Photographic processing is a skill-and-labour contract, not a works contract, so sales tax does not apply.

Processing and developing photographs for customers is treated as a contract for skill and labour rather than a works contract, because the transfer of paper is merely incidental and the prints are not regarded as marketable commodities. On that basis, such activity is not exigible to sales tax under the Orissa Sales Tax Act, 1947. The text also states that a contrary view sustaining tax liability was unsustainable on the facts and law governing the issue.

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Issues: (i) Whether the processing and developing of photographs, with supply of prints to customers, amounts to a works contract exigible to sales tax under the Orissa Sales Tax Act, 1947. (ii) Whether the Tribunal's conclusion sustaining tax liability on the activity was perverse for non-consideration and misconsideration of facts and law.

Issue (i): Whether the processing and developing of photographs, with supply of prints to customers, amounts to a works contract exigible to sales tax under the Orissa Sales Tax Act, 1947.

Analysis: The activity was held to be essentially a contract for skill and labour in which the photographer develops negatives and supplies prints to the customer. The photographs produced were treated as not being commercial or marketable commodities, and the transfer of paper was regarded as merely incidental. The reasoning followed the settled position that such photographic work is a service contract and not a contract for sale or a works contract.

Conclusion: The activity does not amount to a works contract and is not exigible to sales tax as such.

Issue (ii): Whether the Tribunal's conclusion sustaining tax liability on the activity was perverse for non-consideration and misconsideration of facts and law.

Analysis: In light of the settled legal position on photography contracts and the admitted nature of the transaction as one of service rendered to the customer, the Tribunal's view sustaining tax could not stand. The conclusion was held to be unsustainable on the facts and law governing the issue.

Conclusion: The Tribunal's conclusion was held to be perverse and liable to be set aside.

Final Conclusion: The reference was answered in favour of the assessee, and the levy of tax on the photography activity was not sustained.

Ratio Decidendi: A photographer's activity of processing and developing photographs for a customer is a contract for skill and labour, not a works contract or sale of goods, where the material used is merely incidental and the prints are not marketable commodities.

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