1970 (4) TMI 150 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of notification regarding tax rate on jewellery with precious stones.
Determining whether jewellery with precious stones falls under the category of ornaments for tax purposes.

The judgment pertains to a case where the Additional judge (Revisions) Sales Tax, Agra, sought the opinion of the court on whether jewellery sold, worth a specific amount and containing precious stones, should be taxed as gold or silver ornaments at 3% or as an unspecified item at 2%. The assessee, engaged in the business of jewellery, contended that the disputed jewellery should be considered an unspecified item and taxed at 2%. The Sales Tax Officer disagreed and levied tax at 3% under a specific notification. The appellate authority favored the assessee, but the judge (Revisions) overturned this decision, aligning with the Sales Tax Officer's assessment.

The key point of contention revolved around the interpretation of the notification dated 5th April, 1961. The notification specified that ornaments made of gold or silver, with or without any other alloy, would be taxed at an enhanced rate. The assessee argued that jewellery with precious stones should not be considered ornaments for taxation purposes. The assessee's counsel relied on a subsequent notification from 1967, which differentiated between jewellery and ornaments containing precious stones. However, the court held that the term "ornaments" in the 1961 notification was comprehensive and encompassed jewellery with precious stones. The court emphasized that the subsequent notification merely aimed to tax more expensive ornaments at a higher rate, while cheaper quality ornaments remained taxable at a lower rate.

Ultimately, the court ruled that jewellery with precious stones falls under the category of ornaments as per the 1961 notification and should be taxed at 3%, rejecting the contention that it should be treated as an unspecified item taxed at 2%. The Commissioner of Sales Tax was awarded costs, and the counsel's fee was also determined. The reference was answered accordingly.