2003 (2) TMI 449 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of notification exempting tax on sale or purchase of goods.
2. Application of section 5A of the Act on purchase turnover of bullion.
3. Exemption eligibility under the notification for sale of bullion by State Bank of India.

Issue 1: Interpretation of notification exempting tax on sale or purchase of goods

The case involved a dispute regarding the interpretation of a notification exempting tax on the sale or purchase of goods, specifically bullion and jewelry. The notification required the seller to produce a certificate obtained from the purchaser for the exemption to be applicable. The contention arose whether the exemption was total or limited based on the specific conditions mentioned in the notification.

Issue 2: Application of section 5A of the Act on purchase turnover of bullion

The primary issue revolved around the application of section 5A of the Act on the purchase turnover of bullion by the assessee. Section 5A mandates the levy of purchase tax under certain circumstances. The assessing authority contended that the purchase turnover of bullion was liable to be assessed under section 5A as it had not suffered tax under section 5(1) at the point of sale by the State Bank of India.

Issue 3: Exemption eligibility under the notification for sale of bullion by State Bank of India

The dispute also involved the eligibility of the State Bank of India for exemption under the notification for the sale of bullion to the assessee. The majority view of the Tribunal held that the exemption granted for the sale of bullion was total, thereby exempting it from tax under section 5(1) of the Act. However, the departmental member's dissenting order argued that the exemption was not total, thus invoking the provisions of section 5A of the Act.

The court analyzed the relevant provisions of section 5A and the notification to determine the applicability of the exemption and the levy of purchase tax. It was established that all conditions necessary to attract section 5A(1) were satisfied in this case, as the bullion purchased was used in the manufacture of gold ornaments. The court concluded that the exemption under the notification was limited, available only to specific entities, and not a total exemption as contended by the assessee.

Ultimately, the court referred to a previous decision where a similar question had arisen regarding the levy of purchase tax under section 5A. Based on the interpretation of the notification and relevant legal provisions, the court set aside the majority view of the Tribunal and upheld the dissenting order, ruling that the purchase turnover of bullion made by the assessee was liable to be assessed under section 5A of the Act. The court disposed of the tax revision case accordingly.