Judgment

KHANNA, J. - Whether sales tax is payable by a photographer under the Madhya Pradesh General Sales Tax Act (Act 2 of 1959) when the photographer takes photographs or does other photographic work and thereafter supplies the photographic prints to his client or customer is the question which arises for determination in this appeal on certificate against the judgment of Madhya Pradesh High Court reported in 28 STC 1 : The High Court answered the question in the negative in favour of the assessee respondent.

2. The respondent is the proprietor of Kame Photo Studio. He has apart from his main shop, two branches. He carries on business, inter alia, of buying and selling photographic goods. After buying photographic goods he either sells them to his customers or uses them in three ways- (1) in taking photographs and supplying prints thereof, (2) in making enlargements for the clients who bring their own negatives, and (3) in preparing positive prints of the same size from the negatives brought by the clients. For doing these various types of works the assessee respondent charges consolidated amount depending upon the work involved and the size and number of prints demanded by the client.

3. The sales tax authorities assessed the respondent for different periods from April 1, 1964 to March 31, 1969 to sales tax on his turnover on best judgment basis as he had not kept full and complete accounts. It may be convenient to refer to the figures of assessment for one of the years. For the year 1964-65 the total turnover of the respondent was taken to be Rs. 41,500. Out of this amount a deduction of Rs. 6,500 was allowed as relatable to developing and enlargement which was considered to be not chargeable to tax. The balance of Rs. 35,000 was divided into two parts - Rs. 12,000 being treated as relatable to sale of materials as such and the rest of Rs. 23,000 being taken to be the receipts on account of the supply of photoprints to those who got themselves photographed at the studios.

4. The respondent filed writ petition to challenge the levy of sales tax on the last item, namely, the item for the supply of photoprints. The contention of the respondent was that in taking a photograph, preparing its negative and thereafter the final positive print for supplying the same to the client, the respondent undertakes a contract of work and labour and does not enter into a sale transaction. It was also stated on behalf of the respondent that the prepared positive print was not a marketable commodity and he could not sell the photograph of one person to any other person except with the formers consent. As against that, the case of the appellants was that the respondent was carrying on a commercial activity in the nature of trade and business and the finished photographs supplied by him to his customer was a commodity and the supply of same attracted the levy of sales tax. The High Court, on consideration of the matter, came to the conclusion that the respondent only undertook the contract of work and labour and did not enter into a sale transaction. The respondent as such was held not liable to pay sales tax in respect of the item to which the writ petition related. The High Court while accepting the writ petition also observed as under:

"We may lastly make it clear that in this case we are not called upon to go into the question whether the material used in preparing the photograph is sold and taxable. The petitioner has alleged in the petition that he has paid full tax on value of such material and the respondents have neither denied the fact nor have claimed tax on such material. We, therefore, express no opinion on that question and need not consider either Masandas case (1957) 8 STC 370 : where the only question referred to this Court was whether such material alone could be taxed, or the observations of the Bombay High Court in Camera House case (1970) 25 STC 354 about severability of the contract into one separately for service and supply o