Decided on April 08,1960

Shah Manekchand Kundanmal And Co Appellant


Y.V.Dixit, President - (1.) THESE three applications which raise a common question may be disposed of by a common judgment and it would be sufficient to mention the facts in Revision Application No. 347 of 1959.
(2.) THE applicants are a partnership firm who do business under the name and style of Messrs Shah Manekchand Kundanmal & Co. The period of assessment is from 1st April, 1954, to 31st March, 1955 and in respect of this period the applicants were assessed by the Sales Tax Officer in the manner set out in his order dated 21st February, 1958. The applicants preferred appeal from that order to the Assistant Collector of Sales Tax who, by his order dated 23rd February, 1959, confirmed the order made by the Sales Tax Officer. From the appellate order the applicants went in revision before the Additional Collector of Sales Tax, Bombay City Division (Revision), Bombay and that authority by his judgment dated 14th July, 1959, confirmed the order made by the Assistant Collector. It is the correctness of this order which has been questioned by Mr. Kshatri on behalf of the applicants. The learned Advocate appearing for the applicants says that the applicants are bullion merchants and their business is to purchase bullion from registered as well as unregistered dealers. According to Mr. Kshatri, the business done by the applicants is that in the first place they purchase bullion from both unregistered and registered dealers, then send the same to the refinery for being melted and sell the refined bullion. The Sales Tax Officer, while making the order, observed as follows: "As the majority of purchases of bullion are from unregistered dealers which is sold after mixing or melting and as the dealer could not satisfactorily prove that he mixed or melted only bullion purchased from R. dealers his claim under Rule 5(b) is rejected. No claim is also allowed under Section 8(a). He has purchased old ornaments from U. R. dealers and has sold gold after melting the same ". Therefore, the story as put forward on behalf of the applicants is not true. Their business does not seem to be merely of purchasing bullion and selling it. They also do the business of purchasing old ornaments which they appear to melt and then sell as bullion.
(3.) THE question raised before the Additional Collector was that the applicant should be given the benefit of Rule 5(b) of the Bombay Sales Tax (Exemptions, Set -off and Composition) Rules, 1954. Rule 5 deals with classes of sales on which sales tax leviable under Section 8 is not payable and Rule 5(b) says that the sales tax leviable under Section 8 shall not be payable in respect of the following classes of sales, that is to say, - (b) sales of bullion prepared by melting, mixing or refining bullion which has been purchased by a dealer on or after the 1st April, 1954, in the pre -Reorganisation State of Bombay, excluding the transferred territories from registered dealers and to the purchase of which the provisions of Section 46 or Clause (v) of Rule 7 do not apply Therefore what is exempted under Rule 5(b) is sales of bullion as indicated in Rule 5(b). There is a proviso to Rule 5(b) which says: - Provided that nothing in this sub -rule shall apply to sales of bullion prepared by; melting any ornament or article made of gold or silver, either alone or partly with bullion. It is clear, therefore, that to claim exemption under Rule 5(b) it must be sale of bullion only. The benefit of the provisions contained. in Rule 5(b) does not arise where the proviso applies and the proviso applies to a sale of bullion prepared by melting any ornament or article made of gold or silver, either alone or partly with bullion.;

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