Works contract taxation applies to photographic processing where the sale element is severable after the Forty-sixth Amendment.

Photographic processing, including taking photographs, developing and printing films, was analysed as a composite works contract under the Kerala General Sales Tax Act. The article notes that, after the Forty-sixth Amendment, the sale element in such contracts is severable and taxable even where the dominant object is service; on that basis, later Supreme Court authority displaced the earlier contrary view in Rainbow Colour Lab and supported taxation. Questions on limitation and interest were not examined because they had not been raised before the Tribunal.

---

---

Issues: Whether photographic processing, including taking photographs, developing and printing films, was a works contract exigible to sales tax under the Kerala General Sales Tax Act, 1963.

Analysis: The revision challenged the Tribunal's view that the assessee's activity fell within the expanded concept of works contract. The Court held that the later Supreme Court decisions had clarified that, after the Forty-sixth Amendment, the sale element in a composite works contract is severable and taxable. On that basis, the decision treating Rainbow Colour Lab as controlling was no longer sustainable, and the Tribunal had correctly applied the law declared in Associated Cement Companies and followed in Bharat Sanchar Nigam Ltd. The questions relating to limitation and interest were not adjudicated because they had not been raised before the Tribunal.

Conclusion: The activity was rightly treated as a works contract and the levy of tax was upheld, in favour of the Revenue.

Final Conclusion: The revision failed on the sole issue actually decided, and the assessment order as restored by the Tribunal was sustained.

Ratio Decidendi: After the Forty-sixth Amendment, the sale element in a composite works contract is taxable even where the dominant object is service, and later Supreme Court authority overruling an earlier contrary view governs the field.

---