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TMI Blog2012 (10) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... B. LOKUR AND MR. JUSTICE A. C. UPADHYAY JJ. Appellant :- By advocate : Ms. N Hawelia, Ms. N Hawelia, Respondent : Mr. K. N. Choudhury, Addl. A.G., JUDGMENT AND ORDER (MADAN B. LOKUR, CJ) These appeals are directed against a common judgment and order dated 1-2-2006 passed by a learned Single Judge in WP(C) No.7812/2002, WP(C) No.5369/2002 and WP(C) No.7896/2002. 2. The appellants in two of the appeals are a private limited company which was earlier a partnership concern of Sanat Kumar Dey. The appellant in the third appeal is Sanat Kumar Dey. All the appellants, therefore, are really one and the same. 3. The appellants carry on the business of developing exposed photographic film rolls into negatives and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are required to answer is whether the transactions entered into by the appellants are works contracts (that is composite contracts having both a service element and a sale element) with deemed sales or mutant sales of goods for the purposes of liability to sales tax. 7. The concept of works contract was introduced in the Constitution through Article 366 (29A) by the Forty-sixth Amendment. In terms of Article 366 (29A), a tax on the sale or purchase of goods includes a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. Article 366 (12) of the Constitution defines goods as including all materials, commodities and articles. 8. The Assam General Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he test of marketability of goods has not been overrules is clear from BSNL v. Union of India, (2006) 3 SCC 1. In that case, the Supreme Court referred with approval to Tata Consultancy Services Ltd v. State of A.P, (2005) 1 SCC 308 where it was held that goods may be tangible property or intangible property. Such property would become goods if it has the attributes thereof having regard to - (a) Its utility, (b) Its capability of being bought and sold and (c) Its capability of being transmitted, transferred, delivered, stored and possessed. There is, therefore, no doubt that to qualify as goods an item must have some utility and must be marketable. Applying this test, the Supreme Court held that electromagnetic waves are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes - (i) ........... (ii) any transfer of property in goods (whether as goods or in some other form) involved in the execution of a works-contract Again, there must be a transfer of property in goods involved in the execution of a works contract. 15. Assuming that the chemicals used in developing exposed photographic film rolls into negatives and then processing the negatives into positive photographs are goods , these chemicals are not used in the execution of a works contract. Therefore, the respondents cannot urge that there is a sale of chemicals within the meaning of the Act. 16. Finally, it was sought to be urged on behalf of the respondents that Section 8 of the Act provides that the tax leviable under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and negatives are not goods the provisions of Sections 7, 8 and Schedule VI of the Act do not come into play at all. When a customer goes to the appellants to have his exposed photographic film rolls developed or negatives processed, there may be an agreement for the transfer of property in the chemicals used in the processing or otherwise treating or adapting the exposed photographic film rolls and negatives. But since they are not goods within the meaning of the Act, the question of taxing the sale of the chemicals does not at all arise. 19. The above discussion undoubtedly leads to only one conclusion which is that the conversion of exposed photographic film rolls into negatives and then into positive photographs or the conversi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods . Consequently, a contract for processing exposed photographic film rolls and negatives is not a works contract as defined in Section 2(38) of the Act. Reference to Studio Sujata is not at all apposite. 22. Learned counsel for the appellants also relied upon Rainbow Colour Lab to contend that the dominant intention of the contract is required to be considered as also the marketability of the goods. The learned Additional Advocate General is partially right in submitting that Rainbow Colour Lab was overruled in BSNL. In paragraph 49 of the Report, the Supreme Court held: After the Forty-sixth Amendment, the sale element of those contracts which are covered by the six sub-clauses of clause (29-A) of Article 366 are separable and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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