DEPUTY COMMISSIONER LAW Vs. ALAPPAT EXPORTS P LTD
HIGH COURT OF KERALA
DEPUTY COMMISSIONER (LAW)
ALAPPAT EXPORTS (P) LTD.
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(1.) The Deputy Commissioner (Law), Board of Revenue (Taxes), Ernakulam, is the revision petitioner. The assessee is the respondent. The assessment year concerned is 1992-93. The respondent assessee is a company engaged in the export of gold jewellery. For manufacture of the gold jewellery for export, the assessee had purchased bullion from State Bank of India. The gold ornaments manufactured by using the said bullion was exported to outside India. For the assessment year 1992-93, the assessee, filed return under the Kerala General Sales Tax Act (for short 'the Act'), declaring a total and taxable turnover of Rs.2,36,25,714.65 and claimed exemption in respect of the entire turnover. There is no dispute that the assessee is entitled for exemption on the sales turnover of gold ornaments exported. We are only concerned with the levy of purchase tax under S.5A of the Act on the purchase turnover of bullion, purchased from the State Bank of India.
(2.) The Government, in exercise of the power vested under S.10 of the Act, had issued a notification, SRO No.361/92 dated 31.3.1992, effective from 1.4.1992, making an exemption on the tax payable under the Act on the sale or purchase, as the case may be, of goods specified below payable by persons or units with regard to their turnover, subject to the condition specified therein, namely on the sale of bullion and jewellery is made by non resident Indians or Banks to registered dealers in jewellery of gold, subject to the condition that the seller should produce a certificate in the form appended thereto obtained from the purchaser. By virtue of this notification, the assessee did not have to pay tax on the purchase turnover of bullion at the point of sale of bullion by the State Bank of India, for the State Bank of India was exempted from the liability to pay tax in respect of its sale of bullion effected to the petitioner, who is a registered dealer, who satisfied the other requirements also. The assessing authority did not accept the return filed by the assessee, for, according to him, the purchase turnover of bullion is liable to be assessed under S.5A of the Act, for the said turnover has not suffered tax under S.5(1) of the Act at the point of sale effected by the State Bank of India in favour of the assessee. The 1st Appellate Authority confirmed the order of the assessing authority. The three member Bench of the Tribunal, however, by majority, has taken the view that since bullion was imported by the State Bank of India under an EXIM Policy, and the same was sold to the assessee for the specific purpose of manufacture and export of gold ornaments by the assessee, it must be held that the exemption granted for the sale of bullion, under the notification is total exemption, and therefore, there was no liability to tax under S.5(1) of the Act in respect of the sale of bullion effected by the State Bank of India, which is an essential condition for the application of S.5A of the Act.
(3.) However, in the descending order of the departmental member it was held that the exemption to the State Bank of India is not total exemption, and therefore, the provisions of S.5A of the Act are attracted. The Department, being aggrieved by the majority view of the Tribunal, has filed this revision.;
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