GANJAM NAGAPPA AND SONS Vs. STATE OF MYSORE

JUDGEMENT

(1.) The question which arises in this revision petition is whether in respect of the turnover of the petitioner for the assessment year 1963-64 sales tax was payable under the proviso to section 5(1) or at the higher rate specified in Second Schedule to the Act. The petitioner is a jeweller, and, when he produced his return before the Commercial Tax Officer he advanced the contention that some part of the turnover included labour charges which could not be taxed. The finding of the Commercial Tax Officer was that the petitioner sold finished articles of jewellery and that no portion of the turnover could be regarded as labour charges. But he thought that the sales consisted of distinct sales of component parts of a manufactured jewel. According to him when there was a sale of a jewel in which a precious stone had been set, there was a sale of that precious stone and a sale of the gold in which it was embedded. The position, he thought, was similar when there was a sale of a jewel in which an artificial stone had been set. So he thought that tax was payable at 1 1/2 per cent. of the turnover which related to the sale of gold, at 3 per cent. of the turnover which related to the sale of artificial stones and at 5 per cent. of the turnover with respect to the sale of precious stones. In the appeal preferred to the Deputy Commissioner the finding of the Commercial Tax Officer that there was a sale of finished products was affirmed and the claim to exemption in respect of labour charges was negatived.

(2.) In the further appeal presented to the Sales Tax Appellate Tribunal, two arguments were presented. The first rested on the finding of the Commercial Tax Officer and the Deputy Commissioner that there was a sale of finished articles of manufactured jewels. It was urged that, if what was sold by the petitioner was a jewel, there was no sale of gold or a precious stone or an artificial stone as such, and so, tax was payable at the lowest rate of 1 1/2 per cent. of the turnover specified in the proviso to section 5(1) of the Act on every sale of a jewel. The second contention raised before the Tribunal was that labour charges which formed part of the price paid by the customer to the petitioner were wholly exempt from the payment of tax. Both these contentions were negatived by the Tribunal.

(3.) But in this revision petition the contention concerning labour charges was not pressed. With respect to the measure of the tax, the Tribunal was of the view that although there was a sale of a finished product by the dealer to his customer, so long as a component part of the product was a precious stone or an artificial stone, there was a sale of such precious or artificial stone, as the case may be, and so, with respect to such sale the higher tax specified in the third column of the 64th item in the Second Schedule to the Act was payable.