1962 (11) TMI 30 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the appellant is considered a dealer under the Madras General Sales Tax Act.
2. Whether the transactions involving the drawings by the appellant constitute sales within the meaning of the Act.

Analysis:
The appellant's occupation involves drawing pictures for remuneration, which are then handed over to business firms for printing and sale. The Deputy Commercial Tax Officer assessed the appellant for sales tax on the turnover from these drawings. The Appellate Assistant Commissioner initially set aside the assessment, stating that the appellant was not a dealer under the Act. However, the Board of Revenue, in a revisional power exercise, restored the assessment, considering the appellant's actions as sales. The central issue is whether the appellant's activities amount to sales and if he can be classified as a dealer under the Act.

The definition of "sale" under the Act involves the transfer of property in goods from one person to another in the course of trade or business, for cash or other valuable consideration. The crucial question is whether the elements of this definition are met in the appellant's case. The distinction between a sale and a contract for work and labor is essential. Judicial decisions and authoritative texts emphasize that if the main object of the transaction is the transfer of a chattel, it constitutes a sale; otherwise, it is a contract for work and labor. In the present scenario, where an artist creates a work of art for remuneration, the essence of the transaction needs to be determined to ascertain if it aligns with a sale or a contract for work and labor.

The principles laid down in various cases highlight that transactions involving the exercise of skill and labor, with materials supplied incidental to that skill, are not considered sales but contracts for work and labor. The focus is on whether the transaction primarily involves the application of skill and labor, rather than the transfer of property in goods for sale. In a similar case, a sculptor supplying bronze casts was not deemed a dealer under the Act, as the casts were made to please admirers, not for sale in the open market. Similarly, in the appellant's case, drawing pictures for remuneration does not constitute sales under the Act, as the essence of the transactions is the provision of artistic services, not the sale of goods.

Ultimately, the Court held that the appellant did not sell or supply pictures but only drew them for remuneration. Therefore, the Board's order assessing sales tax on the appellant's turnover was set aside. The appellant was not considered a dealer under the Act, and the transactions were not classified as sales. The appeal was allowed, and the appellant was awarded costs from the Department.