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TMI Blog1997 (11) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... g prints thereof, making enlargements from negatives given by the customers and preparing positive prints of the same size from the negatives brought by the customers. On the returns filed by the petitioners, the assessing authorities have either assessed the petitioners for payment of tax or issued proposition notices. In some cases, the application filed by the petitioners under section 25-A of the Act seeking rectification of the orders of assessment also have been rejected. Under these circumstances, the petitioners have presented these petitions challenging the constitutional validity of entry 25 of the Schedule. 5.. Sri R.V. Prasad, learned counsel for the petitioners, submitted that entry 25 of the Schedule is unconstitutional inasmuch as there is no element of transfer of property in the goods in so far as the business carried on by the petitioners in taking photographs and supplying prints thereof, making enlargements from negatives given by the customers and preparing positive prints of the same size from the negatives brought by the customers. He points out that the prepared positive print is a non-marketable commodity as the photograph of a person cannot be sold by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Punjab and Haryana High Court in the case of Thomson Press (India) Ltd. v. State of Haryana [1996] 100 STC 417. The learned counsel also relied upon the decisions of the Supreme Court in the case of Mittal Engineering Works (P) Ltd. v. Collector of Central Excise, Meerut [1997] 106 STC 201, Union Carbide India Ltd. v. Union of India [1987] 64 STC 444; Collector of Central Excise, Baroda v. Ambalal Sarabhai Enterprises (P) Ltd. [1990] 77 STC 190 and Indian Cable Co. Ltd. v. Collector of Central Excise, Calcutta [1995] 97 STC 307 in support of his plea that the goods produced must be marketable and unless the goods transferred are marketable, it is not permissible to levy tax on transfer of property in the goods even assuming that there is any transfer of goods in the property. Relying upon the decision of the Patna High Court in the case of Pest Control India Ltd. v. Union of India [1989] 75 STC 188, Sri Prasad submitted that the nature and the activity carried on by the photographers does not involve transfer of any goods as understood in sub-clause (b) of clause (29A) of article 366 of the Constitution or under section 5-B of the Act and the contract executed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is only incidental to this transaction. The object of the payment of the price is to get the document duplicated, not to receive the paper. The payer of the price has no interest in the bare paper upon which his document is duplicated. He is interested in it only if it bears such duplication. What is involved is not a sale but a contract of work or labour. He also relied upon the decision of the Supreme Court in the case of State of Tamil Nadu v. Anandam Viswanathan [1989] 73 STC 1. In the said decision, the Madras High Court referring to the decision of the Allahabad High Court (Commissioner of Sales Tax v. Uma Art Press [1984] 56 STC 300) has observed thus: The High Court relied on the decision of the Allahabad High Court reiterating the principle that it is necessary to determine the substance of the contract, and as the substance of the contract is that skill and labour that had been exercised for the production of the article and sale of material is only ancillary to that. In our opinion, the principle upon which the High Court relied, is not applicable in case of transactions of printing of question papers. Question papers as such, after being printed are neither avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to processing and supplying of photographs, photoprints and photo negatives. She strongly relied upon the Division Bench decision of the Kerala High Court in the case of Bavens v. Union of India [1995] 97 STC 161 and drew my attention to paragraphs 10, 18, 20, 22 and 23 of the said judgment. She further submitted with reference to the return filed by the petitioners that the returns filed by each of the petitioners disclose that they have purchased the materials of considerable amount for the purpose of the works executed by them. In this connection, she brought to my notice the purchase statement filed by the petitioner in Writ Petition No. 824 of 1997 before the assessing authority, a copy of which has been produced as annexure R1, and the trading account of the said petitioner as annexure R2. She further pointed out that when sub-clause (b) of clause (29A) of article 366 of the Constitution of India and also section 5-B of the Act, in unambiguous terms, provides for levy of tax on transfer of property in the goods, it is not permissible for this Court after the amendment made to the Constitution by amending article 366 of the Constitution of India by incorporating clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each year, a tax under this Act on his taxable turnover of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract mentioned in column (2) of the Sixth Schedule at the rates specified in the corresponding entries in column (3) of the said Schedule. (c) entry 25 of Schedule VI to the Act reads as hereunder: 25. Processing and supplying of photographs, photoprints and photo negatives. 10.. Now, let me examine as to whether there is any merit in the contentions advanced challenging the constitutional validity of entry 25 of the Schedule. 10a. Section 5-B of the Act provides for payment of tax by every dealer on turnover of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contracts mentioned in column (2) of the Sixth Schedule. Therefore, there cannot be any doubt that the tax could be levied in the execution of works contract only on transfer of property in goods. Column (2) of entry 25 of the Schedule provides for levy of tax on processing and supplying of photographs, photoprints and photo negatives. Whether, in a given case, processing and supplying of phot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of photographs and supplying of prints thereof neither results in sale of photographs nor can it be treated as sale of photographs for the reason that it is not the intention of the customer to buy a photograph from the photographer as a photograph has no marketable value. However, in the said case, the Supreme Court did not consider the work relating to enlargement of photographs from the negatives brought by the customer and preparing the positive prints of the same size from the negatives brought by the customers. The effect of processing and supplying of photographs, photoprints and photo negatives made available by the customer, was also not considered by the Supreme Court in the B.C. Kame s case [1977] 39 STC 237. It may be that in cases where a photographer undertakes to take photograph, develop the negative or do photographic work and thereafter supply prints to his customer, he cannot be said to have entered into a contract for sale of goods. In such situation, the contract has to be treated as one for use of skill and labour by the photographer to bring about the desired result. In the year 1982, in view of the law laid down by the Supreme Court in the case of State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Prasad is concerned, I am of the view that it relates to a case of a photo copier. On the basis of the facts of that case, the Supreme Court held that the paper upon which the duplication takes place is only incidental to the transaction and the object of the payment of the price is to get the document duplicated and not to receive the paper. In my view, the ratio laid down in the said decision cannot be applied in respect of the activities carried on by a photographer. It is necessary to point out that in view of the development of the technical know-how in the activities of a photographer, the skill of a photographer, which had a great role to play or paramount at one point of time, is not the same thing as of today. Therefore, merely because some skill is used or some service is rendered, is not a ground to strike down the entry in question so long as the said entry intends to levy tax on transfer of property in goods, which are used for the execution of the works contract. The view I have taken, is supported by the Division Bench decision of the Kerala High Court in Baven s case [1995] 97 STC 161, referred to above and relied upon by the learned Government Pleader. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken that the activities referred therein are the only activities which can be subject-matter of works contract. Secondly, the work done by the petitioners in the second and third categories would certainly come within the activity processing referred in the definition. Admittedly, in order to develop an exposed roll of film certain processing has necessarily to be undergone, so also for taking positive prints out of it. Processing is necessary for taking positive prints from a negative handed over by the customer. In any view of the matter, taking positive prints out of the developed negative which is an allied activity to the processing of exposed film would certainly come within the definition of works contract . 21.. By applying the test of accretion to the nucleus also, we are of the view that the second and third categories would come within works contract since the photographer is working upon the exposed film or the negative supplied by the customer and produce the positive prints in the desired size. We are also not inclined to accept the contention that while carrying on the above activity of processing an exposed roll of film and taking positive prints therefrom, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition notices or to challenge the orders made rejecting their applications filed under section 25A of the Act, which are under challenge in these petitions. 15.. Having regard to the facts and circumstances of the case, I am of the view that the request made by the learned counsel for the petitioners is reasonable. 16.. Accordingly, the petitioners are given 30 days time from today to file appeals either before the first or the second appellate authority or file their objections or take such other appropriate remedy available to them under the Act. If such appeals are filed within 30 days from today, the appellate authority is directed to consider the appeal on merits without raising any objection with regard to the period of limitation. Further, if objections are filed within 30 days from today, the appellate authority is directed to consider the objections on merits and proceed to pass assessment orders in accordance with law. 17.. All the contentions urged by the petitioners on the merits of their claim, are left open to be urged either before the assessing authority or before the appellate authority, as the case may be. 18.. In the light of what is stated above, thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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