Burden of proving second-sale exemption and treatment of commercial photography receipts as sales of goods

Where a dealer claims that turnover is exempt from single-point tax as second sales, the burden lies on the dealer to prove the facts within special knowledge, consistently with section 10 of the Madras General Sales Tax Act, 1959 and section 106 of the Evidence Act. On the facts, the assessee proved second sales only for part of the radio turnover, so the balance remained taxable. Receipts from a commercial photo studio were treated as sales of goods because the transaction involved production and supply of finished photographs, not a mere contract for work and labour. The assessment was therefore sustained for both turnovers.

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Issues: (i) Whether the burden of proving that the disputed radio turnover was not liable to single-point tax on the footing of second sales lay on the assessee. (ii) Whether receipts from a commercial photo studio constituted sales of goods or contracts for work and labour.

Issue (i): Whether the burden of proving that the disputed radio turnover was not liable to single-point tax on the footing of second sales lay on the assessee.

Analysis: The charging provision made the turnover liable to tax, while the claim that the goods were taxable only at a single point operated as an exemption. The Court held that the dealer seeking that benefit had to establish the facts within his special knowledge. Section 10 of the Madras General Sales Tax Act, 1959 was read consistently with the general principle in section 106 of the Indian Evidence Act, 1872. On the facts, the assessee could prove second sales only for part of the turnover and failed to furnish the necessary particulars for the balance.

Conclusion: The burden lay on the assessee, and the assessment on the disputed radio turnover was upheld.

Issue (ii): Whether receipts from a commercial photo studio constituted sales of goods or contracts for work and labour.

Analysis: The Court distinguished cases where the substance of the bargain was the exercise of skill alone from cases where the customer engaged a commercial photographer to produce negatives and supply copies as finished goods. In studio photography, the transaction was treated as one for the supply of photographs to the customer rather than merely for labour and materials. The authorities relied on the commercial character of the transaction and the supply of completed copies, not the value of labour versus materials.

Conclusion: The photo studio receipts were taxable as sales and not as mere contracts for work and labour.

Final Conclusion: The revision failed in respect of both disputed turnovers, and the Tribunal's order was sustained.

Ratio Decidendi: Where the taxable concession depends on facts specially within the dealer's knowledge, the dealer bears the burden of proving entitlement; and a commercial photography transaction involving production and supply of finished copies is a sale of goods rather than a pure works contract.

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