( 1 ) PETITIONERS are all assesses under the Karnataka Sales Tax Act, 1957 (for short, the Act ). They are in the business of developing photographic films brought by the customers, making positive prints thereof and supplying positive prints to the customers. Some of them also undertake the works of taking photographs, enlarging prints, etc.

( 2 ) SECTION 58 was inserted in the Act by Act 27 of 1995 witheffect from 1. 4. 1986. It enables the State to levy tax on transfer of property in goods (whether as goods or in some other form), involved in the execution of work contract. The said Section is extracted below: 5-B Levy of tax on transfer of property in goods (whether a goods or in some other form) involved in the execution of works contracts - Notwithstanding anything contained in sub-section (1) or sub-section (3) or sub-section (3-C) of Section 5, but subject to sub-section (4), (5) or (6) of the said section, every dealer shall pay for each year, a tax under this Act on his taxable turnover of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract mentioned in column (2) of the Sixth Schedule of the rates specified in the corresponding entries in column (3) of the said schedule.

( 3 ) THE term 'works contract' is defined in Section 2 (1) (v-l) asincluding any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property.

( 4 ) SIXTH Schedule enumerates the description of works contractsinvolving transfer of property in goods in regard to which tax is payable under Section 5b. Entry 25 of Sixth Schedule, with which we are concerned is extracted below:

SI. No.

Description of Works Contract

Period

Rate of Tax U/s 5-B

25

Processing and supplying of photographs, photo

1. 7. 1987 to 31. 3. 1996

6%

prints and photonegatives

1. 4. 1996 to 31. 3. 1998

8%

From 1. 4. 1998

10%

( 5 ) THE challenge to the constitutional validity of Entry 25 in Sixthschedule was considered by a Division Bench of this Court in keshoram SURINDRANATH PHOTO-MAG ( P) " TD. vs ASSISTANT commissioner OF COMMERCIAL TAXES (LP), CITY DIVISION, bangalore. It was contended by the Appellants therein that they carried on the business of taking photographs, supplying prints, making enlargements and preparing positive prints from negatives (exposed film) brought by the customers; that customers approach them because of their expertise/expert knowledge, and the paper on which the positive print is taken or the chemicals used for developing negatives or making positive prints is only incidental to the service rendered by them; that photographs taken for a customer or photo prints taken bv them for a customer are of interest and value only to that particular customer and are not otherwise marketable commodities. In view of the 46th Constitutional amendment, though not only transactions of sale of goods, but also transfer of property in goods involved in the execution of works contracts can be subjected to sa!es tax, contracts described under entry 25 were not works contracts; and that the work of a photographer is that of an artist involving imagination, taste and expertise and in a contract relating to processing of photo films, the film roll belongs to the customer and it is taken back by the customer after development without any addition or accretion thereto and that therefore processing of photo negatives does not involve any transfer of property in goods. It was therefore contended that entry 25 was beyond the competence of State Legislature, as there was no transfer of property in goods involved in the execution of a contract relating to processing and supplying of photographs, photo prints and photo negatives. Reliance was placed on the following observations of the Rajasthan Tax