LexC.K. JIDHEESH versus UNION OF INDIA AND ORS.
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C.K. nDHEESH v. UNION OF INDIA AND ORS. OCTOBER 27, 2005 B (S.N. VARIAVA AND P.P. NAOLEKAR, JJ.] Finance Act, 1994-'Section 67 (as amended by Act 14 of 2001)- Photography service-Taxation of-On the gross amount charged by service provider-Writ Petition challenging the taxation as arbitrary and C discriminatory-Plea of serVice provider to bifurcate the receipts into element of goods and element of service and charge tax only in respect of service- Held: Taxation on gross amount justified-The receipts are not bifurcable- The contracts in question entered into by service providers are contracts pure and simple..,-There is no discrimination-Constitution of Jndia,1950- D Articles 14 and 19(/)(g). Petitioner was running business of developing and printing colour photographic films. By a letter from Ministry of Finance the value of taxable service was ascertained as gross amount charged from the Customers. The cost of goods used for possession except unexposed photography films were E not excluded from the taxable value. Petitioner filed Writ Petition before this Court challenging the letter as violative of Arts. 14 and 19(l)(g) of the Constitution oflndia and of the Finance Act, 1994 as amended by Act 14 of 2001. Petitioner prayed to tax only that portion of the receipts which was attributable to the service rendered after bifurcating the receipts into element F of goods and element of service. Dismissing the petition, the Court HELD: Section 67 of Finance Act, 1994 provides that the value of taxable service shall be the gross amount charged by the service provider for such G service rendered by him. The Explanation to Section 67 exempts only the cost of unexposed photography film, unrecorded magnetic tape of such other storage device if aoy, sold to the client during the course of providing the service. Contracts of the type entered into by persons like the Petitioner are nothing else but service contracts pure and simple. In such contracts there is no H 862 C.K.JlDHEESHv. U.0.1. [VARIAVA,J.] 863 element of sale of goods. Hence the question of directing the Respondent to A bifurcate the receipts into element of goods and element of service cannot and does not arise. There is also no discrimination. (865-B; 866-B; 867-El Rainbow Colour Lab and Anr. v. State of MP. and Ors., (2000) 2 SCC 385, relied on. Associated Cement Companies Ltd v. Commissioner of Customs, [2001) 4 sec 593, distinguished. CIVIL ORIGINAL JURISDICTION : Writ Petition (C) No. 507 of2002. (Under Article 32 of the Constitution .of India.) Krishnan Venugopal, Syed Shahid Hussain Rizvi, Prasad Vijay Kumar and Siddarth Singh for the Petitioner. T.M. Mohd. Yusuf, S. Wasim A. Qadri, P. Parmeswaran and B. Krishna B c Prasad for the Respondents. D The Judgment of the Court was delivered by S.N. V ARIA VA, J. By this Writ Petition, the Petitioner seeks to challenge a letter dated 9th July, 2001, issued by the Ministry of Finance as being arbitrary and discriminatory being in violation of Articles 14 and 19(J)(g) of E the Constitution, and also violative of the Finance Act, 1994 as amended by the Act 14 of 200 I. The Petitioner also prays for an Order directing the Respondent to bifurcate the gross receipts of processing of photographs into the portion attributable to goods and that attributable to services. The Petitioner claims that the Respondents must tax only that portion of the receipts, which is attributable to the services rendered. F Briefly stated the facts are that the Petitioner is the owner of one Ajantha Colour Lab, Kottakkal, Malappuram, Kerala. The Petitioner is running the business of developing and printing of colour photographic films. The Petitioner develops the negatives supplied by the customer and gives to the G customer positive prints as per the order of the customer. By the impugned letter it has been clarified that the service tax would be on the entire amount recovered by persons like the Petitioner. Mr. Mohd. Yusuf raises a preliminary objection. He submits that the Kerala Colour Labs Association had filed a Writ Petition in the Kerala High H 864 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R. A Court challenging the constitutional validity of the provisions in the Finance Act, which permits levy of service tax on services like those rendered by the Petitioner. He submits that that Writ Petition came to be dismissed by a Judgment of the Kerala High Court dated 31st Ja
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