Allowed

State of Kerala v. Sri Mathew Padinjath (Prop)

Kerala HC16 Jun 2020OT.Rev/65/2018

Case brief

AI extract

What is this about?

This order allows the State's tax revision regarding whether gold transport to a refiner without proper delivery notes constitutes a sale of ornaments or bullion. The Court held that transport for processing without Rule 58(16) compliance is deemed a sale at the higher tax rate.

What did the court decide?

Revision allowed; order of the Tribunal and First Appellate Authority reversed; Assessing Officer's order restored. The assessee is deemed to have sold gold ornaments.

State of Kerala Vs Sri Mathew Padinjath (Prop) — Company and Corporate | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

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THE HONOURABLE MR. JUSTICE T.R.RAVI

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TUESDAY, THE 16TH DAY OF JUNE 2020 / 26TH JYAISHTA, 1942

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OT.Rev.No.65 OF 2018

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AGAINST THE ORDER/JUDGMENT IN TAVAT 250/2015 DATED 17-11-2017 OF KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM

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REVISION PETITIONER:

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STATE OF KERALA REPRESENTED BY THE DEPUTY COMMISSIONER OF STATE TAX (LAW),STATE GOODS & SERVICES TAX DEPARTMENT,ERNAKULAM - 11.

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BY GOVERNMENT PLEADER

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RESPONDENT:

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SRI MATHEW PADINJATH (PROP) J.P.TRADERS,THIRUVANIKKAVU,OLLUKKARA, THRISSUR,PIN - 680 655.

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R1 BY ADV. RAJESH NAMBIAR

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OTHER PRESENT:

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SENIOR GOVT.PLEADER SRI.V.K.SHAMSUDHEEN

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THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 16.06.2020, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

O.T. Rev.No.65/2018

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O R D E R

(Dated this the 16^th day of June, 2020)

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K.Vinod Chandran, J

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The revision petitioner/assessee is a trader in gold ornaments and bullion. The assessee filed return for the month of January 2015 showing purchase of gold ornaments and sale of bullion. The assessee's contention was that the old gold jewellery purchased in auction from various places had been refined and bullion obtained, which was sold to other dealers. The Assessing Officer found that as per the details of the Registration Certificate, the assessee is not a manufacturer nor does he maintain a refining unit.

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2. The assessee is said to have transported the old jewellery purchased, to the refining units by delivery chalans for the purpose of refining. The bullion obtained on such refining

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having been sold to the very same refining unit, the Assessing Officer found sale of jewellery and not bullion; the former of which is assessable at the higher rate of 5% while the later at 1%.

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3. The First Appellate Authority remanded

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the matter finding that the assumptions made by the Assessing Officer were not established with proper evidence. The Tribunal concurred with the First Appellate Authority. The State is in appeal and the learned Senior Government Pleader submits that when the transport was not supported by delivery notes the transfer of gold ornaments from the assessee to the refining units is deemed to be a sale. It is also submitted that the delivery chalans indicated the very same quantity having been received back even after refining. There is no ground for remand and the assessee is liable to pay tax at the higher rate, is the argument.

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4. The learned Counsel appearing for the

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assessee would first contend that on the basis of the order of the Tribunal, the Assessing Officer had reconsidered the issue and had passed orders accepting the returns of the assessee not only for the month of January but also for the month of February and March of the same year. There is no appeal taken from the years for February and March and in such circumstances, there is no reason why the impugned order should be interfered with.

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5. It is also argued that the order is one

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of remand and specifically for the purpose of establishing the allegations made in the notice by substantiating evidence. There could be no dispute raised on an open remand which in any event, is justified. The Assessing Officer had proceeded on mere surmises and conjectures and in fact the bullion received was not of the same weight as the jewellery send for refining. It is also argued that only in one instance there was sale of

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bullion to the dealer which carries out the refining unit. In the other cases, there were sufficient other materials to evidence the refining of gold and subsequent sale of bullion by the assessee to another dealer who was not connected with the refining unit.

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6. On the ground of the revision being

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not maintainable, the learned Government Pleader argued that no appeal was filed from the orders of the first Appellate Authority in the months of February and March because the first Appellate Authority had relied on the Tribunal order impugned herein, with respect to the month of January. An appeal to the Tribunal would have been futile. However, if the present revision is allowed, there is still time to file an application for rectification before the First Appellate Authority, is the contention. We are of the opinion that there is no ground to find the

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revision to be not maintainable especially since the order relates to the first month on which the discrepancy was noticed. We however, leave it to be considered whether a rectification is possible

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or not and express no opinion on that for the subsequent months.

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7. The question of law raised is as to whether the assessee could establish by other evidences as to the jewellery having been sent to

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the refining units for the purpose of refining and then a subsequent sale having been made of the bullion obtained on such refining.

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8. The First Appellate Authority found that there is not even one single instance of interception of consignment and that the finding of the assessing authority that the appellant received back bullion of the same weight as the jewellery transferred for refining was factually incorrect. The usage of delivery chalan instead

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of delivery note (Form 15) was found to be a technical defect.

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9. Rule 58(16) inter alia provides that

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if any dealer sends goods to any place within the State or outside the State inter-alia for processing, repairs etc., then the consignment shall be accompanied by delivery note in Form No.15 for the onward and return transport. On return of the processed goods, it shall also be accompanied by the invoice or bill of the processed goods along with delivery note. Delivery chalan as is provided under Rule 58(18A) is permissible only when the transport is of goods in small quantities by the dealers from one of his shops or godown to another shop or godown. It is also mandatory that when transport is made using such delivery chalans, the dealer should give prior intimation of the serial numbers assigned to the delivery chalans to the Assessing Authority.

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10. In the present case, though delivery

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chalans were used the transport was not from one of the dealer's shop or godown to another shop or godown. There was also no prior intimation given to the assessing officer of the challan numbers. The use of delivery challans for such transport for processing hence cannot be said to be a mere technical defect. The transport was admittedly for processing which is covered by Rule 58(16). The transport having not been supported by delivery notes, the assessee cannot raise a contention of the movement of goods having been effected for the purpose of refining or processing.

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11. Though we are not concerned with the facts, the assessee on the ground of open remand made, had strenuously contended before us that there was ample evidence to show that there was no sale of gold ornaments as such. We have looked at

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the assessment order which extracts the objection of the dealer. The dealer admittedly sold bullion to three jewellers namely SJS Gold Private Limited, MJ Gold and Sivasakthi Bullions. Sivasakthi Bullions is a refiner. The bullion sold

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to SJS Private Limited is said to have been refined by SJS Enterprises. Transport of goods for the purpose of refining having not been established for reason of the same having not been accompanied with delivery notes; necessarily the assessee is deemed to have purchased old gold and sold it in the same form while accepting the purchase price of the bullion obtained after refining has been carried out. The invoices created with respect to the sale of bullion is a mere subterfuge employed for the purpose of paying lower tax as applicable to bullion. The assessee's

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transport, for the purpose of refining having not been established, it can only be deemed to be sale

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of gold ornaments.

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We answer the question of law in favour of the revenue and against the assessee and reverse the order of the Tribunal and the first appellate authority and restoring the order of the Assessing Officer.

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O.T.Revision hence is allowed. No order

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as to costs.

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Sd/K.VINOD CHANDRAN, Judge

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Sd/T.R RAVI, Judge

jma

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APPENDIX

PETITIONER'S/S EXHIBITS:

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ANNEXURE A TRUE COPY OF ASSESSMENT PROCEEDINGS OF THE COMMERCIAL TAX OFFICER, FIRST CIRCLE, THRISSUR DATED 17.03.2015 ANNEXURE B TRUE COPY OF THE APPELLATE ORDER OF ASSISTANT COMMISSIONER (APPEALS) THRISSUR DATED 16.09.2015 ANNEXURE C CERTIFIED COPY OF THE ORIGINAL ORDER OF TRIBUNAL DATED 17.11.2017 IN T.A.(VAT) NO. 250/2015.

State of Kerala v. Sri Mathew Padinjath (Prop)

Case brief

What is this about?

What did the court decide?

State of Kerala v. Sri Mathew Padinjath (Prop)

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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