JAIHIND Vs. STATE OF KERALA

JUDGEMENT

(1.) The question that has come up for consideration before us is whether the Tribunal is justified in taking the view that the return of gold with labour charges in exchange of gold ornaments, would amount to sale within the meaning of S.2(xxi) of the K.G.S.T. Act When these two tax revision cases came up for consideration before a Division Bench of this Court, the Bench doubted the correctness of the decision in Radha Printers, Kollam v. State of Kerala, 90 STC 201 ((1992) KLJ (TC) 379), and referred the matter to a Full Bench. T.R.C. No. 65 of 1993 is filed by the assessee and T.R.C. No. 77 of 1993 is filed by the Revenue. This arise out of a common order passed by the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam, in T.A.No. 23 of 1991.

(2.) The assessee is a Jeweller borne on the file of the Assistant Commissioner (Assessment), Special Circle, Ernakulam. The assessment year in question is 1980-81. On verification of the accounts of the assessee, for the purpose of assessment under the K.G.S.T. Act, it was noticed that he had purchased 2293.480 gms. of gold ornaments from dealers outside the State giving in return equal quantity of gold with labour charges. The assessing authority took the view that the said transaction is interstate sale assessable under the C.S.T. Act It was therefore, proposed to assess the turnover under the said Act.

(3.) Assessee filed objections to the said proposal stating that the transaction in question was not a purchase or sale under the C.S.T. Act Assessee contended that the gold supplied to dealers outside the State would not come within the definition of sale under the K.G.S.T. Act or C.S.T. Act According to the assessee, the expression 'valuable consideration' under S.2(xxi) of the K.G.S.T. Act is intended to cover up only cheques, promissory notes and other negotiable instruments. Objections raised by the assessee were overruled holding that receipt of gold ornaments and entrustment of gold with labour charges subsequently are two independent transactions and have got the character of inter state sale.