IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT :- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.T.SANKARAN WEDNESDAY, THE 9TH APRIL 2008 / 20TH CHAITHRA 1930 ST.Rev..No. 396 of 2004 ----------------------------------------- TA.No.644/1994 of SALES TAX APPELLATE .TRIBUNAL, ADDITIONAL.BENCH, PALAKKAD (ORDER DATED 5-5-2003) .................... REVISION PETITIONER/APPELLANT/ASSESSEE:- -------------------------------------------------------------------- M/S. ALAPPAT PALATHINGAL FASHION JEWELLERY, M.G. ROAD, TRICHUR, REPRESENTED BY ITS PARTNER, P.M. THOMAS. BY ADV. SMT.S.K.DEVI SRI.M.RAJ MOHAN SRI.SANTHOSH P.ABRAHAM SRI.FRANKUR D.JAYAN SMT.DEEPSUR D.JAYAN SRI.K.P.PRADEEP (PAYYANNUR) SRI.SHANMUGHAM D. JAYAN SMT.P.K.MAYA DEVI RESPONDENT/ RSPONDENT/REVENUE:- ------------------------------------------------------- STATE OF KERALA, REPRESENTED BY ITS FINANCE SECRETARY, SECRETARIAT, TRIVANDRUM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 09/04/2008, ALONG WITH STRV NO. 398 OF 2004 STRV NO. 399 OF 2004 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & K.T.SANKARAN, J. ------------------------------------------------------ S.T.REV. Nos.396, 398 and 399 of 2004 ------------------------------------------------------- Dated, this the 9th day of April, 2008 ORDER H.L.Dattu, C.J. Since the assessee is common in all these tax revision cases, these revision petitions are clubbed, heard and disposed of by this common order. (2). In these revision petitions, we are primarily concerned with the orders of assessment passed by the assessing authority for the assessment years 1988-1989, 1989-1990 and 1990-1991. (3). The assessee is before us, being aggrieved by the orders passed by the Sales Tax Appellate Tribunal in T.A.Nos. 644/1994, 248/1997 and 249/1997 dated 5-5-2003. (4). The assessee is a dealer registered under the Kerala General Sales Tax Act and Central Sales Tax Act. (5). The assessee is doing business in Jewellery. The assessee not only effects sales of new jewellery but also claims that he undertakes the job work of re-making of jewellery after collecting old gold ornaments from the customers. In the returns filed, the assessee had conceded a particular total turnover and taxable turnover. The assessee had also declared in the turnover the so-called re-making charges collected by him from his customers. (6). The assessing authority has rejected the returns filed by the assessee but also the books of accounts produced by him. He has proceeded to complete the best judgment and while doing so, has treated the S.T.Rv.Nos.396,398,399/2004 -2- so-called entrustment of gold ornaments and sales of them as purchase of old gold and sale of new gold ornaments and accordingly has quantified the tax liability, under the provisions of the KGST Act. (7). Aggrieved by the quantification so made, the assessee was before the first appellate authority, who by his order dated 6-10-1994 had allowed the assessee's appeal, relying on the orders passed by the Tribunal for the earlier assessment years. (8). The Revenue being aggrieved by the orders passed by the first appellate authority had carried the matter by way of second appeal to the Tribunal. The Tribunal by its order dated 5-5-2003 in T.A.Nos. 644/1994, 248/1997 and 249/1997, has allowed the Revenue's appeal and has modified the orders passed by the first appellate authority. While calling in question the correctness or otherwise of the orders passed by the Tribunal, the assessee has framed the following questions of law for our consideration and decision. They are as under: i). Whether the Tribunal is right in holding that the petitioner is liable to tax on supply of gold ornaments manufactured out of the old gold ornaments entrusted by parties after collecting making charges? Is not this decision of the Tribunal against the Full Bench decision of this Hon'ble Court in M.Jaihind's case, 114 STC 374? ii). In the absence of consideration as stipulated in section 2 (xxi) in the above transactions has not the tribunal erred in sustaining the finding of the assessing authority that there is S.T.Rv.Nos.396,398,399/2004 -3- sale on the reasoning of absence of details that are immaterial? iii). Has not the tribunal erred in not following its Annexure II for the previous years, for the above transactions? (9). Sri.Santhosh P.Abraham, learned counsel appearing for the assessee would submit, that, there was no justification for the assessing authority to come to the conclusion that the assessee had purchased old gold and had effected sales of new gold Jewellery. It is further contended that the Tribunal ought not have confirmed the orders passed by the assessing authority, since the first appellate authority has relied upon the orders passed by the Tribunal for the earlier assessment years. In aid of his submission, the learned counsel has taken us through the orders passed by the assessing authority and the orders passed by the Tribunal. (10). The assessing authority, while quantifying the tax liability after rejecting the books of accounts filed by the assessee, in his order has observed as under: “..................The order book for exchange does not contained the full address of the individual who have entrusted the gold ornaments for remaking. The pattern/model/weight of the ornaments to be made from the gold ornaments entrusted for remaking are not available in the order book made available for verification. The making charges paid for the manufacture of 9475.550 gross gold ornaments is much higher than the charges paid for the manufacture of 12862.297 grams of own S.T.Rv.Nos.396,398,399/2004 -4- old gold.” (11). In the regular course of his business whenever the assessee accepts old gold ornaments for the purpose of re-making, he is expected to issue an invoice or at least a form/receipt which contains the details of gold which was entrusted to the assessee for the purpose of re-making. Normally the form/receipt should contain the full address of the customer who had entrusted the gold ornaments for re-making. Even, if for any reason the assessee has not collected the full address of the customer, he would definitely indicate the weight of the gold ornament which is entrusted for the purpose of re-making and also would definitely show it in the particular form/receipt the model and pattern required by the customer. (12). The assessing authority verified the documents produced by the assessee. In the documents so produced, the assessing authority points out, that, firstly the forms do not contain the correct address of the customers. Even if this aspect of the matter is ignored by us, in our view, whenever the assessee collects old gold ornaments for the purpose of re-making new jewellery it/he would certainly mention the weight of the gold and pattern of new jewellery that the customer wants. In the instant case, on facts and on verification of the documents, the assessing authority has come to the positive conclusion that the form/receipt produced by the assessee do not contain the aforesaid details. In view of the above, the assessing authority, in our opinion has rightly proceeded to reject the claim of the assessee that the customers had entrusted with it/him some old gold S.T.Rv.Nos.396,398,399/2004 -5- ornaments and that he had only collected re-making charges and therefore there is no sale of gold jewellery as such. In our opinion, the assessing authority was justified in treating the aforesaid turnover as purchase of old gold and sale of jewellery for the assessment years in question. (13). The Tribunal, in our opinion, has rightly concurred the view of the assessing authority. (14). Sri.Santhosh P.Abraham, learned counsel appearing for the assessee would submit that the first appellate authority was justified in relying upon the earlier orders passed by the Tribunal while allowing the assessee's appeal and therefore the Tribunal ought not have interfered with the orders passed by the first appellate authority. (15). The concept of res judicata in tax matters has been well explained by the Apex Court in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India { 2006 (145) STC 91}. In the said decision, the Apex Court has observed as under. “Res judicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of S.T.Rv.Nos.396,398,399/2004 -6- precedent or precedential value of the earlier pronouncement. Where the facts and law in a subsequent assessment year are the same, no authority whether quasi- judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fetters only on a co-ordinate Bench, which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a Bench of superior jurisdiction” (16). In view of the declaration of law made by the Apex Court, in our opinion, the concept of res judicata in tax matters normally would not arise, except in those exceptional cases pointed out by the Apex Court. (17). In view of the above discussion, the questions of law framed by the assessee requires to be answered against the assessee and in favour of the Revenue. (18). In view of the order passed in the tax revision cases, all pending interlocutory applications are closed. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (K.T.SANKARAN) JUDGE MS/DK.