1972 (6) TMI 57 - HC - VAT and Sales Tax

High Court interprets tax law: impure silver ingots deemed alloy under item 15

The High Court of Madras ruled in a case involving the interpretation of item 15 of Schedule I under the Madras General Sales Tax Act. The Court held that ... - Issues:1. Interpretation of item 15 of Schedule I under the Madras General Sales Tax Act.2. Reassessment of turnover at a higher rate of tax.3. Classification of silver ingots under item 15.4. Comparison of Tribunal's view with the Madras Act 10 of 1963 and previous court decisions.The High Court of Madras addressed the issue of the interpretation of item 15 of Schedule I under the Madras General Sales Tax Act in a case where the assessing authority proposed to reassess the turnover of a petitioner at a higher tax rate. The turnover in question was derived from the sale of silver ingots obtained by converting old silver ornaments into ingots through smelting. Initially, the assessing authority accepted that the turnover fell under item 15, but later revised the view based on a decision by the Sales Tax Appellate Tribunal. The Tribunal's interpretation of 'bullion' excluded ingots of gold or silver mixed with base metals, contrary to the existing commercial practice. The Madras Act 10 of 1963 was enacted to clarify the scope of 'bullion and specie.' The High Court referred to a previous judgment where it was held that the term 'bullion' includes all grades of gold alloy suitable for making jewelry. The Court disagreed with the Tribunal's technical interpretation and emphasized the inclusion of the word 'alloy' in item 15. It concluded that even impure silver should be considered as an alloy and fall within the scope of item 15. Therefore, the assessing officer's reassessment was deemed unsustainable. The Court granted a writ of certiorari quashing the reassessment order and awarded costs to the petitioner, along with advocate's fees.