2010 (7) TMI 952 - HC - VAT and Sales Tax

High Court: Photography services not works contract under Bihar Finance Act, 1981. Sales tax orders set aside.

Amar Kumar Birley Versus State of Bihar and Others

The High Court of Patna ruled in favor of the petitioner, holding that the photography services provided by the petitioner in his studio do not constitute ... - Issues Involved: The judgment involves the issue of whether the photography services provided by the petitioner as a commercial artist in his studio in Patna constitute works contract under section 3 of the Bihar Finance Act, 1981.Issue 1: Period 1986-87The petitioner submitted returns for the period 1986-87, where the assessing officer determined the figures. The petitioner contested that the amount for photography services is not a works contract and not liable for sales tax. Citing the Supreme Court judgment in Rainbow Colour Lab v. State of Madhya Pradesh, the petitioner argued against the imposition of tax on photography services. The court agreed with the petitioner, stating that photography services do not qualify as works contract under the Act. The court found that the State erred in levying sales tax on the photography contracts for this period.Issue 2: Period 1989-90Similarly, for the period 1989-90, the petitioner raised a grievance that his photography services should not be subject to tax. The court reviewed the submissions and upheld the petitioner's argument based on the Rainbow Colour Lab case. It was concluded that the photography services provided by the petitioner do not involve the sale of goods and, therefore, cannot be considered a works contract for tax purposes.Issue 3: Period 1990-91For the period 1990-91, the assessing officer determined the gross figures for photography activities. The petitioner contested the imposition of sales tax on these contracts as well. The court, after considering the legal precedents and arguments presented, found that the photography services provided by the petitioner do not meet the criteria of a works contract as defined under the Act. Consequently, the court set aside the portion of the orders imposing sales tax on the photography contracts for this period.Conclusion:In conclusion, the High Court of Patna ruled in favor of the petitioner, holding that the photography services provided by the petitioner in his studio in Patna do not fall under the category of works contract as per the Bihar Finance Act, 1981. The court found that the State erred in imposing sales tax on the photography contracts for the periods 1986-87, 1989-90, and 1990-91. As a result, the court allowed the writ petition and set aside the orders of the assessing officer that imposed sales tax on the photography contracts for the mentioned periods.