COMMISSIONER OF SALES TAX Vs. RADIO ADVERTISING SERVICES

JUDGEMENT

(1.) BY these references under section 61(1) of the Bombay Sales Tax 1959, the Maharashtra Sales Tax Tribunal has referred the following common questions of law, which arise out of three orders passed by it in similar factual circumstances in three different cases, to this Court for opinion :

(2.) IN so far as the above additional question is concerned, it is stated by Mr.A.J.Rana, learned counsel for the revenue, that the revenue does not propose to press this question. The said question is, therefore, returned unanswered.

(3.) THE material facts of the three cases giving rise to the question referred to us are identical. We shall, therefore, set out the facts of one of these cases only viz. Radio Advertising Services, who is the respondent in Sales Tax Reference No.5 of 1989. The facts are as below : M/s.Radio Advertising Services are producers and distributors of advertising films throughout India. They are registered as dealer under the Bombay Sales Act, 1959 ("Act"). They are engaged in (i) producing advertising films and supplying positive and negative prints thereof and (ii) preparing positive prints in the same size from the negative brought by the customers and supplying the same to them. On 5th December 1977 the assessee received an order from one M/s Hindustan Thompson Associates Ltd., Bombay for the production and supply of 75 feet of an advertising film "Halls Mentholyptus" with complete Hindi commentary which was produced and supplied by the assessee. Thereafter, on 16th February 1978, the assessee received order from the same party for production and supply of 550 prints of the said film. The assessee supplied 60 prints at the rate of Rs.151.00 per film vide its bill dated 3rd March 1978 of the same date. The assessee thereafter filed an application under section 52 of the Bombay Sales Act, 1959 ("the Act") before the Deputy Commissioner of Sales Tax for determination as to whether any tax was payable on the supply of 60 films made by it. It may be observed that in the past, the assessee had been paying sales tax on the additional prints supplied by it. Despite that the above application for determination of the question whether any tax was payable on the supply of 60 prints covered by the aforesaid bill, was made because of the objection of the customer to levy of sales tax on the supply of additional prints of the advertising films in view of the decision of the Supreme Court in the case of The Assistant Sales Tax Officer v B.C. Kame (1977) 39 S.T.C. 237. It is, however, pertinent to mention that in the past, as also at the material time, no sales tax was levied on the production of films (master prints) and supplying the positive and negative prints thereof as according to both the assessee and the revenue that was a works contract. Tax was levied only on the additional prints supplied to the customers. The case of the assessee before the Deputy Commissioner was that the production and supply of additional prints of the advertising films was not a contract for supply of goods but it was a contract for work and labour and as such it was covered by the ratio of the decision of the Supreme Court in the case of B.C. Kame (supra). The Deputy Commissioner of Sales Tax (Administration) accepted the above contention of the assessee and by his order dated 19th August 1978 held that in view of the decision of the Supreme Court in the case of B.C.Kame (supra), job of taking out and supplying additional prints of the advertising films by the assessee was a work of art and skill and no element of sale was involved therein. Accordingly, he held that no sales tax was payable on the supply of 60 prints by the assessee.