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2005 (8) TMI 633 - HC - VAT and Sales TaxLevy of tax on the taxable turnover - Works contract of "processing and supplying photographs, photo prints and photo negatives"- Whether section 2(3) and section 5 of the Karnataka Taxation Laws (Amendment) Act of 2004 has the Constitutional approval or not ? - HELD THAT:- A careful reading of the entire judgment in Golden Color Lab [2003 (7) TMI 665 - KARNATAKA HIGH COURT], would show that unless entry 25 is declared to be invalid and unsustainable in any subsequent proceedings, the judgment of Keshoram 1999 (9) TMI 938 - KARNATAKA HIGH COURT] continues to be binding on the State Government. Unless and until entry 25 is considered as or unless and until the Supreme Court re-considers and pronounces upon a similar entry 25 of any other State, the Keshoram decision [2001] 121 STC 175 (Kar) continues to be binding on the State. In these circumstances, the petitioners are right in their submission that in the light of the binding judgment of Keshoram and in the absence of any declaration in terms of the findings in para 23, the State Government lacks legislative competence in the light of a binding judgment on the parties. We, therefore, find substance in the argument of the petitioners with regard to the unconstitutionality of the impugned Act in the case on hand in the given circumstances. At this stage, we must also notice an argument of the State with regard to re-enactment in the light of the observations of the division Bench in Golden Color Lab case. It is no doubt true that the division Bench did say that the decision in ACC [2001 (1) TMI 248 - SUPREME COURT], at best, may enable the State to re-enact the provisions similar to entry 25. This sentence has to be read along with other findings in paras 22(3), 23, 26 and 27. If read the judgment as a whole, it would be clear that re-enactment is permissible or possible only in the event of a subsequent declaration with regard to entry 25 being invalid and unenforceable and only in the event of the Supreme Court re-considering or pronouncing a similar question in similar term as in entry 25 in terms of the findings in para 23. Admittedly, it is nobody's case before us that entry 25 was re-considered in any other judgment subsequent to Golden Color Lab. In these circumstances, the Golden Color Lab case is binding on the parties. In the light of our discussion with regard to legislative competence in terms of this order, it is unnecessary for us to consider the submission of Sri Naganand, learned Senior Counsel with regard to confiscation. In these circumstances and in the result, these petitions are accepted and we declare that the provisions of section 2(3) as unconstitutional. Respondents are hereby restrained from enforcing the provisions of the Karnataka Taxation (Amendment) Act, 2004. In the light of the declaration in terms of the orders in so far as Act No. 3 of 2000 is concerned, all consequential proceedings including assessment order and consequential demands are also set aside. Parties are to bear their costs. Petitions allowed.
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