TMI Blog1991 (1) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the provisions of the Karnataka Sales Tax Act, 1958 (hereinafter referred to as "the Act") and levied sales tax on the turnover of sales of blocks. Subsequently, the assessee has filed a revised return of turnover and claimed deductions and exemptions for the sale of metal blocks as the blockmaking involves technical skill and expertise. Thus it is not a sale attracting the sales tax. 3.. The assessing authority has rejected this plea and held that the assessee as a registered dealer under the Central Sales Tax Act, 1956, purchases metal blocks, zinc sheets, films, process engraving plates, copper sheets on "C" forms for use in the manufacture of metal blocks for sale, which goods are authorised under the R.O. issued. Similarly, he purchases the same goods in the local market also from the registered dealer paying local tax for use in the manufacture of metal blocks. All the purchases are vouched and accounted duly in the books of accounts. The assessee after manufacturing metal blocks sells in the State and collects Karnataka sales tax at 4 per cent which is in order. 4.. The first appellate authority, i.e., the Deputy Commissioner of Commercial Taxes (Appeals) on an appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover the tax liability. Thus it is not a commercial goods but only a commodity made to a particular individual and its utility is limited to that individual only. 8.. Sri E.R. Indrakumar, learned counsel appearing for the petitioner has submitted that the assessing authority and the first and second appellate authorities have committed an error in not taking into consideration that the photographic block-making involves mainly the skill and expertise. Hence preparation of the photographic block and supplies to a particular individual does not amount to sale. Hence the orders require interference in this petition. 9.. In the case of the Assistant Sales Tax Officer v. B.C. Kame, reported in [1977] 39 STC 237, a distinction was made with regard to contract of sale or contract of work and labour for the purpose of imposing sales tax by the Supreme Court of India. In this decision, the respondent Kame was the proprietor of the photo studio and he was also carrying on business inter alia of buying and selling photographic goods. After buying the photographic goods, he used to make use of those goods (i) in taking photographs and supplying prints thereof, (ii) in making enlargements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the contention and passed assessment orders in respect of block-making and sale of machinery. The appeals preferred by the assessee against the assessment orders were dismissed and the appellate authority affirmed the findings on both the counts. On further appeals by the assessee, the Board of Revenue upheld the contentions of the assessee and held that the block-making was works contract involving labour and skill and therefore, the turnover of the assessee was not liable to tax. The department submitted applications to the Board of Revenue for referring the question of law and then the Board of Revenue referred the question of law for the opinion of the High Court. The Division Bench of the Madhya Pradesh High Court held this question in the affirmative relying on the decision of B.C. Kame [1977] 39 STC 237 (SC) referred to above. 11.. The learned High Court Government Advocate has distinguished the decision on the ground that the learned Judges have held the point in the affirmative as they have found the value of the materials is only 20 per cent of the total price of the blocks and the blocks are used only for a particular customer and not for any other person. 12.. Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to be sold to the customer, it is a contract for the sale of goods. The statement that if the contract be such that it will result in the sale of a chattel, it is a contract of sale, cannot be regarded as indicating a correct test. Where after the customers place orders with a printer for the supply to them of commercial stationery or with a block-maker for blocks, which they are asked to make, those articles are made by the printer and the blockmaker in order that they might be sold to the customers held, the contract is not a contract for work. That the articles produced by the assessee were useful only to the customers to whose orders they were prepared cannot also be of any importance. A contract by which a person promises to make goods for another for a price and by which that another promises to pay such price when they are made is a contract for sale of goods, the ownership of the materials on which labour is bestowed or its value being considerations as inconclusive as the relative value of the labour and materials on which it is bestowed. It cannot be concluded that the transaction was a contract for work from the way the bills were prepared, when it is otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal was therefore right in coming to its conclusion." 15.. In B.C. Kame's case [1977] 39 STC 237 case referred above, the Supreme Court held that taking of photographs and other allied connected works is only a contract of work and labour, by appreciating that, after purchasing the photographic goods, the respondent used to take photographs and supplied prints to the customers and also used to undertake making of enlargement of photos and preparing positive prints from the negatives brought by the clients. 16.. The materials brought by the respondent was altogether converted into a different nature after giving away its original form. When that is so, the film after purchasing, is to fit into a camera and by clicking the photo, it has to be processed in the laboratory to take out negatives and by printing those negatives, positive will come and which will be supplied to the customers. Here, the goods for which the tax is already paid, is converted into a different nature, for which, the skill is necessary. A customer here will give an order to get the positive to his desired design which requires the skill of photographer. 17.. In the present case, the petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
