputed that an exercise book is nothing but a collection of sheets of paper (blank or lined) stitched together by a piece of string or pinned together with pins of a stapler and is a substance used for writing and therefore, would clearly fall within the item ‘paper’. The test would be whether because of stitching or pinning them together such a collection of sheets loses its identity as paper. The answer must be in the negative. Looked at from this angle it is difficult to accept the contention that an exercise book is a distinct commodity other than paper.”

26. It was a case where no alteration, whatsoever, was made in the paper which could render it unfit for being used as writing paper. Indeed what has been held by the Supreme Court in this case to some extent supports the view taken by the Division Bench of this Court in the case of Kanpur Journals Ltd., [1956] 7 STC 661 in so far as letter heads are concerned.

27. Counsel for the opposite party then referred to the case of Assistant. Sales Tax Officer v. B.C Kame, [1977] 39 STC 237 (SC). In this case it was held by the Supreme Court that when a photographer undertakes to take photographs, develop the negative, or do other photographic work and thereafter supplies the prints to his client, he cannot be said to enter into a contract for sale of goods. The contract on the contrary is for use of skill and labour by the photographer to bring about a desired result. Therefore, it must be held that the photographer undertook the contract of work and labour and did not enter into a sale transaction, and was not liable to sales tax. In my opinion this decision is also clearly distinguishable on facts. It was essentially a case of use of specialised skill like the case of Robinson v. Graves, [1935] 1 KB 579 relied on by the Division Bench of this Court in the case of Kanpur Journals Ltd., [1956] 7 STC 661, where it was held that if the substance of the contract is that skill and labour have to be exercised for the production of the article, and that it is only ancilliary to that that there will pass to the customer some materials in addition to the skill involved—as in the case of an oil painting—the contract will be one of work. The instant case is not one of any such specialised skill.

28. Lastly reliance was placed by the counsel for the opposite party on a decision of the Madhya Pradesh High Court in Commissioner of Sales Tax v. Ratna Fine Arts Printing Press, [1984] 56 STC 77 : (1984) 9 STL (MP) 20. That was a case of preparation of a printed article of the subject desired by the customer which involved considerable skill and labour. What was the exact nature of the article which was produced by the assessee in that case is not clear. Counsel for the opposite party pointed out that in this case the circumstances that the articles produced by the assessee was of value to the particular customer was considered as relevant. In so far as this circumstances is concerned, it was emphasised on behalf of the assessee even in the case of B.C Kame, [1977] 39 STC 237 (SC). However, the Supreme Court did not base its decision on this circumstance but on the fact that the job of a photographer was one of skill. As already seen above a Division Bench of the Andhra Pradesh High Court in the case of Krishna Power Press, [1960] 11 STC 498, in so far as an assessee which was a printing press and supplied printed stationery is concerned, has specifically held that the fact that the goods prepared by the assessee could not be exhibited for sale to the general public was not decisive of the matter and the only test was whether the contract was for the sale of finished products.

29. At this place it may also be pointed out that while considering the decisions by the learned single Judges of this Court on which reliance was placed by the counsel for the assessee-opposite party, the following rules of precedent have to be kept in view. In the Punjab Co-operative Bank Ltd. v. Commissioner of Income-tax, AIR 1940 PC 230 relying on the observations of Lord Halsbury in Quinn v. Leathern, [1901] AC 495 it was held that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed or qualified by the particular facts of the case in which such expressions are to be found. In Kondaskar v. V.M Deshpande, (1972) 1 SCC 438 it was held that in order to appreciate the binding force of a decision, See AIR what were the facts of the case and what was the point which was to be decided. In Fateh Kunwar v. Durbijai Singh, AIR 1952 All 942 (FB) a Full Bench of this Court held that the observations of the Judges are not to be construed as words of a statute. They are always to be construed with reference to the facts of a particular case in which they were made.

30. Viewed in that light and keeping in mind the distinguishing features pointed out while discussing those cases, I am of opinion that there is nothing on principle which may be said to be in conflict with the decision of the Division Bench of this Court in the case of Kanpur Journals Ltd., [1956] 7 STC 661 which does not seem to have even been brought to the notice of the learned single Judges who decided those cases. But even if there may be some conflict I am bound to follow the decision of the Division Bench in the case of Kanpur Journals Ltd., [1956] 7 STC 661 in preference to the decisions of the learned single Judges.

31. In State of U.P v. Ram Chandra Trivedi, (1976) 4 SCC 52 : AIR 1976 SC 2547 it was held by the Supreme Court that even in cases where a High Court finds any conflict between the views expressed by larger and smaller Benches of this Court, it cannot disregard or skirt the views expressed by the larger Benches. The proper course for a High Court in such a case is to try to find out and follow the opinion expressed by larger Benches of the Supreme Court in preference to those expressed by smaller Benches of the court which practice, hardened as it has into a rule of law, is followed by the Supreme Court itself. In my opinion this salutary rule of precedent will obviously apply even where the conflict is between the views expressed by the larger and smaller Benches of a High Court.

32. As seen above, the orders of the Sales Tax Officer indicate that the printed materials which the assessee-opposite party had supplied to its customers during the relevant years and in respect of which the question of law as to whether sale of those materials is liable to tax are letter heads, vouchers and bills, etc., what other articles fall within the description “etc.”, is not clear, except that a magazine was also printed and supplied to Kedar Nath Saksaria Girls Inter College, Agra, in 1974-75 which had been held to be not taxable even by the Assistant Commissioner (J) and in respect of which no dispute has been raised before me.

33. In view of the principle of law laid down by the Division Bench of this Court in the case of Kanpur Journals Ltd., [1956] 7 STC 661 the answer to the question of law involved in these two revisions is as follows:

(1) The sale of letter pads would not be taxable as they continue to be writing paper with a printed heading and “their sale is a sale of paper”.

(2) If the assessee is also supplying visiting cards to its customers the sale thereof shall be taxable.

(3) As regards vouchers and bills and such other articles as may fall within the category of, or may be similar in nature to, “receipt books, registers, forms and handbills” referred to in the case of Kanpur Journals Ltd., [1956] 7 STC 661 the matter will have to be looked into with reference to the following contingencies:

(a) The customers of the assessee give specifications of the printed materials (hereinafter referred to as the goods) and require the assessee to print a specified number of such goods on paper supplied by the customers and the customers pay the printing charges;

(b) The customers of the assessee give specifications of the goods and place a standing order with the assessee either generally or for a fixed period that in the course of their business they would require these goods in such quantity as may be notified from time to time and subsequently the assessee produces these goods on its own paper and supplies the same to the customers as and when needed for price paid in lump sum;

(c) The customers of the assessee give specifications as also the quantity of the required goods and the assessee supplies those goods and the payments are made to the assessee by the customers but it is not clear as to whether there were two contracts between the parties one for sale of paper and the other for binding and/or printing, or there was only a single contract for sale of finished goods.

34. If the case falls under category (3)(a) the turnover of the assessee will not be taxable as there is no sale and it is only a case of works contract.

35. If on the other hand the case falls under category (3)(b) the turnover of the assessee will be taxable as it is clearly a case of sale of finished goods produced by the assessee on the basis of the given specifications. It stands on the same footing as the sale of “suits of cloth” referred to in the case of Kanpur Journals Ltd., [1956] 7 STC 661.

36. If the case falls under category (3)(c) the answer to the question as to whether the turnover of the assessee will be taxable will depend on the finding arrived at in regard to the nature of the contract on the basis of the evidence produced by the assessee and the department and on the basis of the attending circumstances as held by the Supreme Court in the case of Guntur Tobaccos Ltd., [1965] 16 STC 240 (SC). While dealing with the question of burden of proof the provisions of section 12-A of the Act have also to be kept in view.

37. If on evidence it is held that the substance of the contract was the production of the goods to be sold to the customers and in pursuance of a single contract the goods were produced and sold the turnover would be taxable.

38. If on the other hand the sale of the paper of which such goods are composed is a transaction separate from the work of binding and/or printing, the turnover shall not be taxable if the printed material is on locally purchased paper inasmuch as sale of locally purchased paper is exempt from the tax and binding and/or printing charges would fall under the category of works contract. In view of the foregoing discussion both these revisions succeed and are allowed. The common order of the Sales Tax Tribunal in the two second appeals mentioned above is set aside and the Tribunal is directed to decide these second appeals afresh in accordance with the law keeping in mind the observations made above. In the circumstances of the case the parties shall bear their own costs.

39. A copy of this order may be sent to the Tribunal concerned as contemplated by section 11(8) of the Act.