2008 (3) TMI 318 - HC - Service Tax

Photography Service colour photo laboratory - The colour photo laboratory in fact is an extended design of a studio - In a photography studio the photographer shoots the photos, thereafter in his dark room he develops negatives and, thereafter prints the desired size of the photographs - The work of the colour laboratory is to receive the exposed negatives/rolls, develop the same and print the photographs of the desired size as per the orders placed by the original consumer through the photographer who had taken the photographs either in the studio or anywhere else. - colour laboratories would be a part of the photography studio or agency involved in providing the service to the consumer and are amenable to the service tax held that service tax on colour photo laboratory is not unconstitutional service tax can be levied .

Summary

Issues:
Challenge to the constitutionality of Section 67 of Finance Act, 2001 and circular dated 9-7-2001; Interpretation of the definition of "photography" and "photography studio or agency" under Section 65(72) of the Act; Liability of petitioner for service tax on photography services; Applicability of previous judgments on similar challenges.

Analysis:
The petitioners sought various reliefs challenging the constitutionality of Section 67 of Finance Act, 2001 and a circular dated 9-7-2001. They argued that their photography-related services did not fall within the definition of "photography" or "photography studio or agency" under Section 65(72) of the Act, hence not liable for service tax. The respondents contended that the inclusive definition of "photography" encompassed all professional photography services, making the petitioners liable for service tax.

The Supreme Court's precedent in C.K. Jidheesh v. Union of India upheld the constitutionality of the Finance Act provisions and the circular dated 9-7-2001. The Court emphasized that the definitions of "photography" and "photography studio or agency" were inclusive and not closed definitions, thereby expanding the scope of taxable services to cover professional photography services.

Referring to the judgment in Rainbow Colour Lab. v. State of M.P., the Court clarified that photography services did not involve the sale of goods and were subject to service tax. Similarly, in Kerala Colour Lab. Association v. Union of India, the Court rejected the argument that color laboratories were not primarily service providers, emphasizing that they indeed provided services to consumers.

The Court determined that color laboratories were part of the "photography studio or agency" category, providing services to consumers and thus subject to service tax. The respondents were found justified in taxing the petitioners, and the petition was dismissed without costs, as there was no basis for interference based on the aforementioned legal precedents and interpretations.