Chand Mal Bagmal v. State of Rajasthan — 1966 DIGILAW 135 (RAJ)

The question that has been referred to us for opinion is whether Gota and Gota-Kinari are articles made of gold and silver, and are taxable as such, or they are articles taxable at the general rate of Sales Tax. In R. R. D. 1963 page 285, a Division Bench of this Board held that Gota-Kinari and Gota are articles made of gold and silver. The assessee is dealer in Gota and Gota-kinari and insists that Gota and Gota-kinari should be taxed as articles made of gold and silver which carry a lower rate of tax than the general rate. To determine the points in controversy we have to examine the various notifications issued under the Rajasthan Sales Tax Act, 1954 from time to time. On 14-4-1955, the State Government issued notification No. F. 21(7) S. R./55, exempting 20 goods from the payment of sales tax on the condition that the dealer obtained a certificate of exemption on payment of the prescribed fee. Item (2) of this notification was "Locally manufactured gold and silver gota, salma, sitara, and badla." On 30-4-1956, the State Government issued notification No. F. 5(33). E. &. T./56, withdrawing exemption from payment of tax in regard to four items which did not include gold and silver, gota, salma, sitara and badla, Among the articles withdrawn from the exempted list were ornaments made of real gold and real silver as well as articles other than ornaments made of gold and silver. By notification No.F.5(8)E&/60 dated 9th March, 1960, the rate of sales tax on ornaments and articles made of real gold and real silver was increased to 1%. By notification No. F. 5(23) E &.T./61 dated 9th March, 1961, the rate of tax on ornaments made of real gold and real silver was reduced to 1/2% By notification No. F. 5(27) E. &. T. 61-I, dated 1st April, 1961 the notification of the 14th April, 1955, referred to above, was amended so as to exclude from the exempted list gold and silver gota, salma, sitara and badla which were locally manufactured. By notification No. F. 5(15)/52/l, dated the 26th March, 1962, the rate of tax on ornaments made of real gold and silver and all articles made of gold and silver other than ornaments was raised to 2%. By notification No. F. 5(15)/52/l, dated the 26th March, 1962, the rate of tax on ornaments made of real gold and silver and all articles made of gold and silver other than ornaments was raised to 2%. On 15-4-1965 notification No. F. 5(26) FD/CT/55 was issued whereby the rate of tax in respect of all kinds of Gota, Gota Kinari, Salma, Sitara and Badla was fixed at 2%. By notification No. 5(155)FD(CT)/65. IV dated 8-11-1965, the rate of 2% on gota, gota Kinari, salma, sitara 12nd badla was maintained at 2%. A plain reading of the foregoing notifications indicates that between 14-4-1955 and 1-4-1961, locally manufactured gold and silver gota, gota kinary, salma, sitara and badla were exempted from payment of sales tax. The assessee would have us believe that thereafter, i.e. from 1-4-1961, gota and gota-kinari were intended to be treated as articles made of gold or silver. This proposition is entirely untenable. Even since notification of 14-4-1955, the various notifications that have been issued have maintained a clear distinction between articles (other than ornaments) made of gold or silver on the one hand, and the gota, gota-kinari, salma, sitara and badla on the other. For a certain period, gota, gota kinari, salma, sitara and badla were treated as exempted articles, but after the exemption was withdrawn, gota, gota kinari, salma, sitara and badla had to be treated as unspecified articles taxable at the general rate and not as articles made of gold or silver which were taxable at a preferential rate. By the notification issued on the 15th April, 1965, the State Government prescribed a specified rate of 2% on gota, gota kinari, salma, sitara and badla, thereby giving relief to the dealers in these goods, But this does not at all argue that the intention was that these goods should before the issue of notification of 15-4-1965 be treated as articles made of gold or silver. In applying fiscal laws strict construction must be resorted to, and the citizen should not be saddled with a liability unless the law clearly imposes it. In our opinion a clear distinction has been made in the above mentioned notifications all along between the items referred to as "all articles excluding ornaments made of gold or silver" and "gota, gota kinari, salma, sitara and badla". In our opinion a clear distinction has been made in the above mentioned notifications all along between the items referred to as "all articles excluding ornaments made of gold or silver" and "gota, gota kinari, salma, sitara and badla". As we would read these notifications, the assessee cannot claim the benefit of being taxed at the lower rate applicable to articles other than ornaments made of gold or silver, even though it may be proved that what the assessee deals in, namely, gota, gota kinari and badla, have gold or silver as their principal ingredients. The assesssee has sworn an affidavit which says that in genuine gota the percentage of silver is 95 and that of copper 5. According to this affidavit, this is also the proportion of silver and copper in badla from which Asli gota is made. The affidavit explains that to prepare gota from badla, silk and cotton fabric is used, the respective percentages of silk or cotton and badla being 3 and 97. In inferior gota, the proportion of silk or cotton fabric goes upto 15%. The affidavit further says that that the main and essential component is silver or gold. It may be stated here that the so-called gold gota is silver gota plated with gold. On behalf of the State an affidavit has been sworn which says that the price of gota and gota-kinari commonly sold in the market is Rs. 24 to Rs. 40/- per kilo gram. This price is too low to suggest that the gota and gota kinari commonly sold in the market have either gold or silver as their principal component. It is evident that the affidavit on behalf of the State refers to the cheaper quality of gota and gota-kinari and not the asali gota referred to in the affidavit of the assessee. The argument of the assessee is that asli or genuine gota and gota kinari should be treated as articles made of gold or silver. It is not his case that spurious gota and gota kinari should also be treated as articles made of gold or silver. However, the affidavits sworn on the two sides do not, in our opinion, make any difference in the determination of the matter in controversy. It is not his case that spurious gota and gota kinari should also be treated as articles made of gold or silver. However, the affidavits sworn on the two sides do not, in our opinion, make any difference in the determination of the matter in controversy. In the various notifications referred to above, Gota and gota kinari, badla, salma and sitara were clearly intended to be treated on a footing different from articles other than ornaments made of gold or silver. Two specific rulings have been cited in this case, the rest being rulings of a general nature regarding the interpretation of fiscal laws. We have already summed up earlier the general principles regarding the interpretation of the fiscal laws and need not refer to any particular ruling because these principles are generally accepted. We shall therefore only touch on the two specific rulings. The first is A.I.R. 1961 Supreme Court 1506. The question before their Lordships was whether under the Schedule to the Indian Tariff Act 1934, fountain pens with gold-plated caps clips and nibs should be treated as fountain pens or as articles made of gold or silver. There were two entries under the schedule to the Tariff Act. Entry 45(3) with gold or silver". In the majority judgment their Lordships held that fountain pens with gold-plated parts like caps and nibs should be taxed as "fountain pens complete" and not as "articles plated with gold and sliver". Their Lordships observed that it could not be denied that the nib, cap and clip were essential pats of a fountain pen and were not mere accessories, and that without them there would be no question of having a "fountain-pen complete". In our opinion, this ruling does not help in determining the matter in controversy in the case before us. This ruling was given within the four corners of the Schedule to the Indian Tariff Act and has relevance only in regard to the facts of the case before their Lordships. The other ruling on which the learned counsel for the assessee has laid much stress is S. T. C. 1962 page 668. The question before the Mysore High Court was whether the gold sold by the petitioners was bullion within the meaning of the Schedule to the Mysore Sales Tax Act. The other ruling on which the learned counsel for the assessee has laid much stress is S. T. C. 1962 page 668. The question before the Mysore High Court was whether the gold sold by the petitioners was bullion within the meaning of the Schedule to the Mysore Sales Tax Act. As business of the petitioners was to buy gold from the Bombay Mint and add to every eleven parts of that gold one part of copper which they termed as sovereign gold, their Lordships held that the expression "bullion" in its popular or trade meaning did not signify only pure gold or silver, but also an alloy of gold or silver with such small percentage of some other metal as did not take away from it the character of bullion. In our opinion, this ruling also does not help the assessee. The gota and gota kinari which he deals in may have silver as its principal component, but that does not make it an article made of gold or silver for the purpose of the Rajasthan Sales Tax Act, 1954. The notifications issued by the State Government under the Act from time to time leave no room for doubt that genuine gota and gota kinari are distinguished from and not to be treated as articles made of gold or silver, much less spurious gota and gota kinari, salma or badla in which silver or gold is mixed in much smaller proportion. We would answer the reference in these terms. Per Shri Gajendra Singh—I had the benefit of reading the order passed by my learned colleagues in this case. I however do not agree with them fully in the conclusion arrived at by them that Gota-Kinari is not an article made of gold and silver simply because it was treated separately by the various Government notifications issued from time to time. There is no doubt that from 14-4-55 to 1-4-61 Gota Kinari, salma sitara and Badla were exempted from payment of sales tax. It was only by the notification dated 1-4 65 when exemption from Gota Kinari from sales tax was withdrawn that it became taxable. The question therefore naturally arises on what basis tax on sales of these articles be levied. It could be done in two ways. It was only by the notification dated 1-4 65 when exemption from Gota Kinari from sales tax was withdrawn that it became taxable. The question therefore naturally arises on what basis tax on sales of these articles be levied. It could be done in two ways. Tax could be levied either under the general category or under the category of articles made of gold and silver and other than ornaments. The former is a category of unspecified golds, and that latter is a very much narrower category of golds and the rate of tax is lower also. The question therefore actually referred to this larger Bench for decision was whether Gota Kinari is an article made of Gold and Silver. This question has not at all to be decided by my learned colleagues. This is a question of fact pure and simple and not of law at all. If the Gota Kinari is really made of pure gold and silver and the principle component of the article is gold and silver then without hesitation one cannot help treating Gota Kinari as an article made of gold and silver other than ornament. If the main ingredient of the metal used is not gold and silver, but copper with gold or silver plating and woven with cotton thread, then obviously Gota Kinari is not an article made of Gold and Silver. In fact the Government advocate while replying to the arguments of the counsel frankly conceded this at the Bar. According to the well known principle of interpretation of fiscal statutes, the interpretation which is beneficial to an assessee has to adopted. In the absence of a clear mention of Gota Kinari in the list of articles to be taxed, this commodity must first be construed whether it can fall in the category of articles made of Gold and Silver other than ornaments before it can be taxed in a general category. In my opinion Gota and Kinari of pure Gold and Silver must fall into category of articles made of Gold and silver other than ornaments. Gota Kinari not made of pure gold and silver must fall inside that category. I would therefore answer the Reference accordingly.