2001 (4) TMI 880 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of reduced sales tax rate to silver bullion.
2. Interpretation of G.O. Ms. No. 1092 and G.O. Ms. No. 252.
3. Legality of reopening the assessment.
4. Clarification by Commissioner of Commercial Taxes.
5. Legislative intent and ambiguity in tax provisions.

Issue-wise Detailed Analysis:

1. Applicability of reduced sales tax rate to silver bullion:
The petitioner, a dealer in silver bullion, argued that the reduced sales tax rate of 0.5% as per G.O. Ms. No. 1092 and G.O. Ms. No. 252 should apply to silver bullion. The original rate under item No. 20 of the First Schedule to the APGST Act was 2%. The petitioner contended that the term "gold" in the G.Os. applied only to specie and not bullion, thus entitling silver bullion to the reduced rate. However, the court found that the reduced rate was intended only for gold bullion and specie, not silver bullion.

2. Interpretation of G.O. Ms. No. 1092 and G.O. Ms. No. 252:
The court examined the language of the G.Os. and concluded that the term "gold" applied to both bullion and specie, indicating that the reduced rate of 0.5% was intended only for gold bullion and specie. The court referred to various dictionary definitions and a Supreme Court judgment to clarify the meanings of "bullion" and "specie," concluding that these terms include both gold and silver, but the legislative intent was to restrict the concessional rate to gold.

3. Legality of reopening the assessment:
The petitioner initially paid the tax at the reduced rate of 0.5%, which was accepted by the assessing officer. However, the assessment was later reopened under section 14(4)(c) of the APGST Act, and the turnover was taxed at 2%. The petitioner argued that this reopening was merely a change of opinion. The court upheld the reassessment, stating that the initial acceptance was incorrect as the reduced rate was not applicable to silver bullion.

4. Clarification by Commissioner of Commercial Taxes:
The Commissioner of Commercial Taxes issued a clarification on March 22, 1995, stating that the reduced rate of tax was applicable only to gold bullion and specie, not silver bullion. The court noted that the petitioner was aware of this clarification and the liability to pay the normal tax rate for silver bullion.

5. Legislative intent and ambiguity in tax provisions:
The court emphasized that the object of the exemption notification and the intention of the State Government must be considered. It found no ambiguity in the expressions used in the G.Os. and concluded that the legislative intent was clear in granting the concessional rate only to gold bullion and specie. The court dismissed the petitioner's argument that the omission of the term "gold" in a subsequent G.O. indicated an intention to extend the concessional rate to silver bullion.

Conclusion:
The court dismissed the writ petition, affirming that the reduced sales tax rate of 0.5% was applicable only to gold bullion and specie, not silver bullion. The reopening of the assessment and the subsequent reassessment at the rate of 2% were upheld as lawful and in accordance with the legislative intent and clarifications issued by the Commissioner of Commercial Taxes.