Photography service tax value cannot include goods component where contract is legally divisible and VAT and service tax are distinct.

The divisibility of a photography contract permits separation of the goods element from the service element after the Forty-sixth Amendment, so the dominant intention test is not decisive where the contract is divisible in law. On that basis, service tax and VAT operate in distinct spheres and cannot be levied on the same taxable element. The value of photographic paper and processing chemicals used in photography services was therefore not includible in the taxable value of the service, and the assessee succeeded.

---

---

Issues: Whether the value of photographic paper and processing chemicals used in photography services could be included in the taxable value for levy of service tax.

Analysis: The applicable constitutional position after the Forty-sixth Amendment permits bifurcation of a works contract into separate components for sale of goods and for services. The dominant intention theory is no longer decisive where the contract is divisible in law. The decision also proceeds on the principle that service tax and VAT operate in distinct spheres and are mutually exclusive in relation to the same taxable element. On that basis, the goods component represented by photographic paper and consumables could not be added to the value of the photography service for service tax purposes.

Conclusion: The inclusion of the value of photographic paper and consumables in the taxable value of photography service was not permissible, and the assessee succeeded.

---