2011 (4) TMI 1229 - HC - VAT and Sales Tax

Whether the order of the Tribunal holding that the transaction pertaining to taking of photograph, developing and printing is works contract? Held that - The grounds covered both transactions, including taking of photographs and sitting charges, as well as developing negatives and making positive prints out of it. We find, both cases fall under the concept of works contract to be considered under section 3B of the TNGST Act. In the circumstances we set aside the order of the Tribunal, thereby remand the assessment back to the assessing officer to consider the issue afresh in the light of the development of law in this regard.

Summary

Issues:
1. Interpretation of works contract in relation to photography services for tax assessment under the Tamil Nadu General Sales Tax Act.
2. Applicability of previous court judgments on the taxability of transactions involving photography, developing negatives, and printing positive prints.
3. Assessment of sitting charges in photography services under the TNGST Act.

Analysis:
1. The tax cases filed by the Revenue questioned the assessment of transactions related to photography services, specifically focusing on the issue of whether the activity of a photo studio constitutes a works contract under the Tamil Nadu Sales Tax Appellate Tribunal's order. The Appellate Assistant Commissioner initially ruled in favor of the assessee, stating that there was no outright sale of positive prints and that developing and printing should not be taxed under section 3(1) of the TNGST Act. The Tribunal, considering the Rainbow Colour Lab case, dismissed the Revenue's appeals, emphasizing the need to assess transactions under section 3B of the TNGST Act.

2. The court analyzed a previous judgment where the processing of negatives and printing positive prints was deemed a works contract under the TNGST Act. The Revenue argued that the transaction of taking photographs and supplying prints also amounted to a sale. However, the court observed that the Revenue did not specifically challenge the turnover related to taking photographs and sitting charges, but the grounds covered both transactions, falling under the concept of works contract. The court set aside the Tribunal's order and remanded the assessment back to the assessing officer for reconsideration based on the legal developments.

3. In one specific case, the Revenue highlighted that the sitting charges were not assessed by the assessing officer and were not raised as an issue before the appellate authority. The court directed a fresh consideration only regarding the turnover related to developing negatives, as the sitting charges were not part of the assessment. The tax case revisions were disposed of accordingly, with no costs imposed.