Photographic processing of customer-supplied negatives can be taxed as a works contract; own-material photography cannot.

Photographic activity is treated differently depending on whether the customer's property is worked upon. Where the photographer uses his own film and camera and supplies finished photographs, the transaction is essentially skill and labour, with any transfer of photographic paper only incidental; it is not a works contract and is not exigible to sales tax. Where exposed films or negatives supplied by customers are processed and positive prints are produced, the activity involves processing of the customer's property and falls within the amended concept of works contract, making the transfer of property in goods involved in execution of the work taxable.

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Issues: (i) whether the first category of photographic activity, where the photographer uses his own film and camera and supplies the finished photographs, constitutes a works contract exigible to tax; (ii) whether the second and third categories of photographic activity, involving processing of exposed films or negatives supplied by customers and supply of positive prints, constitute works contracts liable to sales tax.

Issue (i): whether the first category of photographic activity, where the photographer uses his own film and camera and supplies the finished photographs, constitutes a works contract exigible to tax

Analysis: In the first category, the materials used belong to the photographer and no basic goods of the customer are worked upon. The transaction is essentially one of skill and labour, and any passing of photographic paper is only incidental. The activity does not involve the customer's property being improved, processed, or otherwise subjected to work within the statutory definition of works contract.

Conclusion: This category is not a works contract and is not exigible to sales tax.

Issue (ii): whether the second and third categories of photographic activity, involving processing of exposed films or negatives supplied by customers and supply of positive prints, constitute works contracts liable to sales tax

Analysis: In these categories, the photographer works upon exposed films or negatives belonging to the customer and produces positive prints in the desired size. The statutory concept of works contract covers processing, and the constitutional amendment authorises tax on transfer of property in goods involved in execution of such contracts. The activity is not merely duplication or a pure service, but involves processing of the customer's property and falls within the amended statutory scheme.

Conclusion: These categories constitute works contracts and are liable to tax.

Final Conclusion: The levy was upheld in respect of the processing activities brought within the definition of works contract, while the appeals were ultimately rejected.

Ratio Decidendi: Where a photographer merely undertakes a service using his own materials, the transaction is not a works contract; but where the photographer processes a customer's exposed film or negative and thereby effects a taxable transfer of property in goods involved in execution of the work, the activity falls within the statutory concept of works contract.

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