Page 66 - GSTL_16th July 2020_Vol. 38_Part 3

304 GST LAW TIMES [ Vol. 38
the execution of a works contract. Subsequent to the said amendment, the defini-
tion of ‘sale’ as contained in the Central Sales Tax Act, 1956 and respective State
Acts has also been adopted/amended so as to levy sales tax on sale or purchase
of goods. On that basis it was argued that since the appellant has also paid VAT
on the materials and consumables used in photography, therefore, it cannot be
subjected to separate service tax on the same value of materials and consumables
used in the course of its business of photography. In furtherance of the said ar-
gument, Learned Counsel submitted that the purpose of Notification No.
12/2003-S.T. is to exempt the value of goods and materials, which are otherwise
exigible to sales tax by the States, from the levy of service tax and therefore, sub-
jecting the appellant to service tax on the same value of goods and materials on
which it has paid the sales tax would amount to double taxation. Learned Coun-
sel contended that the material and consumables are transferred by the appellant
to its customers which are embedded in the photographs and therefore, the ap-
pellant is entitled to claim deduction of value of material and consumables
charged from its customers while paying service tax. The term “sold” used in
Notification No. 12/2003-S.T., dated 20-6-2003 must be interpreted to cover even
a mere transfer of possession of goods for consideration by the appellant to its
customers. By referring to Section 2(h) of the Act, it was submitted that any
transfer of possession of goods by one person to another in the ordinary course
of business or trade, would constitute sale for the purposes of the Act. On the
aforesaid premises, it was claimed that the transfer of possession of photographs
to the customers which are prepared with the photography paper upon which an
image is printed using certain consumables and chemicals etc. constitutes a
deemed sale for the purposes of exemption under Notification No. 12/2003. It
was also the contention of the Learned Counsel that the intention to sell can be
gathered from the invoices wherein the appellant has charged price of material
and consumables and has paid VAT on the same. On this ground, it was the
stand of the appellant that the finding recorded by the Tribunal that material and
consumables embedded in the photographs given to the customer are consumed
by them without transfer of possession of material and consumables for some
consideration, is perverse. Lastly, it was projected that since the photography
involves the processing activity, therefore, it is a works contract. There is an ele-
ment of both sale and service in photography, thus, service tax would not be lev-
iable on sale portion. In this regard, heavy reliance was placed upon the Apex
Court decisions in Bharat Sanchar Nigam Limited (supra), Gujarat Ambuja Cements
Ltd. v. Union of India and others, (2005) 4 SCC 214 = 2005 (182) E.L.T. 33 (S.C.) and
Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes, 2008 (9) S.T.R. 337.
6. Support was also gathered from the judgment in Safety Retreading
Company Private Limited v. Commissioner of Central Excise, Salem, (2017) 3 SCC 640
= 2017 (48) S.T.R. 97 (S.C.) to show that gross turnover in respect of which the
appellant-assessee has paid sales tax/VAT under State Act as works contractor is
excluded from purview of service tax.
7. On the other hand, Learned Counsel for the respondents argued in
support of the impugned orders. He contended that the finding recorded by the
Larger Bench of the Tribunal is just and proper that since the consumables and
chemicals used for providing photography service disappear when the photo-
graph emerges and therefore, there is no element of sale involved on those con-
sumables. It was contended that in photography service, the contract is predom-
inantly a service contract and the supply, if any, of material and consumables

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