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TMI Blog1973 (7) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... processed, that the printed copies required by Messrs. Lintas Limited, Bombay, were supplied to them or to their representatives or distributors and that the invoices submitted by the assessees included the value of the negatives, the colour positive films for taking the prints and all other expenses incurred such as processing charges, costume, hire, etc., and also the cost of production of the exposed advertisement films numbering 250. The names of the four films produced by the assessees in pursuance of their contract with the advertiser were: (1) Vannapurah, (2) Solaikumari, (3) Malai Pozhudinilay and (4) Azhagu Chelvam. The total receipts for the assessment years 1961-62 and 1962-63 by the assessees from the said Messrs. Lintas Limited towards the said contract were Rs. 13,950 and Rs. 45,447.08 respectively. The assessing authority assessed the transactions of the supply of advertisement films under the Madras General Sales Tax Act, 1959, on the ground that they were sales of advertisement films by the assessees. It also levied a penalty of Rs. 1,464 for 1961-62 and Rs. 4,772.00 for 1962-63 under section 12(3) of the Act. Aggrieved against the assessment orders, the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uately interpreted the shooting script, visual, etc., he can reject the same and ask the assessees to reshoot the film at their cost. Similarly, the advertiser had the right to reject the finished prints or to have them rectified, if they are not, in his opinion, of good and proper standard. If cuts become inevitable during the censorship of the film, the assessees at the option of the advertiser, had to reshoot so as to substitute the rejected portion with film of equal footage to the satisfaction of the Censor Board and all expenses of such reshooting is to be borne by the assessees. If the advertiser chooses to accept the censored version, he is to pay to the assessees the agreed charges in proportion to its length. The assessees had accepted the exclusive responsibility for any infringement of copyrights, patent rights, trade marks, etc., suffered by the advertiser. These terms indicate that the nature of the work undertaken by the producers (assessees) was purchasing the necessary raw films from the market, producing negatives as per the shooting script and direction given by the advertiser, sending the negatives to the Film Centre, Bombay, for processing such as recording dia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property in the raw films was always with them till the exposed films are delivered by them to the advertiser. It is also pointed out that there is no essential difference between the impugned transactions and transactions in which artistic goods are manufactured and sold in the market, that the turnover in question represented payments for the manufacture and supply of exposed films, and that the mere fact that the advertiser had exercised some supervision to see that the films are made according to its specifications cannot change the nature of the transaction. On a due consideration of the matter we are of the view that on the facts, the Tribunal's view has to be upheld. The Tribunal has proceeded on the basis that raw films had been purchased by the assessees for and on behalf of the advertiser and they have been paid for separately by the advertiser, that only charges for services have been received by the assessees in respect of the production and supply of the four advertising films undertaken by the assessees under the contract and that the property in the raw films was with the advertiser even during the process of production of the advertising films. But we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Board, the assessees have to cut out that portion and reshoot it at their cost to the ultimate satisfaction of the advertiser or the Censor Board. Therefore, even if it is taken that the assessees who produced the advertising films were the owners of the raw film, the ownership and the right of exploitation of the finished product cannot be said to be with them as they have no copyright in the ultimate product. According to section 17, the advertiser at whose instance the films were produced is the owner of the copyright and it is he who can exploit the film. In State v. Prasad Production[1970] 25 S.T.C. 423., a Division Bench of this Court to which one of us was a party, had to deal with a somewhat similar situation. In that case, an assessee was entrusted by a producer with the work of producing the Hindi version of a Telugu film with all assistance including cost of the raw films. After the completion of the Hindi film, the assessee was to hand over the negative to the producer along with the accounts showing the expenses incurred, in return of a fixed remuneration for the services rendered. That transaction was treated only as a service agreement and not as a sale of the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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