Arun Mishra JUDGMENT
A.K. Sikri, J.
1. Constitutional validity of Entry 25 of Schedule VI to the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the 'Act') is the subject matter of the present appeal. It is the third endeavour to resurrect this entry, when on the first two occasions, the steps taken by the State were declared as impermissible. Even this time, the High Court has dumped the amendment as unconstitutional. However, the reasons advanced by the High Court in all three rounds are different. While traversing through the historical facts leading to the issue at hand, we shall be referring to the same for clear understanding of the controversy involved.
2. This entry was inserted in the said Act by an amendment which came into effect from 01.07.1989, thereby providing levy of tax for processing and supply of photographs, photo prints and photo negatives. The validity of this entry was challenged by means of a writ petition filed in the High Court of Karnataka. The High Court in that case titled Keshoram Surindranath Photo -- Bag (P) Ltd. and Ors. v. Asstt. Commissioner of Commercial Taxes (LR), City Division, Bangalore and Ors. 
MANU/KA/0668/1999 : 121 (2001) STC 175, declared the said Entry to be unconstitutional. State of Karnataka had challenged that judgment by filing special leave petition in this Court. This special leave petition was dismissed vide order dated 20.04.2000, following its earlier judgment in the case of Rainbow Colour Lab and Anr. v. State of Madhya Pradesh and Ors. MANU/SC/0061/2000 : (2000) 2 SCC 385. The reason for holding Entry 25 as unconstitutional was that the contract of processing and supplying of photographs, photo frames and photo negatives was predominantly a service contract with negligible component of goods/material and, therefore, it was beyond the competence of State Legislature given in Entry 25 of List II of Schedule VII of the Constitution to impose sales tax on such a contract.
3. It so happened that within one year of the judgment in Rainbow Colour Lab's case, three Judges Bench of this Court rendered another judgment in the case of ACC Ltd. v. Commissioner of Customs MANU/SC/0051/2001 : (2001) 4 SCC 593, wherein it expressed its doubts about the correctness of the law laid down in Rainbow. We may point out at this stage itself that during the course of hearing of the present appeal, there was a hot debate on the question as to whether judgment in Rainbow Colour Lab's case was over-ruled in the case of ACC Ltd. case or not. This aspect will be gone into by us at the appropriate stage.
4. After the judgment in ACC Ltd. case, a circular instruction was issued by the Commissioner of