No Service Tax on Photography

The Hon’ble Supreme Court in their decision dated 24/01/1989 reported as 73 STC 1 (State of Tamilnadu vs. Anandam Viswanatham) ) while dealing with the case of the printed materials, particularly in the context of printing of question papers, pointed out as under:
"The primary difference between a contract for work or service and a contract for sale is that in the former there is in the person performing or rendering service no property in the thing produced as a whole, notwithstanding that a part or even the whole of the material used by him may have been his property. Where the finished product supplied to a particular customer is not a commercial commodity in the sense that it cannot be sold in the market to any other person, the transaction is only a works contract. See the observation in The Court Press Job Branch, Salem v. The State of Tamil Nadu, 54 STC 383 and Commissioner of Sales Tax, M.P. v. Ratna Fine Arts Printing Press, 56 STC 77. In our opinion, in each case the nature of the contract and the transaction must be found out. And this is possible only when the intention of the parties is found out. The fact that in the execution of a contract for work some materials are used and the property/goods so used, passes to the other party, the contractor undertaking to do the work will not necessarily be deemed, on that account, to sell the materials. Whether or not and which part of the job work relates to that depends as mentioned hereinbefore, on the nature of the transaction."
in the case of photography services, the party enters into work contract for service with its clients, i.e. clicking and printing of photograph and supplying it to its client and the photograph supplied to a particular customer is not a commercial commodity in the sense that the work executed by the photographer is meant for particular customers, who placed orders and it cannot be sold in the market to any other person; and that as pointed out by the Apex Court, the mere fact that in the execution of the contract for work, the paper owned by the assessee stands transferred to the contractee incidentally would not lead to the inference that the transaction is only a sale and not a works contract. This particular contract of service is liable to service tax under the Finance Act, 1994 as Photography Services.

chdzone chdzone 03/09/2015