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TMI Blog1999 (3) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... t are three fold: (a) taking photographs of customers with films supplied by the photographer and supplying prints or enlargement after developing the same; (b) developing, printing and if necessary enlarging exposed films supplied by the customers; and (c) take positive prints from the negatives brought by the customers and supply the prints in desired size to the customer along with their negative. When a photographer undertakes to take photographs, develop negative or do other photographic works and thereafter supply the prints to his clients, he cannot be said to enter into a contract for sale of goods and the contract, on the contrary, is for use of skill and labour by the photographers to bring about a desired result. 3. The assessing authority discarded the case of the Appellant and levied works contract tax in respect of the turnover in the hands of the Appellant. They challenged those assessment orders for the years 1989-90, 1990-91 and 1991-92 by filing the present Original Petition contending that on a proper interpretation of definition clause of works contract and also the relevant charging section, the activity of photography will not come within the ambit thereof. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Single Judge ought to have allowed the Original Petition in toto declaring that the Appellant is not liable to pay tax on their turnover relating to the photography as works contract. 4. Since this legal position has not been considered by the learned Judge, the Appellant filed R.P. 1 of 1999 highlighting the aforesaid aspects. The learned Judge dismissed the Review Petition on 12th January 1999. Aggrieved by the judgment of the learned Single Judge, the Petitioner preferred the Writ Appeal. According to the Appellant, in view of the settled legal position, the processing of photographic prints is a skilled labour irrespective of the fact that the materials are supplied by the customer and that the photograph is not a marketable commodity and there can be no transfer of property in goods unless the goods themselves exists. The transaction in question does not involve transfer of any goods within the meaning of Sub-clause (b) of Clause 29(a) of Article 366 of the Constitution and it is a pure service contract. The activity relating to customer's exposed films being developed and processed by the studio for preparation of final prints, there the negative of the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming the conditional order of the Appellate Authority. W.A. No. 820 of 1999: 6. This appeal has been filed against the judgment of Shanmugham, J. in O.P. 7208 of 1994 which was disposed of in terms of Jacob Cherian's case (1995 (1) K.L.T. 240) (supra) The Review Petition filed to review the above judgment was dismissed by Sivarajan, J. on 19th March 1999 in R.P. 7/99. Here again, the very same contentions are raised as in the other two Writ Appeals. 7. Learned Counsel for the Appellants reiterated the contentions raised by the Appellants in the respective appeals and also cited Jacob Cherian's case (1995 (1) K.L.T. 240) (supra) and also the judgment of the Supreme Court in Everest Copiers v. State of T.N. : A.I.R. 1996 S.C. 2662 We have gone through the relevant provisions of law and also the judgments relied by learned Counsel for the Appellants and also the other decisions which have been referred to in Jacob Cherian's case (1995 (1) K.L.T. 240) (supra) in order to appreciate the rival contentions. 8. The question that arise for consideration is whether, in the activities carried on by the Appellants any works contract, is involved, thus making a portion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax. The 46th Amendment to the Constitution has introduced Clause 29A to Article 366 defining tax on sale or purchase of goods as inclusive of a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract). The definition of sale in Section 2(xxi) of the Act was thereafter amended with effect from 1st Apiil 1984 inter alia adding explanation (3A) deeming a transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract as a sale. The Supreme Court, as already noticed in paragraphs above, has analysed the reason behind the constitutional amendment in Builders Association of India v. Union of India ((1989) 73 S.T.C. 370) and had laid down that the emphasis is on the transfer of property in goods, without such transfer of property in goods being involved, there could be no levy of sales tax in relation to a works contract. The ratio of the decision applies to Explanation (3A) to Section 2(xxi) of the Act as well. 11. We shall now examine the three categories of activities carried on by the photographers. They are: (1) take photograph of customer, develop the neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the customer. Here, the photographer uses his own camera and his own film. The negative which is subjected to further processing belongs to the protographer and not to the customer. No basic goods is provided by the customer which was subjected to processing etc. by the photographer so as to make the contract one in the nature of works contract. There is no accretion to goods or the property or nucleus of a property which originally belonged to the customer. By applying the above test, it cannot be held that there is any works contract involved in the first category of the Appellants activity. It cannot also be treated as sale of the photograph for the reason that it is not the intention of the customer to buy a photograph from the photographer which is not a marketable commodity and has no marketable values. 14. The second and third category of work can be considered together. The photographers undertake to develop exposed film handed over by the customer and take positive prints. They also receive processed negative from the customers and take positive prints therefrom. In these two cases, the developed negatives along with the positive prints are delivered to the custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s assessed the Assessee to sales tax on his turnover. The Assessee filed a Writ Petition to challenge the levy of sales tax on the last item, i.e., item (in) above, namely, the item for the supply of photoprints. His contention was that in taking a photograph, preparing its negative and thereafter the final positive print for supplying the same to the cliens, he undertakes a contract of work and labour and does not enter into a sale transaction. It was also his contention that the prepared positive print was not a marketable commodity and he could not sell the photgraph of one person to any other person except with the formers consent. The case of the State was that the Respondent therein was carrying on a commercial activity in the nature of trade and business and the finished photographs supplied to the customer was a commodity and the supply of the same attracted the levy of sales tax. The Madhya Pradesh High Court came to the conclusion that the Assessee only undertook the contract of work and labour and did not enter into a sales transaction and as such held that the Assessee was not liable to pay sales tax in respect of the item to which the Writ Petition related. In appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unals decision could not be treated as laying down inflexible rules applicable to all transactions of a similar nature where attendant facts might be different. The Bench further held that it is difficult to accept the contention of the Government Pleader that supply of bill books, etc. by a printer should always be regarded as sale on the basis of the authority of P.T. Varghese v. St ate ((1976) 37 S.T.C. 171) (supra) and that the said decision cannot be construed as laying down any such inflexible rule. 18. Another decision of a Division Bench of this Court reported in Deputy Commissioner of Sales Tax v. Dr. Parans Dental Laboratories ((1987) 67 S.T.C. 249) can also be beneficially looked into. The Revenue was the Petitioner in that case and the Respondent was an Assessee under the Kerala General Sales Tax Act. The matter relates to teeth setting done by the Dental Laboratories to their patients. The amount received by the Laboratory was brought to tax by the assessing authority and in appeal, the Appellate Assistant Commissioner held that the amount realised towards teeth setting charges is not a transaction of sale of goods and directed exclusion of the same from the taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants in Everest Copiers v. State of Tamil Nadu : A.I.R. 1996 S.C. 2662. In that case, the Appellant runs a photocopying businers. Assessment was made on the basis that there was a sale by the Appellant of the photocopied or zeroxed document to the customer. The Supreme Court was concerned with the question as to whether the making of photostat copies with the use of a zerox or other machine and delivering the copies so taken to the customer on receipt of payment amounts to a sale of goods exigible to tax under the Tamil Nadu General Sales Tax Act. The Supreme Court, after referring to B. Girija v. State of Karnataka ((1984) 56 S.T.C. 297), Hindustan Aeronautics Ltd. v. State of Karnataka ((1984) 55 S.T.C. 314) and other judgments, came to the following conclusion: 7. As we see it, the view taken by the Karnataka High Court is right and is based upon the decisions of this Court. Where the main object of the work undertaken by the person to whom the price is paid is not the transfer of a chattel as a chattel, the contract is one of work and labour. The main object of the work undertaken by the operator of the photocopier or zerox machine is not the transfer of the paper upon which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he definition of works contract. The photographer is working upon the exposed film or the negatives supplied by the customer and produce the positive prints in the desired sizes. The Division Bench also negatived the contention that while carrying on the above activity of processing an exposed roll of film and taking positive prints therefrom, there is no artistic talent or skill involved. Therefore, the artistic talent or skill which is required to take a photograph is already investigated by someone other than the Assessees. It cannot be compared to the artistic skill or talent necessary for taking a good photograph or painting a good portrait. 21. In B.C. Kames case (1977) 39 S.T.C. 237 (supra), the Supreme Court has considered only the first category of work and second and third categories were not specifically considered. It was also found by Their Lordships that the value of the photographic paper is so minimal comparing to the charges taken by them after processing. Therefore, Their Lordships held that the photographic paper, the property which is transferred to the customer, is exigible to tax. Accepting the above view and the contentions of the Appellants, the learned S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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