2000 (12) TMI 874 - HC - VAT and Sales Tax

Photographer's Services Taxable under Works Contract Law

Live Tone Versus State of Tripure and Others

The court held that the activities of a photographer, including taking snaps, washing negatives, and printing photographs, constitute a 'works contract' ... DEEMED SALE — WORKS CONTRACT — DEFINITION — INCLUDES ALTERING, ORNAMENTING, FINISHING, IMPROVING OR OTHERWISE PROCESSING — PHOTOGRAPHER TAKING PHOTOGRAPHS, DEVELOPING NEGATIVE AND TAKING PRINTS - VALUE OF GOODS TRANSFERRED (I.E., NEGATIVE AND PRINTING PAPER) TAXABLE Issues Involved:1. Whether the activities performed by the petitioner, a photographer, constitute a 'works contract' under the Tripura Sales Tax Act, 1976.2. The applicability of the definition of 'works contract' under section 2(o)(iv) of the Tripura Sales Tax Act, 1976.3. The relevance and applicability of precedents set by the Supreme Court and other High Courts on similar matters.Detailed Analysis:Issue 1: Whether the activities performed by the petitioner, a photographer, constitute a 'works contract' under the Tripura Sales Tax Act, 1976.The petitioner, a photographic firm, challenged the assessment orders passed by the Superintendent of Taxes, Commissioner of Taxes, and the Tripura Sales Tax Tribunal, which held that the activities of taking snaps, washing negatives, and printing photographs constitute a 'works contract' and are taxable under the Tripura Sales Tax Act. The petitioner argued that these activities are artistic services and not 'works contracts.'Issue 2: The applicability of the definition of 'works contract' under section 2(o)(iv) of the Tripura Sales Tax Act, 1976.The respondents contended that the activities fall under the definition of 'works contract' as per section 2(o)(iv) of the Tripura Sales Tax Act, which includes 'the altering, ornamenting, finishing, improving or otherwise processing or adopting of any goods.' The court examined section 3A, which taxes the transfer of property in goods involved in the execution of a works contract.Issue 3: The relevance and applicability of precedents set by the Supreme Court and other High Courts on similar matters.The petitioner cited several cases, including Assistant Sales Tax Officer v. B.C. Kame, where the Supreme Court held that a photographer's work is not a 'works contract' but a service contract. Similarly, the Kerala High Court in Bavens v. Union of India and the Supreme Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers interpreted similar activities as services rather than works contracts. However, the respondents argued that these cases were distinguishable because the Tripura Sales Tax Act specifically defines 'works contract.'The court noted that the Supreme Court's decision in Rainbow Colour Lab v. State of Madhya Pradesh, which the petitioner heavily relied upon, interpreted the Madhya Pradesh General Sales Tax Act, which did not have a definition of 'works contract' similar to the Tripura Sales Tax Act. The court emphasized that the Tripura Sales Tax Act's definition explicitly includes the processes involved in photography.Conclusion:The court concluded that the activities performed by the photographer, including taking snaps, washing negatives, and printing photographs, involve altering and processing goods, thereby falling under the definition of 'works contract' as per section 2(o)(iv) of the Tripura Sales Tax Act. The court distinguished the cited precedents on the grounds that the specific definition in the Tripura Sales Tax Act was not considered in those cases.The court held that the entire price charged by the photographer could not be taxed as a works contract if the petitioner had separately shown the cost of goods and the charges for artistic skill. However, since the petitioner did not provide such a breakdown, the tax authorities had no option but to tax the total sale price.The petition was dismissed, and the court upheld the impugned orders, stating that they did not suffer from any illegality or infirmity as long as the definition under section 2(o) of the Tripura Sales Tax Act remained in force. The interim order, if any, stood vacated.Petition dismissed.