Page 69 - GSTL_16th July 2020_Vol. 38_Part 3

2020 ] AGRAWAL COLOUR ADVANCE PHOTO SYSTEM v. COMMISSIONER OF C. EX. 307
“366. (29A) ‘tax on the sale or purchase of goods’ includes -
(a) *** *** ***
(b) a tax on the transfer of property in goods (whether as goods or in
some other form) involved in the execution of a works contract;
*** *** ***
The aforesaid definition of “sale” has been adopted by the M.P. VAT Act, 2002.
Sub-clause (ii) of Section 2(u) of the said Act, which is relevant for the purposes
of present controversy, is reproduced as under :-
“2(u) “Sale” with all its grammatical variations and cognate expressions
means any transfer of property in goods for cash or deferred payment or
for other valuable consideration and includes -
*** *** ***
(ii) a transfer of property in goods whether as goods or in some other
form, involved in the execution of works contract;
Section 2(h) of the Central Excise Act, 1944 defines “sale” and “purchase” as any
transfer of possession for consideration by one person to another. Section 2(h) of
the Act is reproduced as under :-
“2(h) “sale” and “purchase”, with their grammatical variations and cog-
nate expressions, mean any transfer of the possession of goods by one per-
son to another in the ordinary course of trade or business for cash or de-
ferred payment or other valuable consideration;”
14. According to the Learned Counsel for the appellants, the material
and consumables are embedded in the photograph when it is transferred to the
customers. The Larger Bench of the Tribunal erroneously held that the consuma-
bles and chemicals used for providing such service disappear when the photo-
graph emerges and concluded that value of photography service includes all el-
ements which bring that to the deliverable stage. As noticed earlier, the stand of
the appellants is that under sub-clause (b) of Clause (29A) of Article 366 of the
Constitution, in execution of works contract, the tax which is paid on the sale or
purchase of goods should be on the transfer of property in goods only. The pho-
tograph is completed through developing and printing process by using the con-
sumables and chemicals, which are the essential ingredients without which the
photography cannot be completed. Therefore, when value of photography paper
upon which an image is printed and certain consumables and material with
which the photography is done, can be separated from the photography service
then both the elements cannot be remixed for the purposes of service tax particu-
larly when the VAT is levied on the material, consumables and chemicals which
are used in the photography service.
15. However, it needs to be examined whether Article 366(29A)(b) of
the Constitution is attracted in the present case, for which, it is to be necessarily
seen whether the photography service is a works contract.
16. This aspect of the matter has been considered by a three-Judge
Bench of the Apex Court in Civil Appeal No. 1145/2006 (State of Karnataka, etc. v.
M/s. Pro. Lab & Others) decided on 30th January, 2015 [2015 (321) E.L.T. 366
(S.C.)] wherein challenge put forth was to the constitutional validity of Entry 25
of Schedule-VI to the Karnataka Sales Tax Act, 1957. The Apex Court took note of
six sub-clauses of Clause (29A) of Article 366 of the Constitution of India and
elaborately discussing its earlier decisions and the case law on the subject, reject-
ed the contention of the State that processing of photography was a contract for
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