O B RATHOD Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(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 : <FRM>JUDGEMENT_39_TLKAR0_1978Html1.htm</FRM>

(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.