R.N. Misra, J.
1. This court at the instance of the assessee by order dated 24th January, 1972, directed the Orissa Sales Tax Tribunal under Section 24(3) of the Orissa Sales Tax Act (hereinafter referred to as the 'Act') to state a case and refer the following question for determination of this court:
Whether, in the facts and circumstances of the case, the petitioner is a dealer under the Orissa Sales Tax Act?
In compliance with the direction, the Tribunal has stated a case.
2. This reference relates to the quarter ending 30th June, 1963. The assessee during this period was the Professor of Radiology in the S.C.B. Medical College and Hospital attached thereto at Cuttack. He was carrying on private practice as a radiologist and for that purpose had installed an X-ray plant. He used to purchase X-ray plates and other chemicals from outside the State and take X-ray photographs of patients according to requisitions from physicians as also of his own patients. After taking the X-ray, he used to give technical advice to his patients and was charging a flat rate of Rs. 10 towards his remuneration and cost of materials.
The Sales Tax Officer was of the view that the turnover arising from such transactions was liable to tax under the Act. The assessee resisted the attempt of the Sales Tax Officer by taking the stand that the transactions were essentially contract of work and labour and, therefore, the turnover arising out of such transactions was not exigible to tax. Overruling the stand of the assessee, the Sales Tax Officer completed the assessment for the quarters ending 30th September, 1962, to 30th June, 1963.
The Appellate Assistant Commissioner was satisfied that liability under the Act keeping the extent of turnover in view could arise only from 1st April, 1963. He, therefore, vacated the assessments for the earlier quarters and agreeing with the assessing officer and overruling the contentions of the assessee sustained the assessment for the quarter ending 30th June, 1963. He, however, bifurcated the turnover into two and only the one that was in relation to the supply of the X-ray film was subjected to tax. For the break-up, he relied upon some accounts produced by the assessee.
The Tribunal in second appeal by the assessee affirmed the assessment and sustained the appellate order. The assessee applied for stating a case to this court and when that was refused, this application has been made to this court.
3. Before us, the assessee's counsel has taken the stand that the radiologist cannot be equated with a professional photographer. He is essentially an expert who is approached by the patients for technical advice. For giving proper technical advice, it is necessary to subject the patient to an X-ray examination and the charge collected by the radiologist is essentially a fee as an expert towards the service rendered and not for labour and sale of goods. On the other hand, the standing counsel for the revenue takes the stand that the decisions of the courts in relation to liability of a photographer to sales tax equally apply to the instant case and the payment made is actually in respect of a composite contract of both sale of goods as also labour. He relies upon the assessee's accounts from which the Assistant Commissioner has been able to find out the price of X-ray plates and the professional fee charged by the assessee. In support of the respective contentions, some decisions of the Supreme Court, a host others of the High Courts in India and some English and Australian decisions have been relied upon.
4. Before we proceed to examine some of these cases cited at the Bar, we think it appropriate to examine what exactly is the nature of work done by the radiologist and if he can be equated with a photographer.
5. 'Photography' as ordinarily understood is the art of making pictures with a camera. The light from the subject or scene being photographed is made to fall on substances of the film in the camera. These substances change when exposed to light. The substances used on the photographic film are chemical compounds of silver. The word 'photography' actually means 'drawing a picture with light'. The picture is drawn by the glass lens in the front of the camera and is recorded on the light-sensitive chemicals on the film roll.
X-ray, or roentgen rays as they are sometimes called, were discovered in 1895 by the German scientist Wilhelm Konrad von Rontgen. These rays are produced as a result of the bombardment of the target in the tube by the stream of electrons. The hardness of the X-rays, which is the expression used for their power of penetration, depends mainly on two things. The first is the extent to which the tube is emptied of all air and gas. The fewer the molecules of gas remaining in the tube, the less the electrons are interrupted by collisions. The second factor is the voltage, or electrical pressure, applied to the tube. The higher the voltage, the greater the impulse given to the stream of electrons and the more their energy when they strike the target. By use of X-rays, doctors and dentists can examine the condition of a person's bones, the roots of his teeth or the state of other hidden parts of his body. This may be done by direct observation against a fluorescent screen, or by photographic methods. We are concerned in this case with the photographic method. Continued exposure to X-rays is harmful to health and expert handling is, therefore, very much necessary.
6. A radiographic work requires a team of trained personnel -- radiologist, radiographer, dark-room assistant and engineer. When the unit is small, the radiologist has got to combine in him all the qualifications of the four types of people referred to above.
The Assistant Commissioner of Sales Tax had referred to certain article by Dr. K.P. Mody regarding the practice of radiology, wherein it has been stated thus:
Fifty years back medicines were practised in what we might call 'water-tight compartments'. The surgeon was concerned chiefly with his operations, the physician with his stethoscope was engrossed in writing prescriptions for his patients. There was no co-operation as we now understand. Every one worked in his own solitary sphere and any attempt at discussion or any difference of opinion was looked upon with disapproval. There was no attempt at collaboration, no staff meetings or conferences. Under these circumstances, it is easily understandable that interpretation was at best left to the surgeon and physician in charge of the case. They had the case in front of them, they were in possession of the full notes of the case so that they could co-relate the X-ray appearances with the clinical findings better than the radiologist who was confined as a solitary figure in the basement with his coils, beakers, gas tubes and such other paraphernalia. He produced pictures and occasionally ventured on a report which very often was sketchy and unhelpful consisting, as it did, of laborious description of 'shadows', 'opacities', 'filling defects', etc. Thus it was in the best interest of the patient for the medical men in charge of their case to evaluate their problems themselves with whatever little assistance that could be given by the radiologist.
This unsatisfactory state of affairs has undergone a radical change since special courses and diplomas were established for the training of radiologists. Cambridge University is the first to introduce the D.M.R.E. about the year 1918. The status and outlook for radiologists have greatly improved since then and far from being considered as technicians, they have come in line with the consultants....
Regarding the vexed question of the ownership of radiograms, there is a false notion amongst the public that because they have paid for the investigation, the films are their property. It must be emphasised that this is not so and that the radiograms are the property of the hospital or of the radiologist who carries out the examination. This has been established in courts of law time and again. Several law suits are recorded in medical journal where this point has been unequivocally decided. Unfortunately, the practice in this country is to hand over the films to the patients, a very pernicious system which has existed from the very beginning. The correct procedure should be for the radiologist to send the report to the doctor referring the case, to whom the films may be sent, if asked for. The referring doctor's desire to see the films is quite understandable. Apart from the scientific interest, the physician or surgeon may want to see them with a view to gauge the extent of the disease, the specific characteristics of the diseased processes, if it is a case of deformity or otherwise. On the basis of such visualisation as depicted from the radiogram, depends the treatment to be given....
We have also been shown the curriculum prescribed by the Utkal University for both the under-graduate and the post-graduate degrees in the subject. There is a clear indication that to be a radiologist, one has to be a doctor with specialisation in the subject.
7. We do not propose to refer to all the cases of the photographers that were cited before us, because, we think it sufficient to refer to only a few of the cases to decide the point before us.
In the case of Camera House v. State of Maharashtra  26 S.T.C. 354, a Bench of the Bombay High Court was considering the exigibility of the dealings of a photographer to sales tax. The test to apply was laid down by saying:
In the case of a contract for work and labour and furnishing of materials, the question that has to be considered is -- is the contract 'entire and indivisible', or does the transaction embody two distinct and separate contracts, one for the sale of goods as such, and the other for work and labour. It is only in the case of contracts that are 'entire and indivisible' that the tests laid down in Halsbury's Laws of England (3rd Edition, Volume 34, pages 6-7, para. 3) and by the Supreme Court in State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd.  9 S.T.C. 353 (S.C.) have to be applied for the purpose of determining the real nature of the transaction. In the case of transactions that are distinct and severable, it is only the activity which results in a sale that can be taxed to sales tax. Therefore, the primary question that arises for consideration in the case of a transaction, which is neither a pure contract of sale nor a pure works contract, but which is of a mixed nature, is whether the transaction is entire and indivisible, or whether it is severable into more than one distinct contract. (quoted from headnote.)
In the same volume of the Reporter is reported the case of Eastern Photo Studio v. State of Madras  25 S.T.C. 376, of the Madras High Court, where the same question was again examined. Dealing with a photographer's trading activity, the court said:. The substance of trading activity of a photographer consists in bringing out a finished product, namely, a photograph from the negative. The materials used in the process are ingrained in the finished article and form part and parcel of it and not a mere ancillary or collateral material appurtenant to the contract. In this view, it appears to us that it is not an absolute necessity for a photographer to be a dealer in photographic materials as well. Without being a dealer in such material he can be a photographer, for he could secure the same from others. If he trades in such materials as well, it would add to his business convenience. But the fact remains that the vocation of photography is not interlocked or interlaced with his dealings in photographic materials. In the ultimate analysis the trade involves the production of a marketable commodity, though it may be of interest to particular persons concerned. We are however satisfied that a commercial activity is reflected in the entire process. It is not a case of work and labour. When a customer approaches a photographer and wants him to take a photograph and pays for it and the copies therefrom, no skill is involved, and even if involved, it bears an infinitesimally small proportion to the totality of the bargain. The essence of the deal is a sale of a finished product and not a case where work and labour alone is involved....
In the case of B.C. Kame v. Assistant Sales Tax Officer  28 S.T.C.1, a Bench of the Madhya Pradesh High Court was considering the exigibility of the turnover arising out of supplying of photo prinls to those who got themselves photographed at the studio of the dealer to sales tax. The learned Chief Justice spoke for the court thus:
The classical distinction between the two classes of contracts is to see if the movable article or chattel, as English lawyers would call it, is taken as such or the contract is primarily one of work and labour and the transfer of chattel is only ancillary. Take for instance, when a customer takes a shoe or a suit he takes it for its use as such; but when a client takes a paper from a lawyer on which the latter has written out his opinion on a legal matter or has drawn up a pleading or a document, the client does not take the paper as such but takes it only as a vehicle of the lawyer's labour and ideas. These are extreme illustrations which easily fall into one or the other class. But cases may be on a border line that may require considerable thought for deciding to which class a particular contract belongs. To this end some other criteria may also be applied as aids to come to a conclusion. Another way of looking at such contracts would be to see whether the article prepared is a marketable commodity so that even if not prepared to special order it would be got in the market to satisfy the particular need, though not so well; or in its very nature it is such that it can only be had if the skill of some person is requisitioned to make it available. In such cases, the customer who wants it would think of entering into an agreement of work and labour rather than of purchasing an article. From both these points of view also a photograph is a thing which is valued for the imprint and not the chattel and must be got prepared when wanted and would not be available ready-made in the market. Of course, the pictures of leaders and public men sold in the market are in a different class and need not be confused with personal photographs.
The proportion of cost between the material used and of the charges for labour are also relevant. Where the difference is considerable it is obvious that the attention of the parties was on the skill and labour rather than on buying the material. But the contrary does not necessarily follow. Where the difference is not considerable the contract may still not be of sale....
As indicated in paragraph 10 of the judgment, the court was not called upon in this case to go into the question whether the material used for preparing the photographs was sold and, therefore, taxable.
8. Learned standing counsel for the revenue had placed before us a decision of the Australian High Court in the case of Federal Commissioner of Taxation v. Riley 53 C.L.R. 69. The Australian Court was required to find whether photographs, whether tinted or untinted, supplied to clients for reward in the course of a photographer's business carried on within the Commonwealth of Australia, were 'goods manufactured in Australia' so as to be exigible to tax under the Sales Tax Assessment Act. The main judgment delivered by three Judges stated:. The contention is open to the observation that it does not strictly adhere to the question in the special case, which assumes the sale of the photographs as goods, and inquires, are they produced or manufactured?.... In any case, we think the contention cannot prevail. The end of the organised business of a portrait photographer is to produce as many copies of a picture as his customer will buy, and to sell them to him with a view to profit. It differs from many other productive arts in the fact that its products must be designed in each case for one individual, and in its attempt to secure some aesthetic value. But it is a process practised commercially to produce an article which will be bought. A tailor must attempt to fit his individual customer and the manufacturer of ornaments might claim that his designs had an aesthetic purpose.
We do not find much support for the point in issue from the aforesaid decision.
9. On the other hand, a conclusive test is available from the decision of the Supreme Court in the case of State of H.P. v. Associated Hotels of India Ltd. 29 S.T.C. 474 (S.C.). At page 480 of the Report, the court has said:. The mere fact that in such a contract of work or service, property in goods which belonged to the party performing the service or executing the work stands transferred to the other party is not enough. To constitute a taxable sale, the revenue has to establish that there was a sale, distinct from the contract of work or service, of the property so passing to the other party.
Thus, in considering whether a transaction falls within the purview of sales tax, it becomes necessary at the threshold to determine the nature of the contract involved in such a transaction for the purpose of ascertaining whether it constitutes a contract of sale or a contract of work or service. If it is of the latter kind it obviously would not attract the tax. From the decisions earlier cited, it clearly emerges that such determination depends in each case upon its facts and circumstances. Mere passing of property in an article or commodity during the course of the performance of the transaction in question does not render it a transaction of sale. For, even in a contract purely of work or service, it is possible that articles may have to be used by the person executing the work and property in such articles or materials may pass to the other party. That would not necessarily convert the contract into one of sale of those materials. In every case the court would have to find out what was the primary object of the transaction and the intention of the parties while entering Into it. It may in some cases be that even while entering into a contract of work or even service, parties might enter into separate agreements, one of work and service and the other of sale and purchase of materials to be used in the course of executing the work or performing the service. But, then in such cases, the transaction would not be one and indivisible, but would fall into two separate agreements, one of work or service and the other of sale.
10. The radiologist is usually approached for technical advice and for rendering such advice a fee is charged. A patient does not approach the radiologist with a request to take a radio-photograph of his as a customer approaches a professional photographer. The primary object of the transaction and the intention of the parties while entering into the arrangement in the case of a patient and the radiologist is really not the - transfer of the title of the X-ray plate, but the technical advice which the radiologist enables himself to give on the basis of his readings from the X-ray photograph. It is with the technical opinion of the radiologist that the patient is concerned. The X-ray photograph cannot be equated with a photograph in the ordinary sense. The photograph is a chattel to be possessed, whereas the X-ray photograph is essentially intended to be used as a medium for the purpose of knowing the defect in a part of the human body which is not visible from outside. It does not have commercial value in the real sense of the term and is actually not a commodity title whereto is intended to pass qua such commodity in the process of performance of the transaction between the patient and the radiologist. There is no doubt that for doing the job, the radiologist uses the X-ray plate which was hitherto his and after it is utilised for taking the X-ray photograph of the patient, it no more continues to be his. Whether the radiologist keeps it, as indicated by Dr. Mody, or makes it over to the patient, it is really not a chattel in the commercial sense which has to be possessed for ever like a photograph; with the detection of the ailment, the utility of the goods is over. We may not be understood to say that if utility is not lasting, there may not be a sale. If that were so, the fruits purchased from the market would not be sale. We have emphasised upon that feature only to find out the true nature of the transaction.
11. Tested in the manner indicated above, we are of the view that the transaction that takes place between the customer and the radiologist is essentially one of work and labour which incidentally involves the supply of the X-ray plate. But, it cannot be said to be a case of two separate agreements, one of work or service and the other of sale. It is not necessary for us to find out whether the tests indicated by the Madhya Pradesh High Court in the case of B.C. Kame v. Assistant Sales Tax Officer  28 S.T.C.1 are apposite. Nor is it necessary to deal with the tests indicated in the case of photographers to some of which we have referred earlier. The sole purpose of referring to them was to draw into bold relief how the photographer's case for liability to sales tax was being viewed judicially. In our opinion, the true test is as indicated in the case of State of H.P. v. Associated Hotels of India Ltd.  29 S.T.C. 474 (S.C.) by the Supreme Court and we respectfully apply the same to the facts before us.
12. In the present case, for the reasons indicated above, our answer shall be that:
The assessee is not a dealer under the Orissa Sales Tax Act.
13. The reference is answered in favour of the assessee and against the department. The assessee shall have his costs. Hearing fee, rupees one hundred.
B.K. Ray, J.
14. I agree.