2008 (3) TMI 452 - SC - VAT and Sales Tax

Whether the ornaments and other articles of gold purchased by the assessee fall within the description of bullion and specie given in entry 56 of the First Schedule to the Kerala General Sales Tax Act? Held that - Appeal dismissed. The relevant period in the present appeals is from November 1, 1994 to March 31, 1995. Hence, the appellant cannot take any benefit of omission of the word gold in bracket for the period in question as the G.O. Ms. No. 625 dated July 31, 1996 is to take effect from August 1, 1996. It is a well-established principle that exemption notifications are to be construed strictly as if the intention of the Legislature is clear and unambiguous, then it is not open to the courts to add words in the exemption notification to extend the benefit to other items which do not find mention in the notification. In the present case, there is no ambiguity in the expression used in the G.O. The intention of the State Government is clear that only gold bullion and specie is entitled to the concessional rate of tax. Under the circumstances, the same cannot be extended to silver as claimed by the assessee.

Issues Involved:
1. Applicability of reduced sales tax rate to silver bullion under G.O. Ms. No. 1092 and G.O. Ms. No. 252.
2. Interpretation of the term "bullion and specie (gold)" in the context of the Andhra Pradesh General Sales Tax Act, 1957.
3. Legality of reopening the assessment and framing the reassessment by the assessing officer.
4. Effect of subsequent G.O. Ms. No. 625 on the interpretation of the earlier notifications.

Detailed Analysis:

1. Applicability of Reduced Sales Tax Rate to Silver Bullion:
The appellant argued that the reduced sales tax rate under G.O. Ms. No. 1092 and G.O. Ms. No. 252 should apply to both gold and silver bullion. The appellant contended that the bracketed word "gold" applies only to specie and not to bullion. However, the court found that the intention of the government was to restrict the benefit of the reduced tax rate to gold bullion and specie only. The court stated, "The Legislature used the term 'gold' in bracket after expression 'bullion and specie' thereby making its intention clear that it wanted to restrict the benefit of reduced rate of tax to gold bullion and specie only."

2. Interpretation of the Term "Bullion and Specie (Gold)":
The court referred to the definitions and common parlance interpretations of "bullion" and "specie." It was noted that "bullion" means gold or silver in mass, in bars, plates, etc., in uncoined form, whereas "specie" means coined gold or silver or any other metal used as currency. The court emphasized that "bullion and specie" is a single phrase and cannot be bifurcated. The court concluded, "The intention of the Government in putting the word 'gold' in the bracket after the words 'bullion and specie' clearly shows that the intention of the Government was to extend the benefit of reduced rate of tax to gold bullion and gold specie only and not to silver."

3. Legality of Reopening the Assessment and Framing the Reassessment:
The assessing officer initially accepted the appellant's return showing a turnover of Rs. 14,33,01,470 with a sales tax rate of 1/2 per cent. Later, the assessment was reopened, and the tax rate was revised to two per cent. The appellant challenged this reassessment, arguing that it was a change of opinion rather than a legitimate reassessment. The court upheld the reassessment, stating that the clarification by the Commissioner of Commercial Taxes indicated that the reduced rate was applicable only to gold bullion and specie. The court noted, "The action of the respondent-authorities in reopening the assessment as well as framing the reassessment is not in accordance with law and is only a change of opinion with reference to the notification issued by the Government under section 9(1) of the Act."

4. Effect of Subsequent G.O. Ms. No. 625 on the Interpretation of the Earlier Notifications:
The appellant argued that the omission of the word "gold" in G.O. Ms. No. 625 indicated that the reduced rate of tax should apply to both gold and silver bullion. However, the court clarified that G.O. Ms. No. 625 was effective from August 1, 1996, and did not apply to the relevant period from November 1, 1994, to March 31, 1995. The court stated, "The appellant cannot take any benefit of omission of the word 'gold' in bracket for the period in question as the G.O. Ms. No. 625 dated July 31, 1996 is to take effect from August 1, 1996."

Conclusion:
The court dismissed the appeals, concluding that the reduced rate of sales tax under G.O. Ms. No. 1092 and G.O. Ms. No. 252 applied only to gold bullion and specie, not to silver. The court emphasized that exemption notifications must be construed strictly and that the clear and unambiguous intention of the Legislature was to limit the concessional rate to gold. The court stated, "For the reasons stated above, we do not find any merit in these appeals and dismiss the same with costs."

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