Page 63 - GSTL_16th July 2020_Vol. 38_Part 3

2020 ] AGRAWAL COLOUR ADVANCE PHOTO SYSTEM v. COMMISSIONER OF C. EX. 301
material/printing material sold to its customers. The Commissioner (Appeals)
vide order dated 17-4-2006 (Annexure A-2) although reduced the amount of pen-
alty under Section 76 of the Act to the tune of ` 1,50,000/- from ` 6,76,386/- but
affirmed the order of the Assessing Officer with the reasoning that under Section
65(105)(zb) of the Finance Act, taxable service would mean “any service provid-
ed or to be provided to a customer, by a photography studio or agency in rela-
tion to photography in any manner” and therefore, all services rendered relating
to photography in any manner are covered under the ambit of photography ser-
vices and therefore, liable to service tax. The relevant extract of the findings rec-
orded by the Commissioner (Appeals) is reproduced as under :-
“10………When the photography services were first brought into the tax
net with effect from 16-7-2001, there was confusion over the value of the
photographic services. The Kerala Colour Lab Association had filed a Writ
Petition before the Honourable High Court of Karnataka and the Honoura-
ble High Court had dismissed the petition filed vide their judgment dated
31-1-2002 as reported in 2003 (156) E.L.T. (17) (Kar.) (Kerala Colour Lab Asso-
ciation v. UOI), Honourable High Court, inter alia, upheld the constitutional
validity of service tax on services rendered by photographic studios, etc.
and held that the exclusion of cost of unexposed photographic film, unre-
corded magnetic tape or such other storage devices sold to the client during
the course of providing the services from the value of the taxable services
was neither discriminatory nor violation of the fundamental rights guaran-
teed under Article 14 of the Constitution. This decision was later on af-
firmed by the Honourable Supreme Court in C.K. Jidheesh v. UOI - 2006 (1)
S.T.R. 3 (S.C.). Accordingly, the value of the taxable services would include
the entire gross amount charged from the customer excluding only the cost
of unexposed photographic film, unrecorded magnetic tape or such other
storage devices, if any, sold to the client during the course of providing the
services.
11. The appellant, at the time of filing appeal against the Order-in-
Original passed by the Divisional Assistant Commissioner, has raised a
new ground that he is not providing any photography services, rather he is
manufacturing excisable goods falling under chapter 37 & chapter Heading
49.11 of the Central Excise Tariff Act, 1985. The short point to be decided
here is that whether the activity of photographing persons/subjects, pro-
cessing & developing of photographic films and printing of photographs
etc. amounts to providing “photography services” under Section 65(78) of
the Finance Act, 1994. The point raised by the appellant at this stage, about
him being the manufacturer of excisable goods, is neither material here nor
the subject matter of the present proceedings. In any case, this new point
raised by the appellant at the appellate stage should be viewed in the back-
ground of the dismissal of his writ petition by the Honourable High Court
of Jabalpur, as also the categorical decision of the Honourable Supreme
Court mentioned in para supra. Under Section 35A of the Central Excise
Act, 1944, I therefore, find this new ground of appeal to be both willful and
unreasonable and as a result not deserving of consideration on this score
alone.
12. Under Section 65(78), photography has been defined “to include still
photography, motion picture photography, laser photography, aerial pho-
tography or fluorescent photography”. Similarly, under Section 65(79) ibid,
photography studio or agency has been defined to mean “any professional
photographer or a commercial concern engaged in the business of render-
ing services relating to photography”. Under Section 65(105)(zb), ibid the
taxable service would mean “any service provided or to be provided to a
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