AJANTHA COLOUR LABORATORY Vs. STATE OF KERALA

JUDGEMENT

(1.) Heard Mr. K.I. Mayankutty Mather for the respective appellants and Mr. R.K Muraleedharan, Additional Government Pleader for taxes for the respondents State Appellants are the assessees in all the three appeals.

(2.) The petitioner in OP 3173 of 1994 is the appellant. The appellant is engaged in the business of photo processing laboratory and also in the purchases and sales of photographic materials. It carries on business inter alia of purchase and sales of photographic goods, processing of film from the negatives given by their customers. They also undertake the job of photography. The controversy arose when 'works contract' was made deemed sales in pursuance of the 46th Constitutional Amendment to the Kerala General Sales Tax Act (for short 'the Act'). According to the appellant, photography is not a specified activity covered by the 4th Schedule to the Act and the activity of a photographer/the processing unit 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) make 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. The decision reported in Jacob Cherian v. Union of India ( 1995 (1) KLT 240 ) was relied on. When the Original Petition came up for hearing, counsel for the appellant made a submission, which appears to be without comprehending the subsequent judicial pronouncement on the subject, that the case can be disposed in the light of Jacob Cherian's case (supra). Accordingly, Shanmugham, J. by judgment dated 23.11.1998 disposed of the Original Petition. Learned counsel for the appellant submitted in this context that in the decision in Studio Kamalalaya v. Commercial Tax Officer, the West Bengal Tribunal took the view that there is no works contract exigible to tax with reference to the activity of photography. It was held that the activity of photography relates to the transaction where the photographer supplies everything from start to finish, from the photographic films which turns into a negative exposed film upto the production of finished photograph. In such a transaction, no works contract can be conceived by because no goods belong to the customer to which the processes of taking a photograph, developing, printing and if necessary enlarging. Hence counsel submitted that this cannot be termed as works contract. It was also held in that case that in case of negative films supplied by the customer to a photographer for developing, printing and necessary enlarging, although it is true that the negative belongs to the customer, who is a person other than the works contractor, the works done by the photographer to bring about the finished photographs do not effect any improvement or repair or alteration etc. to the negative films which is returned intact to the customer. The word 'processing' in the definition clause imply that whatever is done should be done to the goods, namely, the negative supplied by the customer in order to bring about the activity within the ambit of the works contract. It is submitted that the said decision has been affirmed by the Supreme Court when it dismissed Special Leave Petition (Civil) No. 4700 of 1993 on 3.5.1993 against the decision of the West Bengal Taxation Tribunal. This apart, the Supreme Court had also approved this position in the decision reported in Everest Copiers v. State of Tamil Nadu ( AIR 1996 SC 2662 ). In view of the above decision, counsel submitted that the learned single Judge ought to have allowed the Original Petition in to declaring that the appellant is not liable to pay tax on their turnover relating to the photography as works contract.