1992 (3) TMI 334 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of purchase tax on old ornaments.
2. Applicability of different tax rates under the Rajasthan Sales Tax Act.
3. Imposition of interest under section 11B of the Act.

Analysis:
The case involved revisions against the orders of the Sales Tax Tribunal regarding the assessment of purchase tax on old gold ornaments. The assessee purchased old ornaments, removed precious stones, and sent them to Bombay Mint for refining into pure gold. The Tribunal held that the assessee is liable to pay purchase tax at the rate of 1 per cent under section 5A read with section 5C, not 5 per cent. The Tribunal also ruled that interest under section 11B is not leviable in this case. The department challenged these decisions, arguing for tax at 5 per cent with interest and disputing the applicability of section 5C and the imposition of interest under section 11B.

The main contention was whether purchase tax could be levied because the refining process was done outside Rajasthan due to the lack of facilities within the state. The department argued that the entire manufacturing process should be within the state to claim exemption under section 5C. The Tribunal's decision was based on the ownership of property remaining with the assessee and the lack of specific findings on whether the purchase tax should be levied at 5 per cent. The court remanded the matter to the Tribunal for a fresh decision on the applicability of purchase tax under section 5A.

Regarding the imposition of interest under section 11B, the court noted that this provision was not applicable to cases prior to its effective date. The court cited a previous decision to support the Tribunal's decision to set aside the interest. Consequently, all revisions were disposed of in line with the above observations.