High Court · 2012

Aggrieved by the above, the petitioner moved this Court by submitting th at no transfer of property took place in respect of ink used in the course of pr inting. The same is consumed in the process of printing and loses its identity a s goods and, thus, is not transferred by printer to the consumer. We have heard learned counsel for the parties. Stand taken on behalf of the Revenue is that the works contract in quest ion involves composite contract of work as well as sale of material used in exec ution of the work of printing. Learned counsel for the petitioner submits that even though ink is used by the printer for printing, but in this process, no goods are supplied. After t he ink is used in the printing process, ink does not remain goods. It has no phy sical existence thereafter. It has no marketability. Reliance has been placed on the following judgments - (i) Commissioner of Sales Tax, CST Maharastra State, Bombay -Vs.- RMDC Press (P) Ltd. (1998) 112 STC 307; (ii) (iii) EJ 638. BSNL Vs. Union of India (2006) 3 SCC 1; and S.S. Photographic Lab Pvt Ltd. -Vs. State of Assam and others (2011) 3 N On due consideration, we find that in view of above judgments, no sale o f goods is involved in executing the work of printing merely because the printer has used the ink in the process. The use of ink in the process cannot be held t o be transfer of goods by the printer to the person for whom a printing job has been executed. The view taken by the Bombay High Court in RMDC Press (P) Ltd. (s upra) fully supports the assessee and is in consonance with the view taken by th e Hon’ble Supreme Court in BSNL -Vs.- Union of India (2006) 3 SCC 1. In BSNL (su pra), it was observed :- What are the (cid:28)goods (cid:29) in a sales transaction, therefore, remains primaril (cid:28)50. y a matter of contract and intention. The seller and such purchaser would have t o be ad idem as to the subject-matter of sale or purchase. The court would have to arrive at the conclusion as to what the parties had intended when they entere d into a particular transaction of sale, as being the subject-matter of sale or purchase. In arriving at a conclusion the court would have to approach the matte r from the point of view of a reasonable person of average intelligence. & & &.

56. This view was adopted in Tata Consultancy Services V. State of A.P. (200 5) 1 SCC 308 for the purposes of levy of sales tax on computer software. It was held : (SCC p.342, para 81) (cid:28)A ’goods’ may be a tangible property or an intangible one. It would bec ome goods provided it has the attributes thereof having regard to (a) its utilit y; (b) capable of being brought and sold; and (c) capable of being transmitted, transferred, delivered, stored and possessed. If a software whether customized o r non-customised satisfies these attributes, the same could be goods. (cid:29) In S.S. Photographic Lab Pvt. Ltd. (supra), the question was whether pro cessing of negatives into photo by the photographer involves transfer of goods. It was observed :- A combined reading of all the provisions suggests that goods for process (cid:28)18. ing must be in existence. As we have already held that exposed photographic film rolls and negatives are not (cid:28)goods (cid:29) the provisions of Sections 7, 8 and Schedul e VI of the Act does not come into play at all. When a customer goes to the appe llants to have his exposed photographic film rolls developed or negatives proces sed, there may be an agreement for the transfer of property in the chemicals use d in the processing or otherwise treating or adapting the exposed photographic f ilm rolls and negatives. But since they are not (cid:28)goods (cid:29) within the meaning of th e Act, the question of taxing the (cid:28)sale (cid:29) of the chemicals does not arise at all.

19. The above discussion undoubtedly leads to only one conclusion which is t hat the conversion of exposed photographic film rolls into negatives and then in to positive photographs or the conversion of negatives into positive photographs is nothing but a rendering of service specific to a customer and is a matter of skill and expertise of the developer - it is not a works contract. (cid:29) In view of above, we allow this petition, set aside the order passed by the Commissioner of Taxes, Assam (Respondent No.2) and direct the Respondent No. 2 to pass fresh order in accordance with law. The petition is disposed of.