Service Tax – Valuation - Photography Service is Works Contract
Photography is one service which has attracted huge litigation, next only to, perhaps, GTA . These small time photographers have tenacity and some good lawyers.
The CESTAT recently held that it involves both sale and service, and the sale portion cannot be included in the taxable value of service:
The decision in BSNL case lays down the law that works contract (and also catering contract) involves the element of both sale and service contract and that the service and sale elements can be split up. That being so, the Tribunal did not find any merit in the submission of the Revenue that the decision in BSNL case cannot be treated as an authority on the issue of service tax.
If the photography service is a 'works contract', it would follow that it involves the element of both sale and service, and the sale portion of the activity or transaction cannot be included in the taxable value of service. There cannot be any doubt, in view of sub-clause (b) of clause (29-A) of Article 366, that deemed sale of the materials takes place in the rendering of photography service and, therefore, the value of the materials cannot be included while computing the value of the service. 'Sale' and 'Service' cannot stand in the same box.
Sale cannot be treated as service and vice versa.
See the detailed analysis and the case in our ST se GST tak tomorrow.