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P.A.R. Viswanathan and Company Vs. State of Madras - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 238 of 1962 (Revision No. 90 of 1962)
Judge
Reported in[1963]14STC702(Mad)
AppellantP.A.R. Viswanathan and Company
RespondentState of Madras
Appellant AdvocateC.S. Chandrasekhara Sastry, Adv.
Respondent AdvocateG. Ramanujam, Adv. for ;Government Pleader
DispositionSuit allowed
Cases ReferredAkhraj Parakh v. The State of Andhra Pradesh
Excerpt:
.....ingots or into any unwrought body of any degree of fineness. he has given some brief notes on the gold alloys used in the manufacture of jewellery at pages 132-133 :eighteen-carat gold is the quality in which all the best jewellery is made. articles made of 15 carat wear must be better than when made of a softer material; twelve-carat gold is the best of the bright golds. it has a fine rich sparkling appearance imposing,'says gee, but the author is advised by an expert who handles thousands of articles of bankrupts' stocks that he can scarcely recollect scheduling a single article of 12 carat gold. it is chiefly employed in the manufacture of keeper and fancy rings, but there is a good trade in old gold coins of this class of gold. the well established rule of construction of words used..........[1960] s.t.c. 483, where it was held that the expression 'gold or silver bullion' connotes only pure gold or silver and does not take in gold or silver mixed with copper or lead.3. against the levy of tax at 2 per cent, on the sales turnover under bullion, the assessees preferred an appeal to the appellate assistant commissioner, who also took the view that as the assessees had themselves admitted that they did not sell pure gold, but sold gold mixed with copper, they would not come under the category of 'bullion' under item 15 of the first schedule. he too relied on the principle laid down by the andhra high court in the decision referred to above. in the end, he upheld the findings of the assessing authority and dismissed the appeal.4. the petitioners carried the matter in appeal to.....
Judgment:

Venkatadri, J.

1. In this revision the assessees-firm question the validity of the order passed by the Tribunal directing them to pay 2 per cent, sales tax on the disputed turnover of Rs. 97,294-16 for the assessment year 1959-60.

2. The assessees are dealers carrying on business in gold, silver and jewels under the name and style of P. A. R. Viswanathan & Co., in Big Bazaar Street, Coimbatore. They returned a total turnover of Rs. 2,31,968-35 nP. and claimed exemption on a turnover of Rs. 1,921-63 nP. The Deputy Commercial Tax Officer, Coimbatore III, on checking the accounts found the turnover under jewels to be Rs. 1,35,631-76 nP. and under first sales of bullion to be Rs. 97,294-16 nP. During the enquiry the petitioners' authorised agent represented to the assessing authority that the bullion sold by the firm was a mixture of gold and copper. Thereupon the Deputy Commercial Tax Officer came to the conclusion that the commodity sold was not 'bullion', that the assessees are not entitled to the benefit of the concessional rate of 1/2 per cent, on the first sale of bullion and that they are liable to pay tax at 2 per cent, on the sales turnover under bullion. In support of his conclusion he cited the decision of the Andhra Pradesh High Court in Akhraj Parakh v. State of Andhra Pradesh [1960] S.T.C. 483, where it was held that the expression 'gold or silver bullion' connotes only pure gold or silver and does not take in gold or silver mixed with copper or lead.

3. Against the levy of tax at 2 per cent, on the sales turnover under bullion, the assessees preferred an appeal to the Appellate Assistant Commissioner, who also took the view that as the assessees had themselves admitted that they did not sell pure gold, but sold gold mixed with copper, they would not come under the category of 'bullion' under item 15 of the First Schedule. He too relied on the principle laid down by the Andhra High Court in the decision referred to above. In the end, he upheld the findings of the assessing authority and dismissed the appeal.

4. The petitioners carried the matter in appeal to the Sales Tax Appellate Tribunal. The Tribunal held that bullion in the enactment would mean only pure gold or silver to attract liability to tax at the rate of I per cent, under the Act and accordingly dismissed the appeal. It is against this order of the Tribunal the assessees have preferred this revision.

5. We have to consider in this revision what is the meaning to be given to the word 'bullion'. The word 'bullion' as such has not been defined in the Act. But during the course of the arguments our attention was invited to pages 124 and 125 in the Commercial Taxes Manual, Vol. I, where it is stated under the heading 'bullion and specie' that 'bullion is gold or silver in its uncoined state'. There is an explanatory note which states that kora gold represents parts of jewels which cannot be used as jewels without re-making and therefore it should be treated as bullion. In Earl Jowitt's Dictionary of English Law, bullion is defined as 'uncoined gold and silver in the mass' and it is stated 'these metals are called so, either when smelted from the native ore and not perfectly refined, or when they are perfectly refined, but melted down into bars or ingots or into any unwrought body of any degree of fineness.' In Chambers' Technical Dictionary, bullion is defined as gold or silver in bulk, that is, as produced at the refineries or not in the form of coin.

6. In Encyclopaedia Britannica it is stated that bullion may be bar-gold or gold-dust or coins of many different degrees of fineness. It is useful to refer to the book, 'Law and Practice of Hail-Marking Gold and Silver Wares' by J. Paul De Castro. The learned author says at pages 6-7 :

Pure, fine or unalloyed gold is denoted by long custom as 24 carat gold. It is exceedingly soft and consequently seldom employed un-combined in the arts.

There are five statutory standards for industrial gold alloys in

force...

In metric notation the gold content of these five standard alloys runs:-

22 carat contains 916.6 gold in 1000 parts of alloy.

18 carat contains 750 gold in 1000 parts of alloy.

15 carat contains 625 gold in 1000 parts of alloy.

12 carat contains 500 gold in 1000 parts of alloy.

9 carat contains 375 gold in 1000 parts of alloy.'

Page 8 : '...these standard alloys usually consist of gold-copper,

gold-silver, gold-silver-copper....The nature of the alloying constituent is not controlled by enactment, and artificers may vary them as experience suggests.

The Indian Standards Institution has published a pamphlet 'Indian Standard-Grades of Gold and Gold Alloys', which specifies six standard grades of gold and gold alloys used in the manufacture of articles of gold. It is stated in the pamphlet that the alloying elements are mainly copper and silver and that the other elements are also used for alloying depending upon the colour and other properties involved. In the Defence of India (Amendment) Rules, 1963, gold is denned as meaning 'gold, including its alloy, whether virgin, melted, remelted, wrought or unwrought, in any shape or form of a purity of not less than nine carats....'

8. Therefore, it is clear that bullion does not refer to 100% pure gold or pure silver : it may be gold or silver mixed with copper and other metals. The assessees are dealers in gold jewels. They also sell gold to their customers for manufacture of jewels. The gold which is sold for manufacturing purposes will only be an alloy and not pure gold.

9. As pointed out by J. Paul De Castro in his book 'Law and Practice of Hall-Marking Gold and Silver Wares', pure gold is exceedingly soft and consequently seldom employed uncombined in the arts. He has given some brief notes on the gold alloys used in the manufacture of jewellery at pages 132-133 :

Eighteen-carat gold is the quality in which all the best jewellery is made. It can be wrought into almost any article of exquisite beauty and delicate workmanship. It is exceedingly ductile, and its colour is not much altered by wear. Fifteen-carat gold is an alloy largely used in the manufacture of coloured jewellery. This quality is second to none in regard to appearance and durability. It can be made to look equal to the finest gold. It is easy of manipulation, the hardness which nine parts of alloy imparts does not prove a hindrance in manufacture, but gives it that amount of strength and durability which is so essential in costly articles of jewellery. Articles made of 15 carat wear must be better than when made of a softer material; they also keep their shape longer. Rings, brooches, pendants, chains, bracelets, scarf pins, studs, links are frequently met with of 15 carat gold.

Twelve-carat gold is the best of the bright golds. It has a fine rich sparkling appearance imposing,' says Gee, but the author is advised by an expert who handles thousands of articles of bankrupts' stocks that he can scarcely recollect scheduling a single article of 12 carat gold. Ten-carat gold sustains all the characteristics of 12 carat gold. A large quantity of goods is made of the quality in Birmingham.

Nine-carat gold is regularly manufactured into all kinds of bright goods, and this quality, when fully upto the standard of fineness, is hall-marked. The demand for it is largely increasing. It is chiefly employed in the manufacture of keeper and fancy rings, but there is a good trade in old gold coins of this class of gold.

10. Therefore, the gold which is sold for manufacturing purposes will only be an alloy and not pure gold. The word bullion is a technical word. The word is generally used in commercial circles. The well established rule of construction of words used in statutes is thus stated in Black's Interpretation of Law at page 187 :-

Words of commerce or trade, in a tariff law, or other statutes relating to those subjects, are to be taken in their accepted commerce or trade signification; and if it is shown that they bore a definite uniform and generally accepted meaning in the trade and commerce of the country they will be so interpreted without regard to the scientific accuracy of such use by them and without regard to the extent of its divergence from the ordinary or popular meaning.

11. Similarly, Maxwell in his book, 'Interpretation of Statutes', 9th Edition, says at page 57 that-

When dealing with particular businesses or transactions, words are presumed, to be used with the particular meaning in which they are used and understood in the particular business in question.

12. The word 'bullion' is understood by the merchants not as pure gold but as an alloy of gold with some other metal. It is common knowledge that every article of commerce which is sold in goldsmiths' or jewellers' shops, whether it is represented and sold as gold or represented and sold as silver, is known to be composed in part only of pure gold or pure silver. Even the Commercial Taxes Manual treats 'kora gold' which is undoubtedly an alloy, as bullion.

13. Learned counsel for the petitioners brought to our notice a direct decision of the Mysore High Court reported in Canara jewellers v. Commercial Tax Officer [1962] 13 S.T.C. 668. In that case the petitioners who were bullion merchants and jewellers sold to their customers a substance containing 91.66 recurring percentage of gold and only 8.33 recurring percentage of copper and the commodity sold was treated as bullion. The learned Judges held :-

Whether the expression 'bullion' is given the popular meaning or the meaning given to it in trade, that expression means not only pure gold or silver but also an alloy of gold or silver with such small percentage of some other metal as does not take away from it, the character of bullion.

14. In the instant case also the petitioners purchased sokka thangam, mixed a small percentage of copper to make it 'sovereign' gold and sold it to their customers for the purpose of making jewels. We think that the correct interpretation of the word bullion is the one given by the learned Judges of the Mysore High Court and we prefer to follow their decision and with respect we differ from the decision of the Andhra Pradesh High Court in Akhraj Parakh v. The State of Andhra Pradesh [1960] 11 S.T.C. 483 We hold that the word bullion is used to include all kinds of gold alloy of different grades of fineness suitable for the making of gold jewellery.

15. The revision is accordingly allowed with costs. Counsel's fee Rs. 100.


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