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TMI Blog2009 (2) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... quot; Bereft of unnecessary details, the facts and circumstances giving rise to this revision petition are that the petitioner in the present revision petition is a Government of Orissa undertaking. It carries on business in agricultural implements, iron and steel goods, coal, wax plastic goods, hand-pump, electric motor, machineries, steel furniture, electric pump-set, photographic materials, paints, etc., on wholesale basis. It has also undertaken preparation of photo-identity cards for voters as per the orders of the Chief Electoral Officer of Home Department, Government of Orissa (hereinafter referred to as, "the CEO"). The petitioner received Rs. 12.70 per photoidentity card. During the year under consideration, it received Rs. 6,56,06,424 for supply of photo identity cards. This amount has been shown as gross turnover by the petitioner for supply of such photo identity cards. Out of the said total receipt, the petitioner claimed expenditure amounting to Rs. 6,13,12,696 towards labour and service charges. The petitioner did not pay any tax on supply of photo identity card on the ground that the work undertaken by it was a job contract involving labour and service. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EO as chattel qua chattel. The job of preparation of photo-identity cards involves technical skill like entering voters' data from the electoral rolls into computer and the data so entered is to be transferred and stored in magnetic media in a manner so that the data can be utilized at a subsequent date for preparation of photo-identity card. Therefore, the petitioner was to take video photograph of each voter as per the electoral rolls at their respective polling booth or at a suitable place nearby and prepare photo-identity cards using the data stored in the magnetic media. The photo-identity cards so prepared are delivered to the CEO only. The use of materials in photo-identity card was incidental and insignificant and tax has been paid on such goods at the time of purchase. The work undertaken by the petitioner was a special kind of job entrusted for confidence reposed and for the delicate nature of the job performed, the work in connection with the aforesaid order was predominant in the transaction and not the value of the materials which were used in executing the job. The transaction relating to supply of photo-identity card cannot constitute the works contract or sale a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service, parties might enter into separate agreements, one of work and service and the other of sale and purchase of materials to be used in the course of executing the work or performing the service. But, then in such cases the transaction would not be one and indivisible, but would fall into two separate agreements, one of work or service and the other of sale." The honourable Supreme Court in the Assistant Sales Tax Officer v. B.C. Kame [1977] 39 STC 237 (SC), held as follows: (at page 239) "The question as to whether a contract is a contract of work and labour or a contract for sale is not one free from difficulty. The reason for that is that in borderline cases the distinction between the two types of contract is very fine. This is particularly so when the contract is a composite one involving both a contract of work and labour and a contract of sale. Nevertheless, the distinction between the two rests on a clear principle. A contract of sale is one whose main object is the transfer of property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where the principal object of work undertaken by the payee of the price is not the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main object is the transfer of the property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where, however the main object of work undertaken by the payee of the price was not the transfer of chattel qua chattel, the contract is one of work and labour. The honourable Supreme Court in Hindustan Aeronautics Ltd. v. State of Orissa [1984] 55 STC 327, held as follows: (page 333) "As emphasized by this court, there is no rigid or inflexible rule applicable alike to all transactions which can indicate distinction between a contract for sale and a contract for work and labour. But the tests indicated in the several decisions of the court merely focused on one or the other aspect of the transaction and afforded some guidance in determining the question, but basically and primarily, whether a particular contract was one of sale or for work and labour depended upon the main object of the parties in the circumstances of the transactions. In a contract for sale, the main object of the parties is to transfer property in and delivery of possession of a chattel as a chattel to the buyer..." In the said case, the honourable apex court further held as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e job of preparation of photo-identity cards for voters in the parliamentary constituencies mentioned in the Schedule as per the terms and conditions prescribed below: Part (2) relates to job specifications which reads as follows: 2(i) The job shall consist of taking the video photographs of the voters of their respective polling booths. The electors whose names are mentioned on the electoral roll will be called at the concerned polling stations at a suitable place nearby for taking their photographs as directed by the Election Commission of India. Such centre for taking photographs will have to be visited twice to give adequate opportunity to the elector to be photographed as directed by the Election Commission of India. The Corporation will have to make arrangements for taking the photographs of each elector and preparing the photo identity card using data from the electoral rolls already entered in the computer or magnetic media and the pictures as taken. 2(ii) The photo identity card should conform to the following specifications: (i) A frontal photograph of voters 2.5 Cms. (horizontal) x 3 Cms. (vertical) in size with 10 per cent permissible variations shall be printed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain specified nature of work as specified in paragraph 2 of the letter of the CEO. The nature of the job involves highly skilled labour. The job of preparation of photo-identity card involves skill like entering voters' data from the electoral rolls into computers and the data so entered is to be transferred and stored in magnetic media in a manner so that the data can be utilized at a subsequent date for preparation of photo-identity card. For this purpose the petitioner is to take video photograph of each voter as per electoral rolls at their respective polling booth or at a suitable place nearby and prepare photo-identity cards using the data stored in the magnetic media. The photo identity cards so prepared were delivered to the CEO but none else. The photo-identity cards supplied to the CEO are not commercial commodities. The same cannot be sold to any other person. The photo identity cards, which are produced by the petitioner, have no utility or value to any other person than the CEO who paid for the service rendered by the petitioner. The material purchased and utilized in preparation of photo-identity cards is very negligible and incidental. Another important aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which constitutes the State, and this power is independent of the particular form of Government, whether monarchial, autocratic or democratic. In the latter case it was held that the question whether a particular power relates to sovereign function depends on the nature of the power and the manner of its exercise. The facts of the case in Chandra Bhan Gosani's case [1963] 14 STC 766 (SC) are completely different from the facts of the case at hand. In the said case the appellant manufacturing and supplying large quantities of bricks to a company under a contract was assessed to sales tax under the Orissa Sales Tax Act, 1947, on the basis that these supplies were sales. There was a clause in the contract providing that "land will be given free" by the company. The appellant contended that the contract was only for labour or for work done and material found, and that there was really no sale of any goods on which the tax could be levied. In the said case, the honourable apex court held as follows: "(1) that under the contract there was a transfer of property in the earth to the appellant by the company; (2) that although the contract did not use the word ' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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