BHIMA Vs. ASSISTANT COMMISSIONER ASSESSMENT

JUDGEMENT

(1.) In these connected cases filed by sister concerns one in Alappuzha and the other in Ernakulam, the issue is common and therefore the cases are heard together and disposed of by this common judgment. The matter pertains to the sales tax assessments of both the assessees for 2000-01 and 2001-02. The petitioners being dealers in gold and silver jewellery claimed benefit of payment of tax at compounded rate under Section 7(1)(a) of the Kerala General Sales Tax Act, 1963. Under this section, a dealer in jewellery could settle his sales tax liability for the year 2000-01 by remittance of 120 per cent of the tax payable by him as conceded in the return or accounts for the immediately preceding year or the tax paid for the said year, whichever is higher, which in this case is 1999-2000. Later the percentage of tax payable at compounded rate was increased from 120 per cent to 150 per cent and thereafter from 150 per cent to 200 per cent of the previous year's tax. Both the petitioners filed applications for payment of tax at compound rate under Section 7(1)(a) for the assessment year 2000-01 which were accepted by the officer and assessments were accordingly completed. However, later the assessing officer noticed that apart from sale of gold and silver jewellery, the petitioners were buying and selling standard gold (bullion) which is not covered under the scheme of compounding under Section 7(1)(a) as the item falls under separate entry in the First Schedule. According to the officer the turnover on sale of bullion is separately taxable in addition to the tax payable at compound rate. Therefore, he issued proceedings under Section 19 of the KGST Act and modified the original assessments completed for both the petitioners for the year 2000-01 by demanding tax on the first sales turnover of bullion in addition to the tax payable at compound rate for the jewellery business. So far as the assessment year 2001-02 is concerned, even though both the petitioners filed application for compounding and the petitioners were permitted to remit tax at compound rate, the officer while making regular assessment made separate assessment of first sales turnover of standard gold (bullion) in addition to the tax payable at compounded rate. It is against these orders the petitioners have approached in this Court. I heard senior counsel Dr. K. B. Muhamed Kutty who appeared for the petitioners and Government Pleader for the respondents.

(2.) Since the question pertains to the scope and ambit of Section 7(1)(a) of the KGST Act the said provision is extracted hereunder for easy performance.

(3.) Even though counsel for the petitioner contended that purchase and sale of standard gold (bullion) is only an incidental transaction to the business in jewellery, facts disclose otherwise. Exhibit P8 assessment, produced in O. P. No. 27537 of 2002 shows that the petitioner in that original petition which had a sales turnover of gold ornaments and precious stones to the tune of Rs. 20.71 crores sold standard gold (bullion) worth Rs. 67 crores, out of which taxable sales of standard gold (bullion) was Rs. 41.38 crores. In other words, the purchase and sale of standard gold (bullion) is 3 times that of turnover in jewellery. The position of the very same petitioner in the next year also is the same because it is clear from exhibit P1 produced in W. P. (C) No. 31484 of 2003 that during the next year 2001-02 also the petitioner in that original petition had turnover of Rs. 55.73 crores in standard gold (bullion) out of which the first sale that is taxable sales of standard gold (bullion) amounts to Rs. 43.38 crores. It is pertinent to note that sales turnover of jewellery of the petitioner in that year was only Rs. 20.75 crores. From the comparative figures of sales by the petitioners in other connected cases also, it is seen that the petitioners were engaged in massive purchase and sale of standard gold (bullion). Though strange and difficult to believe, both petitioners are more traders in bullion than dealers in jewellery.