KERALA SMALL FINANCIERS ASSOCIATION Vs. STATE OF KERALA

JUDGEMENT

(1.) Petitioners are the members of the Kerala Small Financier's Association. The Writ Petition has been filed by the Kerala Private Bankers Association, represented by its President, North Kerala Private Banker's Association, represented by its President and the Managing Partner of Oriental Firm (Financiers) Kattoor.

(2.) The Original Petition was filed to declare that the respondents are not entitled in law to levy sales tax on the auction of gold (pledged) conducted by the private small financiers and to declare that the amendments brought into S.2 of the K.G.S.T. Act by Ext. P8 are unconstitutional and void, to strike down S.2 of the K.G.S.T. Act as amended by Ext. P8 as unconstitutional, illegal, void and violative of the fundamental rights of the petitioners and for a mandamus restraining the respondents 3 and 4 from taking any further steps against the members of the Association pursuant to Ext. P8. According to the petitioners the members of the petitioners' Association stand in the shoes of a bailee and does not become the owner of the goods and that they have also got a right to sell the goods not as an owner or as agent or any other capacity and that they can sell the goods after giving notice to the pawner and the amount obtained is to be appropriated to the amount due to them. Thus the entire consideration is not taken by the pawnee (petitioners) because if the amount obtained exceeds the loan amount, the balance has to be returned to the owner of the goods.

(3.) In an identical case filed by the Karnataka Pawn Brokers Association and others against the State of Karnataka before the Supreme Court of India challenging the levy of sales tax by the Karnataka State the Supreme Court in the judgment reported in JT 1998 (7) SC 370 held in Para.31 of its judgment that the sales of unredeemed goods through public auction by an approved auctioneer the pawnee who has control or possession over the goods and who was given statutory authority to pass the general property in and title to the goods, is the seller and as such, satisfied the definition of 'dealer' under the General Sales Tax Act of both the States, viz., State of Karnataka and Tamil Nadu. The Supreme Court has further observed that the above conclusion is further strengthened by the definition of pawn broker. It is further held as follows:-