BHIMA AND BROTHERS Vs. STATE OF KERALA

JUDGEMENT

(1.) THE question raised in this revision filed by the assessee is whether the Sales Tax appellate Tribunal, Kottayam was justified in confirming the assessment of purchase turnover of gold valuing Rs. 1,62,30,263. 70 under S. 5a of the Kerala General Sales tax Act, 1963 (hereinafter referred to as "the Act" ). We have heard senior counsel appearing forthe petitionerand Government Pleader appearing forthe respondent.

(2.) ASSESSEE is a dealer in gold ornaments. During the assessment year 1997-98, the assessee conceded purchase turnover of gold ornaments above Rs. 8 crores. The assessing officer noticed that the assessee accounted purchase of gold ornaments for the value of Rs. 1,62,30,263. 70 from close relatives of one of the partners of the petitioner-firm. According to the assessee, the turnover cannot be subjected to purchase tax as it represents value of new gold ornaments purchased from close relatives of one of the partners. The assessing officer felt that purchase should be taken as old ornaments because the persons from whom the petitioner purchased gold are neither manufacturers nor dealers of new gold ornaments. The further finding is that the purchase bills are not in conformity with R. 32 (12a) of the Kerala general Sales Tax Rules (hereinafter referred to as "the Rules") because the address of the suppliers are not available in the three purchase bills. The bills contain only the names and the address shown is that of the petitioner's shop. The purchase bills are in the name of individual sellers who have no connection with the firm except the fact that they are close relatives of one of the partners. The Officer, therefore, concluded that the gold ornaments purchased is in fact old gold ornaments liable to purchase tax under S. 5a of the Act along with other turnover. The First Appellate authority held thatsince the sellers' turnover is above taxable limit, assessment should have been made on them. However, the sellers contested this order issued by the first Appellate Authority before the Appellate Tribunal which were taken along with the appeal filed by the petitioner. By the common order, the Tribunal exonerated the sellers from liability and upheld the assessment holding that the petitioner is liable to pay purchase tax as the gold ornaments purchased is only old gold ornaments.

(3.) DURING hearing, senior counsel appearing for the petitioner produced the purchase bills before us which do not even contain the details of the articles purchased and the bills are also not in conformity with R. 32 (12a) of the Rules. Therefore, the contention of the petitioner that the purchase is of new gold ornaments from three individuals does not stand proved. Besides this, if the claim of the petitionerthat what is purchased is new jewellery is correct, all these sellers, namely the three individuals are required to pay tax on their sales as they acted as dealers in gold jewellery above the limit which would attract tax under the Act. Moreover, the petitioner admittedly paid tax on the sale of the items purchased which is against their own case because if the petitioner's case that the articles purchased are new jewellery is correct, then the subsequent sales being second sales would not attract tax. The petitioner could have claimed exemption on that complying with the requirement of R. 32 (13) of the rules. It is clear from the Tribunal's order that old gold ornaments introduced in business in the name of the family members is as a result of voluntary disclosure of income made by them.