# ASSISTANT SALES TAX OFFICER AND ORS v. B. C. KAME, PROPRIETOR KAME PHOTO STUDIO

- **Citation:** [1977] 2 S.C.R. 435
- **Court:** Supreme Court of India
- **Decided:** 1976-12-14
- **Case number:** Civil Appeal No. 138 of 1972
- **Bench:** H. R. Khanna, A. C. Gupta, Jaswant Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/assistant-sales-tax-officer-and-ors-v-b-c-kame-proprietor-kame-photo-studio-7054
- **Pages:** 6

## Headnote

43 5
Madhya Pradesh General Sales Tax Act, 1959, whether taking photographs
and supplying photo-prints is sale transaction for the purpose of-Contract of
sale and contract of work and labour, distinction between.
r
The respondent carries on business, inter alia, of supplying
photo-prints
C
to those who get themselves photographed at his studios. The
Sales-tax
·
authorities assessed him and levied sales tax on his supply of photo-prints. The
respondent filed a writ petition in the High Court contending that in supplying
photo-prints, he did not enter into sale transactions but only undertook contracts
of work and labour. He also refuted the appellant's contention that a finished
photograph was a marketable commodity. The High Court allowed the writ
petition holding the respondent not liable to ,_;;y sales-tax on the supply
of
photo-prints.
Dismissing the appeal, the Court,
HELD : ( 1) When a photographer undertakes to take photograph, develop
the negative, or do other photographic work and thereafter supply the prmts
to his client, he cannot be said to enter into a contract for sale of goods. The
contract on the contrary is for use of skill and labour by the photographer to
bring about desired result.
[439E]
Masanda's case (1957) 8 STC 370 and Camera House Case (1970) 25
E
STC 354, distfoguished; 28 S.T.C. 1 MP reversed.
(2) A contract of sale is one whose main object is the transfer of property
in, and the delivery of the possession of, a chattel as a chattel to the buyer.
Where the principal object of work undertaken by the payee of the price is not
the transfer of a chattel qua chattel, the contract is one of work and fabour.
t
The test is whether or not the work and labour bestowed end in anything that can
properly become the subject of sale. [437D-E]
F
State of Himachal Pradesh & Ors. v. Associated Hotels of India Ltd. 29
STC 474 and State of Madras v. Garmon Dunkerley & Co. (Madras) Ltd.
9'
-."tSTC 353, applied.
Sale of Goods, 4th Edn. p. 10 by P. S. Aliyah relied upon.

## Text

ASSISTANT SALES TAX OFFICER AND ORS.
v.
B. C. KAME, PROPRIETOR KAME PHOTO STUDIO
December 14, 1976
[H. R. KHANNA, A. C. GUPTA AND JASWANT SINGH, JJ.]
43 5
Madhya Pradesh General Sales Tax Act, 1959, whether taking photographs
and supplying photo-prints is sale transaction for the purpose of-Contract of
sale and contract of work and labour, distinction between.
r
The respondent carries on business, inter alia, of supplying
photo-prints
C
to those who get themselves photographed at his studios. The
Sales-tax
·
authorities assessed him and levied sales tax on his supply of photo-prints. The
respondent filed a writ petition in the High Court contending that in supplying
photo-prints, he did not enter into sale transactions but only undertook contracts
of work and labour. He also refuted the appellant's contention that a finished
photograph was a marketable commodity. The High Court allowed the writ
petition holding the respondent not liable to ,_;;y sales-tax on the supply
of
photo-prints.
Dismissing the appeal, the Court,
HELD : ( 1) When a photographer undertakes to take photograph, develop
the negative, or do other photographic work and thereafter supply the prmts
to his client, he cannot be said to enter into a contract for sale of goods. The
contract on the contrary is for use of skill and labour by the photographer to
bring about desired result.
[439E]
Masanda's case (1957) 8 STC 370 and Camera House Case (1970) 25
E
STC 354, distfoguished; 28 S.T.C. 1 MP reversed.
(2) A contract of sale is one whose main object is the transfer of property
in, and the delivery of the possession of, a chattel as a chattel to the buyer.
Where the principal object of work undertaken by the payee of the price is not
the transfer of a chattel qua chattel, the contract is one of work and fabour.
t
The test is whether or not the work and labour bestowed end in anything that can
properly become the subject of sale. [437D-E]
F
State of Himachal Pradesh & Ors. v. Associated Hotels of India Ltd. 29
STC 474 and State of Madras v. Garmon Dunkerley & Co. (Madras) Ltd.
9'
-."tSTC 353, applied.
Sale of Goods, 4th Edn. p. 10 by P. S. Aliyah relied upon.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 138 of 1972.
(From the Judgment and Order dated 20.3.1971 of the Madhya
Pradesh High Court in Misc. Petition No. 313/70).
I. N. Shroff, for the appellants.
S. V. Gupte, !. D. Jain, Miss Kanwaljit Miglani and Bairam Sahgal
for the respondent.
The Judgment of the Court was delivered by
KHANNA, J.-Whether sales tax is payable by a photographer under
the Madhya Pradesh General Sales Tax Act (Act 2 of 1959) when the
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436
SUPREME COURT REPORTS
[1977] 2 S.C.R.
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 certificata
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.
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.
!
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
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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
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sale of materials as such and the rest 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.
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
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contention of the respondent was that in taking a photograph, preparing
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its negative and thereafter the fina:l positive print for supplying the same
to the client, the respondent undertakes a contract of work: and labour
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and does not enter into a sale transaction.
It was also stated
on
behalf of the respondent that the prepared positive print w11.s not
a -r·· •
marketable commodity and he could not sell the photograph of 0116 person to any other person except with the farmer's consent.
As agilist
that, the case of the appellants was that the respondent ~·as 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 re~pondent as such was held not
liable to pay sales tax in respect of the item t~ 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
ASSTT. s.T.O. v. B. c. KAME (Khanna, J.)
437
in preparing the photograph is sold and t:aXable..
The petitioner has alleged in the petition that he was paid full tax on
the 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 a_nd need not
-consider either Masanda's case (1957) 8 STC 370, where the
only question referred to this Court was '."'hether such mate-
·rial 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 spearately
for
service and supply of material."
A
In 'appeal before us Mr. Shroff has assailed the judgment od'
the
High Court.
As against that, Mr. Gupte on behalf of the respondent
.has canvassed for the correctness of the view taken by the High Court.
The question as to whether a contract is a contract of work and
labour or a contract for sale is not one free from ditficulty.
The
reason for that is that in border line cases the distinction between the
two types of contract is very fine.
This is particularly so when the
contract is a composite one involving both a contract of work
and
labour and a contract of sale.
Nevertheless, the distinction between
the two rests on a clear principle.
A contract of sale is one whose
main object is the transfer of property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where the principal object of work undertaken by the payee of the price is not the transfer .. of
-a chattel qua chattel, the contract is one of work and labour.
The
test is whether or not the work and labour bestowed end in anything
that can properly become the subject of sale; neither the ownership of
materials, nor the value of the skill and labour as compared with the
value of the materials, is conclusive, although such matters may be
taken into consideration in determining, in the circumstances of a particular case, whether the contract is in substance one for work and labour
t
or one for the sale of a chattel (see The State of Himachal Pradesh & Ors. v. Associated Hotels of India(').
The respondent company in that case carried on business as hoteliers.
As a part of its
business as hoteliers, the company received guests in its several hotels
' f_,fo whom, besides furnishing lodging, it also served several other ameni-
~
ties, such as public and private rooms, bath with hot and cold running
water, linen, meals during stated hours.
The bill tendered to
the
guests was all-inclusive one, namely, a fixed amount for the stay in
the hotel for each day and did not contain different items in respect of
e;ich of the amenities.
The question which arose for determination
WllS whether th6 company was liable to pay sales tax under the Punjab
General Sales Tax Act, 1948 in respect of meals served in the hotBl
to the iruests coming there for stay
It was held by the Constitution
Bench of this Court that the transaction was essentially one and indivisible, namely, one of receiving a customer in the hotel to stav.
It
w:is essentially one of service by the hotelier in the perform-ance of
wh'rh, and as part of the amenities incidental to the service,
the
botelier served meals at stated hours.
The revenue, it was hefol, was
(]) 29 S.T.C. 474.
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43 8
SllPREME COURT REPORTS
(1977] 2 S.C.R.
not entitled to split up the transaction into two parts, one of service and
the other of sale of food-stuffs.
This Court accordingly came to the
conclusion that there was no sale of food-stuffs and the respondent
company was not liable to pay sales tax in respect of the meals served
to the guests in the hotel.
In arriving at this conclusion this Court
observed as under :
"Thus, in considering whether, a transaction falls within the
purview of sales tax, it becomes necessary at the threshold to
determine the nature of the contract involved in such a transaction for the purpose of ascertaining whether it constitutes
a contract of sale or a contract of work or service. If it is
of the latter kind it obviously would not attract the tax.
From the decisions earlier cited it clearly emerges that such
determination depends in each case upon its facts and circumstances. Mere passing of property in an article or commodity during the course of the performance of the transaction
in .question does not render it a transaction of sale.
For,
even in a contract purely of work or service, it is possible that
articles may have to be used by the person executing the
work and property in such articles or materials may pass to
tl;ie other party.
That would not necessarily convert the
contract into one of sale of those materials.
In every case
the court would have to find out what was the primary object
of the transaction and the intention of the parties while enter-
. ing into it.
It may in some cases be that even while entering into a contract of work or even service, parties might enter into separate agreements, one of work and service and the other of
sale and purchase of materials to be used in tbe course of
executing the work or performing the service.
But, then in
such cases the transaction would not be one and indivisible,
but would fall into two separate agreements, one of work or
service and the other of sale."
Reliance in the above cited case was placed upon an earlier decision
of this Court in the case of State of Madras v. Gannon Dunkerley &
Co. (Madras) Ltd.(') wherein the Constitution Bench of this Court
held that in a building contract the property in materials used does
not pass to the other party to the contract as movable property.
It
would so pass if that be the agreement between the parties.
But if
there was no such agreement and the contract was only to construct
a building, then the materials used therein would, in the opinion 0£
the Court, become the property of the other party to the contract only
on the theory of accretion.
The distinction between a contract of sale and contract for skill
and labour has been discussed at page 10 of the 4th Edn. of "Sale of
Goodi" by P. S. Atiyah.
The following passage in that book ha& a
material bearing so far as the present case is concerned :
----- -----
(!) 9 li.T.C. 353.
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ASSTT. S.T.Q. v. B.C. KAME (Khanna, J.)
439
"'Tho distinction between contracts of sale and contracts for
skill and labour has agitated the courts for many years, and
though its importance has been greatly diminshcd by
the
.repeal of Seat. 4 of the Act, it still cannot be ignored. It was
thought for many years that Lee v. Griffin (1861), 1 B.&S.
272 laid down that, if a contract would result in the transfer of the property il!,'goods from one party to another, th~n
it must be a contract of sale.
The view was exploded m
Robinson v. Graves (19.35) 1 K.B. 579 where it was held
that a contract to paint a pollrait was a contract for
s~ill
and labour and not a contract for the sale of goods, despite
the fact that it was the object of the contract to transfer the
property in the completed portrait to the defendent. Green
L. J. stated the law: as follows (1935) 1 K. B. at p. 587 :
'If the substance of the contract .... is that skill and labour
have to be exercised for the production of the articles
and. . . . it is only ancillary to that that there will pass from
the artist to his client or customer some materials in addition
to the skill involved in the production of the portrait, that does
not make any difference to the result, because the substance
of the contract is the skill and experience of the artist in producing the picture."
Keeping the above principles in view, we may now turn to the
facts of the present case.
When a photographer like .the respondent
undertakes to take photograph, develop the negative, or do other photo-
·graphic work and thereafter supply the prints to his client, he cannot be
·said to enter into a contract for sale of goods.
The contract on the
contrary is for use of skill and labour by the photographer to bring
about a desired result.
The occupation of a photographer, except
fa so far as he sells the goods purchased by him, in our opinion,
is
·essentially one of skill and labour.
A good photograph reveals not
·only the aesthetic sense and artistic faculty of the photographer, it
also reflects his skill and labour.
A good photograph in most cases
is indeed a thing of beauty.
It not only seeks to mirror and porlrny
·a scene from actual life, it also catches and preserves for the future
'What belongs to and is a part of the fleeting moment. . The ravage
brought about by !}le passage of time, the decay and the ggeing proces~
which inevitably set in as tlie years roll by leave what is pre~erved in
the photograph unaffected.
It is no wonder that an old photograph
revives nostalgic memories of days no more, but to which we look
back through the mist of time with fondness even though such fondness has a tinge of sadness.
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We, therefore, find no cogent grou!ld to disagree with the High
Court in so far as it has decided against the revenue and has held the
-contract to be one for work and.labour.
Our attention has been
invited during the course orf arguments to some decision.s of the High
'Courts.
'It is, in our opinion, not necessary to deal with those cases
,II
12 -1546 SCI/76
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440
SUPREME COURT REPORTS
[1977] 2 s.c.R ..
because after giving the matter our consideration was are of the opinion
that the view taken by the High Court in the judgment under appear
substantially represents the correct position in law.
The appeal consequently fails and is dismissed, but in the circumstances without costs.
M.R.
Appeal dismissed ..