TMI Blog2001 (3) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... costing Rs. 48,89,613.89 in the course of his business during April 1, 1986 to March 31, 1989 and has received through job-work a sum of Rs. 83,15,927.55 which included transfer of property in goods in the aforesaid chemicals and photographic papers to its customers which were involved in execution of work for them. On these premises, after taking recourse to section 12 of the Rajasthan Sales Tax Act, 1954 reassessments was made for the aforesaid period and tax was assessed on Rs. 5,94,912.40 additional surcharge on which was computed at Rs. 51,922.96 and considering the evasion of tax on transfer of property goods costing Rs. 48,49,613 penalty under section 16(1)(i) was also imposed. Further interest under section 11-B was also levied. 4.. On the aforesaid premise regular assessments for April 1, 1989 to March 31, 1990 and for April 1, 1990 to March 31, 1991 were also made under section 10(3), raising demand on account of tax, surcharge, interest and levied penalty under section 7-AA. 5.. Appeals against all the three orders before the Deputy Commissioner (Appeals) were unsuccessful. 6.. Hence three appeals were preferred before the Rajasthan Tax Board by the dealer. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and supply the same along with the negative films to the customers. Yet, third type of cases may be in which the developed film is given to the dealer either for taking of enlarge prints or the required prints of already developed negatives. 10.. He contends that while first type of activity can be considered to be an activity of service contract only because in such cases passing of the prints on the paper used in taking out the prints from the negatives may only be considered to be incidental of service contract; but in latter two types of cases it continues to remain a works contract and no amount of service is involved. For this proposition, he relies on decision of the Kerala High Court in Bavens v. Union of India [1995] 97 STC 161. He further contends that the decision of Kerala High Court making out this distinction has since been approved by the Supreme Court in [2000] 118 STC 9; (2000) 2 SCC 385 (Rainbow Colour Lab v. State of Madhya Pradesh). 11.. On the other hand, Mr. Mehta, learned counsel for the respondent-dealer urges that the Tribunal has rightly decided the case in favour of the assessee and contends by relying on the principle laid in the judgments referred a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 161 (Ker) we do not find any evidence in the judgment of Rainbow Colour Lab's case [2000] 118 STC 9; (2000) 2 SCC 385 that the apex Court has also approved the distinction in principle as has been drawn by the Kerala High Court in Bavens Judgment [1995] 97 STC 161. 13.. In fact the principle was first enunciated in the case of a photographic work that it is essentially one of skill, labour and not the case of work contract in Kame's case [1977] 39 STC 237 (SC). In that case, the court categorically said: "When a photographer like the respondent undertakes to take photograph, develop the negative, or do other photographic work and thereafter supply the prints to his client, he cannot be said to enter into a contract for sale of goods. The contract on the contrary is for use of skill and labour by the photographer to bring about a desired result. The occupation of a photographer, except in so far as he sells the goods purchased by him, in our opinion, is essentially one of skill and labour." 14.. The facts before the Supreme Court in Rainbow Colour Lab case [2000] 118 STC 9; (2000) 2 SCC 385 after about 23 years of Kame's case [1977] 39 STC 237, in which, were almost same as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch reads thus: ................." After quoting the clause (29A) of article 366 the court said: "The amendment referred to above has not empowered the State to indulge in a microscopic division of contracts involving the value of materials used incidentally in such contracts. What is pertinent to ascertain in this connection is what was the dominant intention of the contract. Every contract, be it a service contract or otherwise, may involve the use of some material or the other in execution of the said contract. The State is not empowered by the amended law to impose sales tax on such incidental materials used in such contracts." 18.. Thus the dominant intention behind the transaction was held to be decisive in determining whether it is a contract of sale of goods involved no execution of works contract, or transfer of property in goods is only incidental to a contract of service or of work and labour but not of sale. 19.. More close at home, is the decision in the Everest Copier's case [1996] 103 STC 360 (SC). It was a case in which the main object of the work undertaken by a photocopier to develop or make a xerox copy of the document which was supplied by the customer an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the photographer. The photograph has no marketable value. What is expected from the photographer is his service, artistic skill and talent. If any property passes to the customer in the form of photographic paper, it is only incidental to the service contract. No portion of the turnover of a photographer relating to this category of work would be exigible to sales tax." 22.. The court approved of above principle. However nothing was said about distinction drawn by the court with other branch of service rendered by a developer of photo reels. In our opinion the principle enunciated by the Supreme Court by quoting with the approval from Kames case [1977] 39 STC 237, Hindustan Aeronautics case [1984] 55 STC 314 and Everest Copiers case [1996] 103 STC 360 and Baven's case [1995] 97 STC 161 (Ker) and further agreeing in Kame's case [1977] 39 STC 237 (SC) in the facts noticed by the court as quoted above, leaves no room for doubt that the distinction drawn by the Kerala High Court and relied on by learned counsel for the petitioner, has not found its approval expressly or impliedly. Approval was accorded by the court, only to the principle quoted above which was in consequence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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