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TMI Blog2006 (2) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... ed company incorporated under the Companies Act, 1956 with its place of business at SS Road Lakhtokia, Guwahati, Assam. Initially, it was a proprietorship concern up to December 31, 1996 in the name and style of M/s. SS Colour Lab of which Shri Sanat Kumar Dey [petitioner in W.P. (C) No. 5369 of 2002], was the proprietor. The petitioner-company, a new industrial unit under the Industrial Policy of Assam, 1991 has been granted the eligibility certificate and it is entitled to claim sales tax exemption for the period from March 18, 1994 to March 17, 2001. According to the petitioners, in course of business, they received photo negatives from various customers for the purpose of processing the same into positive photographs and prints for delivery thereof, against some job charges and that the process does not involve any sale of goods or transfer of property in goods as comprehended under section 8(i)(e) of the Act. In response to the notices in the year 1997, asking them to explain why their business transactions would not be treated as "works contract" under the Act, they submitted their written replies, contending that having regard to the nature of business, no tax under the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of the expression "tax on the sale or purchase of goods" provided in article 366(29A) of the Constitution of India, they pleaded. The above assertions were negated holding that in executing the works entrusted in course of their business, the petitioners were engaged in "works contract" as defined under section 2(38)(iv) of the Act and thus chargeable to tax under section 8(1)(e) of the Act, in view of article 366(29A) of the Constitution of India and entry No. 24 of Schedule VI of the Act. As photo papers, chemicals, etc., are involved at the delivery of the finished products to the customer, according to the respondents, there is a transfer of property in goods in execution of the job orders attracting tax liability under the Act. It being within the legislative competence of the State Legislature to enact the Act, in view of the constitutional empowerment traceable in article 246(3) of the Constitution of India and entry No. 54 to the State List, the demand was unassailable, they asserted. 6.. Mr. Bora has argued that the petitioners' business transactions are exclusively service based against the charges therefor and do not in any manner witness transfer of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 of the Sixth Schedule thereof, it was well within the dominion of the respondents to decipher the transfer of property in goods involved therein and make due assessment of the tax payable in accordance with the said legislation. Any transfer of property in goods involved in a works contract being chargeable to tax as is explicit from section 8(1)(e) of the Act, Mr. Choudhury, has urged that in the facts and circumstances of the case, the assessment and demand of tax is unexceptionable. According to him, the decision of the apex Court in Rainbow Colour Lab [2000] 118 STC 9 (SC); (2000) 2 SCC 385 relied upon by the petitioners, is no longer a good law in the face of the subsequent decision of the apex Court in Associated Cement Companies Ltd. v. Commissioner of Customs [2001] 124 STC 59 (SC); AIR 2001 SC 862. He maintained that in the teeth of the ratio in Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); AIR 2001 SC 862, the petitioners' assertions based on Rainbow Colour Lab [2000] 118 STC 9 (SC); (2000) 2 SCC 385 and the other decisions of this Court structured thereon, are of no avail. 9.. The learned Additional Advocate-General in order to trace the background of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks contract; .. and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made." Entry No. 54 of the State List appearing in the Schedule VII of the Constitution of India, dealing with taxes on the sale or purchase of goods is couched in the following language: Entry No. 54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry No. 92-A of List I. 12.. The Act, is therefore a statute enacted in exercise of the power conferred in article 246(3) read with entry No. 54 of List II as above. The preamble proclaims that it is a legislation to amalgamate and consolidate the laws relating to levy of tax on the sale or purchase of goods in the State of Assam. 13.. The word "sale" is defined in section 2(33) to mean with all the grammatical variations and cognate expressions, any transfer of property in goods by any person for cash, deferred payment or other valuable consideration, and includes: (i) . (ii) any transfer of property in goods (whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing with camera, X-ray and other scanning machines. 15 8 16. Bearing in mind, the admitted enterprises of the petitioners in course of their business dealings, the same in my opinion, are well within the ambit of "works contract" envisaged in the above entry. Indeed, as observed hereinabove, the above aspect has not been assailed by the petitioners. The pleaded facts are also not in dispute having remained uncontroverted in absence of a counter by the respondents. With this background, it is now time to turn to the precedential law. 17. In Builders' Association of India Ltd. [1989] 73 STC 370 (SC); (1989) 2 SCC 645 the apex Court while dealing with the challenge to the levy of sales tax on the turnover relating to works contract, following the above constitutional amendment and the consequential changes in the various State laws, dilated, inter alia, on the reasons for the insertion of clause (29A) in article 366 of the Constitution of India. Referring to its earlier decision in State of Madras v. Gannon Dunkerley [1958] 9 STC 353 (SC); AIR 1958 SC 560 to the effect that a works contract was not divisible and therefore, the turnover of the goods used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the transfer of property in goods involved therein, would be permissible only, if the contract manifested a dominant intention to transfer such property and not where such transfer takes place as an incidents of the contract of service. It held against the power of the State to indulge in any microscopic division of contracts involving the value of materials used incidentally in such contracts. It further held that the work done by the photographer is only in the nature of a service contract not involving any sale of goods and therefore struck down the levy. In coming to its conclusion, the apex Court took note amongst others of its earlier decisions in Hindustan Aeronautics Ltd. v. State of Karnataka [1984] 55 STC 314 and Everest Copiers v. State of Tamil Nadu [1996] 103 STC 360; (1996) 5 SCC 390. 19.. The decision in Rainbow Colour Lab [2000] 118 STC 9 (SC); (2000) 2 SCC 385 came up for consideration before apex Court in Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); AIR 2001 SC 862, where their Lordships were of the view that the decision rendered in Rainbow Colour Lab [2000] 118 STC 9 (SC); (2000) 2 SCC 385 ran counter to the express provision contained in article 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 22.. Though while, rendering the order dated September 3, 2002, passed in Photovisual (Assam) Pvt. Ltd. (C.R. No. 4736 of 1997), the decision in Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); AIR 2001 SC 862 was referred to, the learned single Bench upheld the challenge to the levy by taking note only of an observation in paragraph 32 thereof, opining that thereby the decision in Rainblow Colour Lab [2000] 118 STC 9 (SC); (2000) 2 SCC 385 did not stand overruled. 23.. Apart from the fact that the above decisions of this Court had been rendered after Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); AIR 2001 SC 862, it is noticeable that while deciding the above cases, the same was not brought to the notice of this Court. In Photovisual (Assam) Pvt. Ltd. (C.R. No. 4736 of 1997), as well the attention of the court was not invited to the above extracted paragraph from Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); AIR 2001 SC 862. 24.. Significantly, the decision in Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); AIR 2001 SC 862 is later in point of time and is also by a larger Bench. A plain reading of the observations contained in the quot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 (SC); (2000) 2 SCC 385, for the above reasonings, with all respect and humility, I am unable to subscribe to the views expressed therein. 27.. The above decisions of this Court being rendered at a point of time, subsequent to the one in Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); AIR 2001 SC 862 those have to be construed as per incurium. This aspect of law of precedents was dwelt upon by the apex Court in State of U.P. v. Synthetics and Chemicals Ltd. [1992] 87 STC 289 (SC), expressing itself as hereinbelow: "'incuria' literally means 'carelessness'. In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The 'quotable in law' is avoided and ignored if it is rendered, 'in ignoratium of a statute or other binding authority'. ([1944] 1 KB 718 Young v. Bristol Aeroplane Co. Ltd.), Same has been accepted, approved and adopted by this Court while interpreting article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubey [1962] 2 SCR 558 this Court, while pointing out the procedure to be followed when conflicting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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