Case1

@Transactional
public class UserServiceImpl implements UserService {

    ...................
    public void method1(){
        try{
            method2();
        }catch(Exception e){

        }
    }
    public void method2(){

    }
}

Case2

public class UserServiceImpl implements UserService {

    ...................
    public void method1(){
        try{
            method2();
        }catch(Exception e){

        }
    }
    @Transactional
    public void method2(){

    }
}

In case1 if any exception occurs it rollback is working, but in case 2 it's not working. Is there any performance issues if I follow the case1?

In case 1 @Transactional is applied to every public individual method. Private and Protected methods are Ignored by Spring.

Spring applies the class-level annotation to all public methods of this class that we did not annotate with @Transactional. However, if we put the annotation on a private or protected method, Spring will ignore it without an error.

In case 2 @Transactional is only applied to method2(), not on method1()

Case 1: - Invoking method1() -> a transaction is started. When method1() calls method2() no new transaction is started, because there is already one

Case 2: - Invoking method1() -> no transaction is started. When method1() calls method2() NO new transaction is started. This is because @Transactional does not work when calling a method from within the same class. It would work if you would call method2() from another class.

From the spring reference manual:

In proxy mode (which is the default), only external method calls coming in through the proxy are intercepted. This means that self-invocation, in effect, a method within the target object calling another method of the target object, will not lead to an actual transaction at runtime even if the invoked method is marked with @Transactional. Also, the proxy must be fully initialized to provide the expected behaviour so you should not rely on this feature in your initialization code, i.e. @PostConstruct.

@Transactionalon a class applies to each method on the service. It is a shortcut. Typically, you can set @Transactional(readOnly = true) on a service class, if you know that all methods will access the repository layer. You can then override the behavior with @Transactional on methods performing changes in your model. Performance issues between 1) and 2) are not known.