- (1.) HONOURABLE M. Katju, J. This writ petition has been filed against the impugned circulars dated 4.5.2001 and 28.1.2002 (Annexure 2 and 3 to the writ petition) issued by the Commissioner of Trade Tax. The petitioner has also challenged the notice dated 28.1.2003 (Annexure 4 to the writ petition) issued by respondent no. 3 on the basis of the aforesaid circulars.
(2.) HEARD Sri Bharatji Agarwal Senior Advocate and Amit Jaitly for the petitioner and Sri S.P. Kesharwani for the respondents. The petitioner no. 1 is a registered partnership firm and petitioner no. 2 is one of its partners. Petitioners are carrying on the business of developing, printing, processing and enlarging photographs. By the impugned Circular dated 28.1.2002 (Annexure 3 to the writ petition) the Commissioner of Trade Tax has directed that trade tax can be imposed on the photographs taken and printed by the petitioners by bifurcating the value of the goods and service provided by the petitioners. Sri Bharatji Agarwal, learned counsel for the petitioners, has relied on the decision of the Supreme Court in M/s Rainbow Colour Lab and another Vs. State of Madhya Pradesh and others 2000 UPTC 193. That judgment was delivered by a two Judge Bench of the Supreme Court and in that case also the challenge was on the levy of trade tax on photographs as stated in paragraph 7 of the said judgment. In paragraph 14 of the said judgment in M/s Rainbow Lab's case (supra) it was observed that the activity of the appellants cannot be treated as sale of the photographs for the reason that it is not the intention of the customer to buy a photograph from the photographer. The Supreme Court observed : "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 customers 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 eligible to sales tax"
(3.) IN a subsequent decisions a three Judge Bench of the Supreme Court in Associated Cement Companies Ltd. Vs. Commissioner of Customs (2001) 124 STC 59 observed in paragraph 26: "Even if the dominant intention of the contract is the rendering of a service, which will amount to a works contract, after the Forty-sixth Amendment the State would be empowered to levy sales tax on the material used in such contract. The conclusion arrived in Rainbow Colour Lab case (2000) 118 STC 9 (SC): (2000) 2 SCC 385, in our opinion, runs counter to the express provision contained in Article 66 (29A) as also of the Constitution Bench decision of this Court in Builders' Association of INdia v. Union of INdia (1989) 73 STC 370: (1989) 2 SCC 645." Sri Bharatji Agarwal, learned counsel for the petitioners submitted that the decision of the Supreme Court in Associated Cement Company's case (supra) has not over ruled the earlier decision of the Supreme Court in the case of M/s Rainbow Lab's case (supra) but has only doubted the correctness of the said decision. We do not agree. When the Supreme Court states that the conclusion arrived at in Rainbow Lab's case (supra) runs counter to the provisions contained in Article 366 (29A) as also of the Constitution Bench decision in Builder's Association of India (supra), in our opinion it has overruled the decision in Rainbow Colour case, though by using a different language. It is not the language used which is material but the substance of the decision has to be seen.;