2000 (1) TMI 958 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the photo-processing work undertaken by the appellant amounts to a works contract and is thereby taxable.
2. Whether the appellant is entitled to amend the CST registration certificate to include machinery and accessories used in photo-processing.
3. Whether an appeal lies against the rejection of the application to amend the CST registration certificate under section 7(4) of the CST Act.

Detailed Analysis:

Issue 1: Nature of Photo-Processing Work
The appellant, a registered dealer under the KGST Act and CST Act, is engaged in the business of photography, photo-processing, and the purchase and sale of photographic materials. The appellant contends that the photo-processing work is in the nature of job-work and thus not taxable. However, the first respondent rejected this claim, stating that "processing of color photographs will come under works contract."

Issue 2: Amendment of CST Registration Certificate
The appellant sought to amend the CST registration certificate to include a sophisticated film processor and a printer processor from Bombay. The first respondent denied this request, arguing that the processing of color photographs is a works contract, and thus the CST registration certificate cannot be amended to include these machineries and accessories. The appellant argued that even if photo-processing is considered a works contract, they are still entitled to amend the CST registration certificate, referencing a similar case decided by the Full Bench of the Orissa High Court in Kalinga Builders (P) Ltd. v. Commissioner of Commercial Taxes.

Issue 3: Appeal Against Rejection of Amendment Application
The learned single Judge relegated the appellant to challenge the impugned order in appeal before the appellate authority. The appellant contended that the rejection of the amendment application under section 7(4) of the CST Act is not specifically appealable under section 34 of the KGST Act. The court observed that no appeal is provided against an order like Exhibit P3 rejecting an application to amend the CST registration certificate, neither under the CST Act nor the KGST Act.

Court's Observations and Judgment:
1. Dealer Status and Right to Amend CST Registration:
- The court recognized that the appellant is a "dealer" registered under both the KGST Act and CST Act, and thus entitled to seek amendments under section 7(4) of the CST Act. The court noted that the first respondent's refusal was based on the incorrect premise that photo-processing falls under works contract, which does not preclude the appellant from amending the CST registration certificate.

2. Legal Precedents and Constitutional Amendments:
- The court referred to the Constitution (46th Amendment) Act, 1982, which expanded the definition of "tax on the sale or purchase of goods" to include the transfer of property in goods involved in the execution of works contracts. This amendment allowed the Kerala Legislature to amend the KGST Act to include works contracts within the definition of "sale" and "dealer." The court cited several judgments, including Salvicate (Bangalore) Private Limited v. Sales Tax Officer and Larsen & Toubro Limited v. Commercial Tax Officer, which supported the appellant's right to amend the CST registration certificate.

3. Rejection of Respondent's Arguments:
- The court dismissed the respondent's argument that the appellant is not entitled to amend the CST registration certificate because the purchase of machinery and instruments for executing works contracts forms part of the labor portion. The court held that the appellant, being a registered dealer and engaged in works contracts, is entitled to the benefits under the CST Act, including the amendment of the registration certificate.

4. Conclusion and Directions:
- The court allowed the writ appeal, directing the respondents to issue the amended CST registration certificate within one month. The court made no order as to costs and dismissed the order on C.M.P. No. 6489 of 1999 in W. A. No. 2539 of 1999.

Final Judgment:
The writ appeal was allowed, and the respondents were directed to issue the amended CST registration certificate within one month. The court emphasized that the appellant, being a registered dealer and engaged in works contracts, is entitled to amend the CST registration certificate to include the necessary machinery and accessories.

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