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TMI Blog2018 (8) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... pply though not decisive. The real nature and substance of the transaction and not merely the form of the transaction should be the guiding factor for deciding the classification. The department had issued a third Circular bearing No. 104/7/2008-S.T. dated August 6, 2008. It had opined that, both the form and substance of the transactions are to be taken into account. The guiding principle is to identify the essential features of the transaction. The subject contracts cannot be said to limit itself to photography. Preparation of a photograph or photography is not the sole purpose of the contracts. The end product is EPIC. Such end product involves a photograph of a voter. The photograph of the voter incorporated in EPIC is not a standalone product - the contract for EPIC cannot be divided into separate compartments to say that, photography or photograph is a separate compartment. It is indivisible. The contracts in question are for preparation of EPIC. The petitioner cannot be said to have rendered any photographic services to an individual or to the person who had entered into the contract with the petitioner. In CMC Limited [2007 (7) TMI 17 - CESTAT, BANGALORE], CESTAT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner is not a photography studio or agency within the meaning of Sub-section (79) of Section 65. The petitioner does not come under the purview of Sub-Clause (3b) of Clause (105) of Section 65. Learned Senior Advocate for the petitioner has relied upon Section 69(19) of the Act of 1994 and has submitted that, Service Tax excludes any activity which results in manufacturing. In the present case, the petitioner is engaged in the production of an EPIC. The nature of activity would, therefore, exclude the same from the purview of Service Tax. He has also referred to Section 2(f) of the Central Excise Act, 1944 and to the Circular bearing No. 141/52/95- CX dated August 14, 1995. He has submitted that, by such circular, the authorities have acknowledged that photo identity cards are distinct product as compared to other identifiable articles of plastic. It has acknowledged that a photo identity card involves process of manufacturing. Consequently, by virtue of Section 65(19) of the Act of 1994, production of EPIC does not involve any service rendered for the purpose of attracting tax under the Act of 1994. Moreover, according to him, Section 65(76)(b) of the Act of 1994 excludes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, then, the show-cause notice cannot be said to be without jurisdiction. A Writ Court need not interfere when a show-cause notice is under challenge. The issues raised by the petitioners with regard to the show-cause notice can be raised, and adjudicated upon by the adjudicating authority. Learned Additional Solicitor General has submitted that, Section 65(105)(zb) of the Act of 1994 makes any service rendered in relation to photography taxable. EPIC cannot be prepared without photography. Photography is involved in preparation of EPIC. Therefore, the contention of the petitioner that, it is not rendering any service in relation to photography is fallacious. Such a service is amenable to tax. The adjudicating authority is entitled to decide such issue. He has referred to the definition of photography given in Section 65(78) of the Act of 1984 and the definition of photography studio or agency given in Section 65(79) of the Act of 1994. He has submitted that, the preparation of an EPIC involves photography as defined under Section 65(78) of the Act of 1994. The petitioner is carrying on a business which can be termed as photography studio or agency within the meaning of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EPIC for the State of West Bengal. Whether preparation of EPIC by the petitioner attracts Service Tax, is the issue raised in the writ petition. The parties have referred to and relied upon Sections 65(19), (76b), (78), (79), (105)(zb), 65A, 66 and 67 of the Finance Act, 1994. They are as follows:- 65(19). business auxiliary service means any service in relation to (i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or [Explanation.-For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client;] (v) production or processing of goods for, or on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined according to the terms of the sub-clauses of clause (105) of section 65. (2) When for any reason, a taxable service is, prima facie, classifiable under two or more sub- clauses of clause (105) of section 65, classification shall be effected as follows:- (a) the sub-clause which provides the most specific description shall be preferred to sub- clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, insofar as this criterion is applicable; (c) when a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration. 66. Charge of service tax. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent. of the value of taxable services referred to in sub-clauses (a), (b), (c, (d), (e), (f), (g,) (h), (i), (j),(k), (l), (m), (n), (o), (p), (q), (r), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g service tax. (1) Subject to the provisions of this Chapter, service tax chargeable on any taxable service with reference to its value shall,- (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writings, one by the District Election Officer, Muzaffarpur and two by the Electoral Officer of the Government of West Bengal relate to preparation of EPIC. In executing such a contract, the petitioner would necessarily have to take a photograph of the voter. It would also be required to fill up the other requisite details of the voter in the EPIC. Photograph is one of the components of the work required to be discharged by the petitioner. The ultimate product is EPIC. The contracts are pre 2007. The subject contracts cannot be said to limit itself to photography. Preparation of a photograph or photography is not the sole purpose of the contracts. The end product is EPIC. Such end product involves a photograph of a voter. The photograph of the voter incorporated in EPIC is not a standalone product. To my understanding the contract for EPIC cannot be divided into separate compartments to say that, photography or photograph is a separate compartment. It is indivisible. Therefore, on the strength of Larsen Toubro Ltd. (supra) such contracts cannot be divided to bring it under the Service Tax net assuming that, the petitioner was rendering the service of photography. In any event, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration received in the transaction, it does not determine the nature of tax. The taxable event determines the true event of tax. The measure of tax does not determine the nature of tax, but the quantum of tax which can be levied and collected. C.K. Jidheesh (supra) has held that, Rainbow Colour Lab Anr. (supra) was binding precedent. It has also held that, Kerala Colour Lab. Association (supra) lays down the correct law. Bharat Sanchar Nigam Ltd. Anr. (supra) had noticed Rainbow Colour Lab Anr. (supra). It has also noticed C.K. Jidheesh (supra). It has said that, C.K. Jidheesh (supra) was not correct in saying that, Rainbow Colour Lab Anr. (supra) was good law. Daroga Gope (supra) has considered the provisions of the Criminal Procedure Code. In such context, it has dealt with the phrase in relation to . The ratio laid down therein is not attracted in the facts of the present case. Similarly the expression used in relation to the manufacture has been considered in the context of the same occurring in Rule 57A of the Central Excise Rules, 1944 in Solaris Chemtech Ltd. Ors. (supra). Such phrase has been interpreted in the context of the Central Excise Rules, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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