TaxTMI 
TaxTMI 
2015 (3) TMI 1046
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....of gold jewelry studded with diamond. For getting the jewelry/ornaments manufactured, the assessee provides the raw materials/input i.e., gold bullions, diamond and precious stones to artisans and also gives the designs and specification of the gold ornaments studded with diamond and makes payment on job work basis to such artisans. 3. In the course of the assessment proceedings, the assessing authority noticed the diamond, which was used in the manufacture of gold jewelry studded with diamond and platinum jewelry studded with diamond were purchased from a unregistered dealer. Therefore, the authority held as these diamonds lose their identity once they have been consumed in the manufacture of jewelry, articles studded with diamond, the ....
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....by the assessee from an unregistered dealer is consumed in making the jewelry, Section 6 of the Act is attracted. Aggrieved by the said order, the present appeal is filed. In the appeal the following questions of law are raised: 4. On the facts and in the circumstances of the case, Whether or not, (i) The 'II" RA CCT - is justified in his initiating Second Revisional Proceedings by passing Non Speaking Order and setting aside the Speaking Orders of the FAA in allowing the appeal and the orders passed by the 'I' RA in dropping the proceedings appreciating the correctness and completeness of the appellant? (ii) The FAA, is justified in allowing the appeal on merits on a correct position of law, by appreciating the grounds....
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....ka Sales Tax Act, 1957. Admittedly he has purchased the diamonds from an unregistered dealer. If after such purchase he had sold that diamond then Section 6 of the Act is not attracted. But, once the diamond is consumed in making the jewelry, Section 6 of the Act is attracted. 8. Section 6 of the Karnataka Sales Tax Act, 1957 reads as under: Section 6 - Levy of purchase tax under certain circumstances Subject to the provisions of sub-section (5) of section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under section 5 is leviable on the sale price of such goods and, (i) either consumes such goods in the manufacture of other goods for sale or otherwise 2 [or consumes....
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....s are used in the preparation of jewelry, it did not get transformed into another commodity and therefore, it was not consumed. Unless it is consumed, Section 6 of the Act is not attracted. 11. The Apex Court had an on occasion to consider the said argument in the case of Anwarkhan Mehboob Co. vs. The State of Bombay and Others reported in (1960) 11 STC 698 they were examining the issue of the what constitutes consumption of a commodity and observed as follows in page No.704 as under: It is conversion of a commodity into a different commercial commodity by subjecting it to some processing, is consumption within the meaning of the Explanation to Art. 286 no less than the final act of user when no distinct commodity is being brought int....
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....ood as 'used-up'. 13. In the light of the aforesaid judgment, when the article purchased by the assessee are being used in bringing out a different commodity known as jewelry, article, there is a consumption of diamonds and bullions in the process of manufacture of a different commercial commodity i.e., diamond embedded jewelry article. It is not a case where the diamonds purchased by the assessee is sold as such to a buyer. When once the diamond is used in making the jewelry and it is embedded in the jewelry, it changes into another commercial commodity and therefore, such a commercial commodity has come into existence on absorption of the diamond and therefore, the test prescribed under Section 6 of the Act is attracted and the....