9911796707
TMI Blog1960 (7) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board of Revenue in revision, but the revision application was dismissed subject to certain modifications. The contention of the petitioner before the Sales Tax Authorities was that the sales tax cannot be lawfully levied on finished articles like photographs, and the action of the petitioner in taking photographs of customers and developing and printing the negatives was not tantamount to sale of goods within the meaning of the Bihar Sales Tax Act. The argument was rejected by the Board of Revenue and the revision application of the petitioner was dismissed. Under section 25(3) of the Bihar Sales Tax Act the Board of Revenue has submitted the following question of law for the opinion of the High Court: "Whether in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o profit. It is true that the petitioner has to apply his professional skill to the case of each individual and also attempt to secure some aesthetic value. But it is manifest that the petitioner is not engaged merely on an aesthetic or artistic occupation. The gist of the matter is that the petitioner is practising the photographic process commercially in order to produce an article which will be bought and produce a commercial profit. In my view, therefore, the essence of the contract is not work and labour but the contract is one for sale of goods within the meaning of the Indian Sale of Goods Act and the Bihar Sales Tax Act. This view is borne out by the decision of the Queen's Bench Division in Lee v. Griffin30 L.J.Q.B. 252. It was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shew that to determine whether or not there has been the sale of an article the value of the labour as compared with that of the materials, cannot be taken into account." The principle is that you have to look at the substance of a contract in each case and ascertain if the contract is for the supply of finished goods or whether it is an agreement for the exercise of skill and labour for the production of the particular article and it is only ancillary that some material would pass from the artist to the customer. Applying the test to the circumstances of the present case I hold that the essence of the contract between the petitioner and the customers is the supply of finished goods and there is not a mere agreement for the exercise of sk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mixtures. Until prescriptions are dispensed and the compounds obtained, the chemist has not got the goods, which his customers have ordered and which he has agreed to sell. The process of dispensing is carried out for the purpose of producing the contract goods. When dispensing has taken place, but not before, the chemist has the goods with which to supply his customers and which he has agreed to sell to them. The resultant mixtures, after dispensing prescriptions, are the goods sold by a dispensing chemist to his customers; the process of dispensing it to produce those goods for sale." The same view has been taken by the High Court of Madhya Pradesh in D. Masanda and Company v. Commissioner of Sales Tax[1957] 8 S.T.C. 370., where it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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