Classification of minted gold coins and medallions as semi-finished gold articles, not bullion, under the VAT schedule

Minted gold coins and medallions sold by the assessee were held not to be bullion under the Second Schedule to the Kerala Value Added Tax Act, 2003, because they were finished products and not shown to be raw material for ornaments. Applying the specific entry for semi-finished gold articles in entry 4(4) of the Third Schedule, the Court held that the residuary rate could not apply. Tax was therefore to be charged at 4 per cent under the specific schedule entry rather than at the higher residuary rate, with the classification issue decided in favour of the assessee to that extent.

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Issues: Whether gold coins and medallions sold by the assessee during the relevant years were classifiable as bullion under item 1 of the Second Schedule to the Kerala Value Added Tax Act, 2003, or as semi-finished gold articles under entry 4(4) of the Third Schedule, and the consequent rate of tax applicable.

Analysis: The items were minted gold pieces, some embossed with religious images and some bearing company logos, and were not shown to be raw material for ornaments. They were treated as articles intended to be worn or otherwise used as finished products, and the Court followed its earlier view that such goods fall within entry 4(4) of the Third Schedule rather than the bullion entry claimed by the assessee. The assessment at 12.5 per cent under the residuary entry was therefore held to be unsustainable.

Conclusion: The goods were not accepted as bullion under the Second Schedule; they were held to fall under entry 4(4) of the Third Schedule, attracting tax at 4 per cent, in favour of the assessee to that extent.

Final Conclusion: The assessment was reduced by applying the specific schedule entry instead of the residuary rate, but the assessee did not succeed in bringing the goods within the bullion category.

Ratio Decidendi: Minted gold coins and medallions that are finished products and not raw material for ornaments are to be classified under the specific entry for semi-finished gold articles, not under the bullion entry or the residuary entry.

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