LAWS(KAR)-2004-3-31

MMT INDIA PVT LTD Vs. STATE OF KARNATAKA

Decided On March 17, 2004
MMT (INDIA) PVT.LTD. Appellant
V/S
STATE OF KARNATAKA Respondents

JUDGEMENT

(1.) SRI B. Anand, learned Government Advocate is directed to take notice for the respondent.

(2.) THIS is an appeal under Section 24-A of the Karnataka Sales Tax Act, 1957 ("the Act" for short) filed against the clarification/ advance ruling order dated December 22, 2003 in case No. CLR. CR. 106/03-04 passed by the Authority for Clarification and Advance Ruling constituted under Section 4 of the Act.

(3.) THE appellant is a registered dealer under the Act engaged in the business of digital printing. The appellant filed an application seeking advance ruling in regard to exigibility of digital printing to sales tax. The appellant submitted that process of digital printing is a skilled job of printing which does not involve any transfer of property in goods as a consequence of any contract of sales; that the customers provide the art works and designs in the form of computer files stored in floppy/compact discs; and that the assessee uses such art works and designs to produce full size pictures as per the specifications of the customers and the pictures are thereafter printed on vinyl film. It is submitted that the dominant intention of a contract relating to digital printing, is the process of digital printing. It is contended that the use of vinyl film is only incidental to the work of digital printing. The appellant submitted that the activity of digital printing is akin to the activity of printing of photographs ; that in a photo printing the customer provides the exposed film and prints are made on photo paper, whereas in a digital printing, the pictures/ images are provided on a floppy/compact disc which are printed on a vinyl film. Reliance is placed on the following observations of the Supreme Court in Rainbow Colour Lab v. State of Madhya Pradesh [2000] 118 STC 9 wherein the Supreme Court held that processing and making photo prints is a service contract and not works contract: