Works contract tax applies to photographic processing where transfer of goods is involved, despite the service element.

Processing and supplying photographs, photo prints and photo negatives was treated as a works contract because property in goods passed in the execution of the activity, attracting the deemed-sale principle in Article 366(29A) and the charging provisions of the Assam General Sales Tax Act, 1993. The court held that the activity fell within the statutory definition of works contract and that the earlier dominant-intention test could not survive the later larger-Bench ruling clarifying that, after the Forty-sixth Amendment, tax may be levied on the materials used even where service elements are present. The assessments and demands were therefore sustainable.

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Issues: Whether the processing and supplying of photographs, photo prints and photo negatives by the petitioners amounted to a works contract involving transfer of property in goods so as to attract tax under the Assam General Sales Tax Act, 1993.

Analysis: Clause (29A) of Article 366 of the Constitution of India treats the transfer of property in goods involved in the execution of a works contract as a deemed sale. On that basis, the definition of "sale" in section 2(33) of the Assam General Sales Tax Act, 1993 and the charging provision in section 8(1)(e) extend to such transfers. The business activity of processing and supplying photographs fell within the statutory description of works contract in section 2(38) and Entry 24 of Schedule VI. The earlier view that no tax could be levied where the dominant intention was service was held not to survive the later larger-Bench decision which clarified that even where service is involved, tax can be levied on the materials used in a works contract after the Forty-sixth Amendment.

Conclusion: The petitioners' activity was taxable as a works contract and the assessments and demands were sustainable.

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