2008 (12) TMI 716 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of purchase turnover of gold under section 5A of the Kerala General Sales Tax Act, 1963.

Analysis:
The case involved a dispute regarding the assessment of purchase turnover of gold ornaments valuing Rs. 1,62,30,263.70 under section 5A of the Kerala General Sales Tax Act, 1963. The assessee, a dealer in gold ornaments, claimed that the turnover in question represented the value of new gold ornaments purchased from close relatives of one of the partners and should not be subjected to purchase tax. However, the assessing officer considered the purchased gold ornaments to be old and liable for purchase tax as the sellers were neither manufacturers nor dealers of new gold ornaments. The officer also noted that the purchase bills did not comply with the rules as the suppliers' addresses were not available. The first appellate authority held that the assessment should have been made on the sellers since their turnover was above the taxable limit.

The sellers contested the appellate authority's order before the Appellate Tribunal, which ultimately upheld the assessment, stating that the purchased gold ornaments were old and subject to purchase tax. The Tribunal also exonerated the sellers from liability. During the hearing, the petitioner's counsel produced purchase bills that lacked details of the articles purchased and did not comply with the rules. The court found that the petitioner failed to prove that the purchased items were new gold ornaments. Additionally, the court noted that the petitioner had paid tax on the subsequent sales, which contradicted their claim of purchasing new jewelry. The court emphasized that the operation between the partner and family members to avoid tax liability was not acceptable. It was concluded that when gold jewelry is purchased from individuals who are only users, it should be considered old gold jewelry, not new. The court dismissed the tax revision filed by the assessee, deeming it devoid of merit.

In summary, the judgment addressed the issue of assessing the purchase turnover of gold under the Kerala General Sales Tax Act. The court rejected the assessee's claim that the purchased gold ornaments were new and not subject to purchase tax, emphasizing non-compliance with rules and lack of evidence to support the claim. The court also highlighted the inconsistency in the petitioner's tax payments and concluded that the purchased items were old gold ornaments, dismissing the revision as lacking merit.