1. The appellant is common to these two appeals and they relate to the assessment year 1970-71 and 1971-72. The appellant is a dealer in gold and silver ornaments and bullion. In the course of his business he buys articles of gold and silver from others, converts them into bullion and then sells the bullion as such. Since the purchases articles of gold and silver from other persons in the course of his business and consumes them in the manufacture of bullion for sale within the State, he is liable to pay purchases tax u/s. 6 of the Karnataka Sales Tax Act, 1957 (hereinafter called the 'Act') on the purchase turnover of articles of gold silver. On the sales turnover of bullion manufactures by him he has to pay sales tax u/s. 5(3)(a) read with item 74 of II Schedule of the Act. Accordingly, the Assistant Commercial Tax Officer passed orders of assessment in respect of the relevant years. Aggrieved by the orders of assessment the appellant preferred appeals before the Assistant Commissioner of Commercial Taxes. The Assistant Commissioner of Commercial Taxes allowed the appeals in part holding that the tax payable u/s. 6 on the purchase by the appellant had been exempted under the Government Notification No. FD 283 CSL 70 dated 10-9-1970 issued u/s. 8-A of the Act as the appellant had paid the tax payable on the sale of bullion manufactures by him out of the articles of gold and silver purchased by him. On a scrutiny of the orders passed by the Assistant Commr. Of Commercial Taxes in appeal Commr. of Commercial Taxes, found that the notification to the case and therefore, took action u/s. 22-A of the Act to revise the said orders. After hearing the appellant, the Commissioner of Commercial Taxes passed an order holding that the notification was not applicable to the case before him and that the exemption allowed by the Assistant Commissioner of Commercial Taxes was impermissible. Accordingly the orders of the Assistant Commissioner of Commercial Taxes were set aside and the orders of assessment passed by assessing authority were restored. He, however, directed that the penalty levied u/s. 12(4) the Act should be cancelled. Aggrieved the orders of the Commissioner of Commercial Taxes, the appellant has filed these appeals.
2. Before dealing with the contention urged by Sri Srinivasan, learned Counsel for the appellant, we consider it necessary to set out the notification in question. It reads as follows :
'GOVERNMENT OF KARNATAKAKarnataka Government Secretariat,'Vidhana Soudha', Bangalore.No. FD 283 GSL 70, dated 10th Sept, 1970 S.C. 2048.NOTIFICATION - IV
In exercise of the powers conferred by S. 8-A of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), the Government of Karnataka hereby exempts w.e.f. the 1st day of the Oct. 1970, the tax payable u/s. 6 of the said Act on the purchases of articles of gold and or silver (whether set with precious stones or not) by a manufacturer of such articles subject to the condition that the said manufacturer proves to the satisfaction of the assessing authority that he has paid the tax payable either under sub-section (1) or clause (a) of sub-section (3) of S. 5 of the said Act on articles of gold and silver (whether set with precious stones or not) manufactured out of the said articles so purchased by him.
By order and in the name of theGovernor of KarnatakaSyed Gulam KhajaUnder Secretary to Government,Finance Department.'
3. It is argued by Sri Srinivasan that the bullion sold by the appellant was the same as the 'articles of gold and silver' mentioned in the notification and since the appellant had paid the sales tax payable on the sale of bullion he was entitled to exemption from payment of purchase tax on turnover of purchase of articles of gold and silver which were used in the manufacture of bullion. The second contention is that, since no sales tax was payable by him on the turnover of sale of articles of gold and silver as no articles of gold and silver were manufactured, the question of proving that the appellant had paid sales tax did not arise and therefore, as he had not withhold any sales tax payable on the sale of articles of gold or silver, as he had not withhold any sales tax payable on the sale of articles of gold or silver, he was entitled to exemption under the notification.
4. We do not find any substance in either of these contentions. The notification is intended to exempt a manufacture of articles of gold and silver from payment of purchase tax on the turnover of articles of gold and silver purchased by him, if he pays the sales tax payable on articles of gold and silver manufactured out of the articles of gold and silver purchased by him. The expression 'articles of gold and silver' cannot include within its ambit bullion and specie, as the word 'Articles' referred to above conveys the meaning that the goods in question are those which can be used either as jewellery or utensils. They are manufactured out of bullion. In the instant case what is sold by the appellant is bullion and not articles of gold and silver.
5. The second submission of Sri Srinivasan is that since not articles of gold and silver had been manufactured by the appellant, the question of paying sales tax on their turnover did not arise and since the appellant had not therefore withheld any sales tax which he was liable to pay it should be held that the tax payable u/s. 6 was exempt from payment under the said notification. His contention is plainly untenable because the exemption that is granted under the notification is in respect of the tax on the purchase turnover of articles of gold and silver which are used in the him. Since admittedly the appellant has not manufactured any articles of gold and silver no exemption can be claimed under the notification.
6. There is no ground to interfere with the order passed by the Commissioner. The appeals are dismissed with costs. Advocate's fee Rs. 100/-, one set.