9911796707
TMI Blog1964 (11) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... sold one such locket bearing a personal photograph and several other lockets bearing photographs of religious men under a bill bearing No. 977. They also sold other lockets bearing photographs of religious men by another bill bearing No. 978. The applicants submitted these two bills and requested the Deputy Commissioner of Sales Tax under section 52 of the Act to determine whether these sales were taxable. The contention of the applicants before the Deputy Commissioner was that the preparation of these copper plates with photographs inscribed thereon involved considerable degree of skill, that these plates were specialised artistic pieces of work, that the value of raw materials used in the preparation of these plates was negligible compared to the value of the finished products and that the entire transaction was in the nature of a contract for rendering services and not one of sale of goods. With regard to copper plates on which they inscribed photographs of individuals, their further contention was that the ownership in the photographs always remained with the customer under the provisions of the Copyright Act of 1957 and further that there was no evidence of any transfer of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view of the Deputy Commissioner, observing that the business of the applicants was to produce finished lockets for sale and to sell them to anyone who wished to buy them. The Tribunal also held that the sale of a locket with the photograph of religious persons was purely a commercial transaction. That fact indeed was conceded by the applicants before the Tribunal and, therefore, the only contention that remained before the Tribunal was with regard to the copper plates prepared by the applicants with photographs of individual customers. The Tribunal was of the view that the transactions in such copper plates also amounted to sales of goods and therefore attracted the provisions of the Sales Tax Act. It is this decision of the Tribunal which is challenged in this reference. The real question that arises in this reference is whether the transaction in question amounts to a sale of goods within the meaning of the Bombay Sales Tax Act, 1959. Section 2(11) inter alia defines a "dealer" as meaning any person who whether for commission, remuneration or otherwise carries on the business of buying or selling goods in the State. Section 2(22) provides that a "sale" means a sale of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her a bronze statue of Mahatma Gandhi, to the Governments of Madras and West Bengal. The learned Judge who decided the petition held that the petitioner could in no sense be described as a dealer nor could the two creations in question be described as articles of commerce or trade produced for finding a market therefor, and consequently, the requirement of the definition of a "dealer" in the Act, namely, that the sale must be in the course of business or trade, was obviously not satisfied by the two transactions. The learned Judge observed that it was not any and every person who sold or bought would become a dealer as defined in section 2(b) of the said Act. It was only when a person entered into transactions of sale, in a commercial sense, as in trade or business that he could properly be described as a dealer under the definition. The transaction should essentially be commercial as suggested by the words "business of buying, selling, supplying or distributing goods". This requisite of commercial sense of the dealings had been carried also into the concept of sale as defined in section 2(b) of the Act, which made it even clearer than the definition of a "dealer", and that it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for work and labour? Replying to the question posed by them, the learned Judges, in the context of the facts and circumstances before them, stated that it would be a misuse of language to describe an artist's work, be it for remuneration, as a sale of the produce of his art for a price. There would be no warrant for it either under the Sale of Goods Act or under the Madras General Sales Tax Act. The correct approach, they said, would be to view the transaction as a whole and not to dissect it or to catch hold of a limb of it and say that there was an element of sale in the transaction. A contract of sale would not be constituted merely by reason that the property in the materials would be transferred to the customer. If such materials are merely accessories to work and labour, the contract would be for work and labour and materials. On this principle, they held that the transactions of the appellant were not, even in any remote sense, sales under the Act. This decision was followed by the High Court in T.V.S. Sarma Studio v. The State of Madras[1963] 14 S.T.C. 784., where the assessee owned a studio and described himself as a commercial artist. He received orders from film produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomer would then ask them to reproduce that photograph on a copper plate of a require size. They would first prepare negative and positive films out of that photograph with the aid of a miniature camera and then, with the assistance of certain chemical process, reproduce that photograph on a copper plate which, when finished, could be used as a locket or any other ornament. It is, no doubt, true that the resultant article would require some photographic skill and technical knowledge. But that would be necessary in the production of a number of other commercial and mercantile articles. Mere requirement of such technical knowledge and skill, therefore, cannot by itself take away the transaction from the category of sale of goods. It would seem that essentially this work is not any the different from photography except that in addition to the making of a small size photograph, the applicants have to go through additional processes in order that such a photograph is reproduced on a copper plate and the photograph so reproduced then is coloured. Even then, the case is totally different from that of an artist who accepts commission to draw a painting and in which the artist is paid rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the supply of finished goods. In such a contract the bringing into existence of physical things, namely, photographs, was the substance and the materials and chemicals of which photographs were the resultant effect were not merely ancillary to the contract. The High Court rejected the contention urged on behalf of the assessee that a contract for the sale of photographs was a contract for work and labour done, and observed that though a photograph was made or produced for a particular individual and had value for that particular person alone, the essential feature of the assessee's business as a photographer was the production of copies for sale wherein he did not, like a portrait painter, give his personal services to the production of a work of art. When a customer came to a photographer for being photographed and for copies of the photograph, the substance of the contract was not the performance of skilled services but the supply of finished goods. A similar view has also been taken by the Patna High Court in M. Ghosh v. The State of Bihar[1961] 12 S.T.C. 154., which also was a case of a photographer and where the High Court held that a professional photographer who took ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt true that there would be a restriction upon the applicants against selling such copper plates to persons other than the customer concerned. But it is difficult to comprehend how such a restriction can possibly have any bearing on the question, namely, whether the sale in question to a customer recorded in the bill submitted to the Deputy Commissioner for his determination was a taxable sale or not. Any restriction upon the applicants, in view of the provisions of the Copyright Act, has really no connection with the question whether the applicants are dealers and are carrying on the business of producing enamelled photographs on copper plates. There is no dispute in the present case that the applicants are in fact carrying on the business of producing enamelled photographs on copper plates and are selling the same. If by reason of the Copyright Act any restriction results against selling such copper plates with the individual photographs of customers to persons other than the customers, it would not mean that such a sale cannot be said to be made in the course of their aforesaid business and that such a sale does not attract the provisions of the Sales Tax Act. A photographer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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