Gold ornaments treated as exempt gold consignments; seizure and penalty for alleged rule breach were struck down.

Gold ornaments were held to fall within the expression "consignment of goods" of gold under rule 99(2)(c)(ii) of the West Bengal Value Added Tax Rules, 2005, because they are goods made of gold. That exemption excluded the operation of rules 100 to 102, so the administrative distinction between gold bars and gold ornaments was unsustainable. As rule 100 did not apply, seizure for alleged breach of that rule and the related penalty had no legal basis. The seizure and penalty were set aside, and the petitioner was entitled to refund of the security amount.

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Issues: Whether gold ornaments, being goods made of gold, fall within the exemption in rule 99(2)(c)(ii) of the West Bengal Value Added Tax Rules, 2005 so that rule 100 does not apply, and consequently whether their seizure and the penalty imposed for alleged breach of rule 100 were lawful.

Analysis: On a plain reading of rule 99(2)(c)(ii), the expression "consignment of goods" of gold is wide enough to include gold ornaments, since they are made of gold. The exclusion in rule 99(2) therefore prevents the application of rules 100 to 102 to such goods. The distinction drawn by the authorities between gold bar and gold ornaments was held to be unsustainable, and the fact that both were treated alike in the Schedule further supported the conclusion that gold ornaments could not be taken out of the exemption. Once rule 100 had no application, seizure under rule 100 and penalty for its alleged violation could not stand.

Conclusion: The seizure and penalty were illegal and were set aside; the writ petitioner succeeded and was entitled to refund of the security amount.

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