Skip to content


O.B. Rathod Vs. Commissioner of Commercial Taxes, Karnataka, Bangalore - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKarnataka High Court
Decided On
Case NumberSales Tax Appeal Nos. 6 and 7 of 1974
Judge
ActsKarnataka Sales Tax Act, 1957 - Sections 5, 5(3), 6, 8A, 12(4) and 22A
AppellantO.B. Rathod
RespondentCommissioner of Commercial Taxes, Karnataka, Bangalore
Appellant AdvocateK. Srinivasan, Adv.
Respondent AdvocateH.N. Narayan, High Court Government Pleader
Excerpt:
- code of civil procedure, 1908. section 100:[v. jagannathan, j] remand of case by second appellate court held, directions given by second appellate court cannot be ignored by lower appellate court on the grounds that said directions are without jurisdiction or nullity and non-est in eyes of law. -- section 100: second appeal concurrent findings of fact held, it is not liable to be interfered with even if first appellate court commits an error in recording a finding of fact. -- order 41, rule 23a & section 105(2): appealable order - decree passed by lower appellate court was reversed in appeal and further directions were given to dispose of matter in light of observations made in the order of remand held, appeal can be said to have been disposed of otherwise than on a preliminary..........not arise and, therefore, as he had not withheld any sales tax payable on the sales 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 manufacturer 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.....
Judgment:

Venkataramiah, J.

1. The appellant is common to these two appeals and they relate to the assessment years 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 the into bullion and then sells the bullion as such. Since he purchases article 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 purchase tax under section 6 of the Karnataka Sales Tax Act, 1957 (hereinafter called the 'Act') on the purchases turnover of articles of gold and silver. On the sales turnover of bullion manufactured by him he has to pay sales tax under section 5(3)(a) read with item 74 of the Second 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 under section 6 on the purchase turnover of articles of gold and silver purchased by the appellant had been exempted under the Government Notification No. FD 283 CSL 70 dated 10th September, 1970, issued under section 8-A of the Act as the appellant had paid the tax payable on the sale of bullion manufactured by him out of the articles of gold and silver purchased by him. On a scrutiny of the orders passed by the Assistant Commissioner of Commercial Taxes in appeal, the Commissioner of Commercial Taxes found that the notification referred to above was not applicable to the case and, therefore, took action under section 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 the assessing authority were restored. He, however, directed that the penalty levied under section 12(4) of the Act should be cancelled. Aggrieved by the orders of the Commissioner of Commercial Taxes, the appellant has filed these appeals.

2. Before dealing with the contentions urged by Sri Srinivasan, the learned counsel for the appellant, we consider it necessary to set out the notification in question. It reads as follows :

'GOVERNMENT OF KARNATAKA

Karnataka Government Secretariat, 'Vidhana Soudha', Bangalore.

Notification IV. - No. FD 283 CSL 70 dated 10th September, 1970.

S.O. 2048. - In exercise of the powers conferred by section 8-A of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), the Government of Karnataka hereby exempts with effect from the 1st day of October, 1970, the tax payable under section 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 section 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 the

Governor of Karnataka

Under Secretary to Government,

Syed Gulam Khaja,

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 the 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 withheld any sales tax payable on the sales 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 manufacturer 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 no articles of gold and silver had been manufactured by the appellant, the question of payment 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 under section 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 manufacture of articles of gold and silver sold by 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.

7. Appeals dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //