2010 (2) TMI 1082 - HC - VAT and Sales Tax

Whether the Sales Tax Appellate Tribunal is right in holding that the property purchased by the assessee from bank in public auction were not worn out or beaten jewellery falling under entry 3 of Part A of the First Schedule taxable in the hands of the assessee at the point of last purchase but jewels falling under entry 25 in Part B of the First Schedule taxable at the point of first sale in the hands of the seller by placing the burden of proof on wrong shoulders namely on the assessing officer ignoring that section 10 of the Tamil Nadu General Sales Tax Act 1959 places the burden of proof on the assessee? Whether the Sales Tax Appellate Tribunal is right in holding that sale of jewels pledged to the bank is taxable at the point of first sale (vide Lord Krishna Bank Limited v. Assistant Commissioner (Assessment I) Sales Tax Office 1997 (12) TMI 618 - KERALA HIGH COURT ? Whether the Sales Tax Appellate Tribunal has not committed an error of law in not ignoring the purchase turnover of worn out jewellery which would fall under section 7A of the Tamil Nadu General Sales Tax Act 1959 for arriving at the total turnover for the purpose of section 3E of the Tamil Nadu General Sales Tax Act 1959? Held that - The purchase turnover of jewellery from the bank on auction for a sum of 21, 88, 601 was deleted from the turnover and if that amount is deleted the total turnover comes below 50 lakhs. Therefore the authorities below correctly came to the conclusion that the assessee is entitled to compounded rate of tax. It is a concurrent finding based on valid material and evidence. It is a question of fact and it is not a perverse order. The learned Special Government Pleader (Taxes) has not produced any material evidence before us to take a contrary view from that of the authorities below. We do not find any error or illegality in the order passed by the Tribunal. Accordingly the order passed by the Tribunal is confirmed. Under these circumstances the questions of law are answered in favour of the assessee and as against the Revenue.

Summary

Issues:
1. Interpretation of tax laws regarding the treatment of jewellery purchased from a bank in public auction.
2. Taxability of jewellery pledged to a bank at the point of first sale.
3. Inclusion of purchase turnover of worn-out jewellery in the total turnover calculation.

Analysis:

Issue 1: Interpretation of tax laws regarding jewellery purchased from a bank
The case involved a revision challenging the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the tax treatment of jewellery purchased by the assessee from a bank in a public auction. The primary contention was whether the jewellery purchased should be considered as worn-out or beaten jewellery under a specific entry of the tax schedule. The assessing officer included the purchase turnover of jewellery in the total turnover, leading to a dispute over the application of tax laws.

Issue 2: Taxability of jewellery pledged to a bank
Another question raised was whether the sale of jewellery pledged to a bank should be taxable at the point of first sale. The Tribunal's decision was based on a previous case law, emphasizing the point of first sale for taxation purposes. The Revenue challenged this interpretation, arguing that the Tribunal did not consider the case properly and that the turnover represented old and worn-out jewellery.

Issue 3: Inclusion of purchase turnover of worn-out jewellery
The assessing officer's inclusion of the purchase turnover of jewellery in the total turnover was a crucial aspect of the dispute. The Appellate Assistant Commissioner deleted this inclusion, leading to a subsequent appeal by the Revenue. The Tribunal upheld the decision of the Appellate Assistant Commissioner, emphasizing that the turnover calculation should exclude certain items as per the tax laws. The Tribunal's confirmation of the deletion of the purchase turnover was based on a thorough analysis of the relevant provisions and factual circumstances.

In conclusion, the High Court confirmed the Tribunal's order, stating that the assessee was entitled to the benefit of a compounded rate of tax based on the turnover calculation excluding the disputed purchase turnover of jewellery. The Court found no error or illegality in the Tribunal's decision, leading to the dismissal of the tax case revision in favor of the assessee.