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CASE NO.: Appeal (civil)  4491 of 2002

PETITIONER: Orient Traders

RESPONDENT: Commercial Tax Officer, Tirupati

DATE OF JUDGMENT: 12/03/2008

BENCH: ASHOK BHAN & DALVEER BHANDARI

JUDGMENT: U D G M E N T

CIVIL APPEAL NO. 4491 of 2002 With Civil Appeal Nos. 4492 of 2002, 4493 of 2002 and 4494 of 2002

BHAN, J.

1.      This judgment shall dispose of Civil Appeal No. 4491  of 2002 filed against a detailed order by which the High  Court has dismissed the Writ Petition filed by the  appellant and the three connected appeals which have been  filed by the Assessees against the dismissal of their  writ petitions by the High Court following the impugned  Order in Civil Appeal No. 4491 of 2002.  

2.      Facts are taken from Civil Appeal No. 4491 of 2002,  which is the main appeal.  

3.      The relevant period is from November, 1994 to March,  1995 which falls in the Assessment Year 1994-95.  The  appellant deals in the sale of silver bars. It filed its  return showing a turnover of Rs.14,33,01,470/- and paid  sales tax at the rate of =%.  The Assessing Authority  accepted the said return and completed the assessment on  27.11.1995.  Later, the Assessing Officer issued notice  on 17.8.1996 proposing to reopen the assessment under  Section 14(4)(c) of the Andhra Pradesh General Sales Tax  Act, 1957 (for short "the Act") and bring the above  turnover to tax at the rate of 2%, apart from additional  tax and surcharge, on the premise that G.O. Ms No. 1092  and G.O. Ms No. 252 reducing the rate of sales tax to =%  were applicable only to gold bullion and the same were  not applicable to silver bullion and specie.  Questioning  the said show cause notice, the appellant filed W.P. No.  21503 of 1996.  The High Court dismissed the writ  petition on the ground of alternate remedy of filing the  objection and getting a decision from the authorities  under the Act on merits. The appellant thereafter filed  objections claiming that the reduced rate of sales tax  under the G.O. was applicable not only to gold bullion  but also to silver bullion. That the bracketed words  "gold" used in the above G.O. applies only to specie and  not to bullion.  The Assessing Officer rejected the  contention of the assessee and framed the re-assessment.   Questioning the said re-assessment, the appellant filed  Writ Petition No. 1727 of 1997 which has been dismissed  by the impugned order.

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4.      It was stated in the writ petition that though a  remedy of appeal was available, but the said remedy by  way of appeal would not be effective in the light of the  clarification issued by the Commissioner of Commercial  Tax by his order dated 22.3.1995, clarifying that the  G.O.Ms No. 1092 is applicable only to the gold bullion  and not to silver bullion.  It was also contended that  the issue relates only to the interpretation of G.Os.,  therefore, to have effective and binding decision the  appellant has approached the High Court by filing the  writ petition.  The said writ petition was entertained.  It has been dismissed on merits.   5.      It is not in dispute that the appellant is a dealer  in silver bullion. Under Item-20 of the First Schedule to  the Act the original rate prescribed is 2%. However, the  State Government issued Notification under Section 9(1)  of the Act in G.O.Ms. No. 1092 dated 31.10.1994 reducing  the rate of sales tax to =% in respect of ’bullion and  specie (gold)’ from the date of the said Notification. In  order to appreciate the controversy in issue, it would be  necessary to refer to the Entry in the First Schedule to  the Act as well as the Notification issued on 31.10.1994.   Entry 20 in First Schedule to the Act reads :-  FIRST SCHEDULE   SI.  No.  Description  of goods  Point of levy  Rate of  tax  Effective from    20  Bullion and  specie (1020)  At the point  of first sale  in the State  2  4  8-7-1983  1-4-1995             6.      The expression ’bullion’ in Entries 20 and 21 has  been defined in Explanation I to the First Schedule which  reads:- "Explanation-1:--The expression  ’bullion’ in items 20 and 21 means pure  gold or silver and includes gold or  silver mixed with copper, lead or any  other kind of base metal."

7.      The relevant portion of G.O.Ms. No. 1092 Rev. (CT-II)  dated 31-10-1994 is extracted hereunder:-

"Notification-I In exercise of the powers conferred by  the sub-section (1) of Section 9 of the  Andhra Pradesh General Sales Tax Act,  1957 (Act-VI of 1957), the Governor of  Andhra Pradesh hereby directs:

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(a) that the tax leviable under the  said Act on the said Act on the sale of  bullion and specie (gold) be reduced  from 2% to 1/2 %, all included (net  1/2%); (b) that the tax leviable under the  said Act on the sale of jewellery,  including those set with precious  stones be reduced to 2%; (c) that the tax leviable under the  said Act on the sale of precious stones  loose, other than pearls, be reduced to  2%. This notification shall come into force  with immediate effect." (Emphasis supplied) 8.      The subsequent Notification issued u/s. 9(1) dated  19.5.1995 which came into force with effect from 1.4.1995  and the Notification subsequent thereto in G.O.Ms No. 625  dated 31.7.1996 superseding the earlier Notification  omitting the expression ’gold’ (G.O.Ms. Nos. 1092 and 252  of 1995) occurring in the bracket, are not reproduced as  the same are not relevant for the purposes of disposing  of the present appeals.  9.      Learned counsel for the appellant contends that the  perusal of G.Os. issued by the State of Andhra Pradesh  clearly shows that the bracketed word ’gold’ occurs only  after ’specie’ and not either before or after ’bullion’.   Therefore, the said bracketed word ’gold’ is relevant for  the word ’specie’ only and not for the word ’bullion’. If  the G.O. is so interpreted, the reduced rate of sales tax  would be available to the appellant at =% as provided  therein, which was accepted by the Assessing Officer at  the first instance. That there was no reason for the  Assessing Officer to change his opinion to revise the  assessment levying the sales tax at higher rate. Relying  upon the G.O. Ms. No. 625, dated 31.7.1996 which omitted  the expression ’gold’ from the bracket immediately after  the term ’specie’, it was contended that the Government  did not intend to give the benefit of lower rate of tax  only to gold but also to silver bullion. The action of  the respondent-authorities in re-opening the assessment  as well as framing the reassessment is not in accordance  with law and is only a change of opinion with reference  to the Notification issued by the Government under  Section 9(1) of the Act.  It was also contended that the  Notification was clear and unambiguous and the benefit  granted in the Notification would be available to the  dealers dealing in silver bullion as well.  If the G.Os.  are interpreted in this manner, then no case was made out  to revise the assessment to levy the higher rate of tax.   Reliance was placed on a decision of this Court in  Commissioner of Sales Tax V. Industrial Coal Enterprises,  1999 (2) SCC 607.   10.     As against this, the learned counsel appearing for  the Revenue submits that there is no justification to  contend that the term ’gold’ is applicable only to specie  and not to bullion.  According to him, the interpretation  sought to be put by the appellant to the G.O. is not  proper and correct.  It is submitted that ’bullion and  specie’ is one single phrase and they cannot be  bifurcated.  The intention of the Government in the said  G.O. was to apply the reduced rate of tax to gold bullion  and specie only. As these two words constitute one single  phrase the word ’gold’ was bracketed at the end to

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indicate that it is meant to be applicable to gold only.   It was also submitted that Commissioner of Commercial Tax,  Government of Andhra Pradesh by its order dated 22.3.1995  passed on a request made by the Twin Cities Jewelers  Association clarified that the reduced rate of tax is  applicable only to gold bullion and specie.  As such the  contention of the appellant that it is also applicable to  silver bullion is unjustified and untenable.   11.     Learned counsel for the parties have been heard at  length.  12.     Bullion and specie are taxable at the rate of 2%  with effect from 8.7.1983 under item 20 of the First  Schedule of the Act.  Same rate is applicable to the  articles and jewellery mentioned under Entry 21 made out  of bullion and/or specie or both, excluding precious  stones.  Explanation I to the said Schedule defines  bullion as pure gold or silver and includes gold or  silver mixed with copper, lead or any other kind of base  metal.  The Government of Andhra Pradesh by issuing G.O.  Ms. No. 1092 dated 31st October, 1994 under Section 9(1)  of the Act reduced the net rate of sales tax to =% on  sale of bullion and specie (gold). Andhra Pradesh General  Sales Tax Act was amended by Act 22 of 1995 with effect  from 1st April, 1995 prescribing the sales tax in the  case of bullion and specie at the rate of 4%. Again the  Government issued a Notification under Section 9(1) of  the Act in G.O.Ms. No. 252, dated 19.5.1995 reducing the  rate of sales tax in the case of bullion and specie (gold)  to =% with effect from 1.4.1995.  Subsequent G.O.Ms No.  625 dated 31.7.1996 was issued by the State of Andhra  Pradesh omitting the expression ’gold’ in the bracket  immediately after the term ’gold and specie’ occurring in  G.O.Ms Nos. 1092 of 1994 and 252 of 1995.   13.     This Court in the case of Deputy Commissioner of  Sales Tax v. M/s. G.S. Pai and Co., 1980 (1) SCC 142,  considered the terms ’bullion and specie’, in a different  context i.e., whether ornaments and other articles of  gold could be regarded as bullion and specie as specified  in Entry 56 of the First Schedule of the Kerala General  Sales Tax Act, 1963. This Court held in para 3 as under:-  "We will first consider the  question whether the ornaments and  other articles of gold purchased by the  assessee fall within the description of  "Bullion and specie" given in Entry 56.  There are two expressions in this Entry  which require consideration; one is  "bullion" and the other is "specie".  Now there is one cardinal rule of  interpretation which has always to be  borne in mind while interpreting  entries in sales tax legislation and it  is that the words used in the entries  must be construed not in any technical  sense nor from the scientific point of  view but as understood in common  parlance. We must give the words used  by the Legislature their popular sense  meaning "that sense which people  conversant with the subject-matter with  which the statute is dealing would  attribute to it". The word "bullion"  must, therefore, be interpreted  according to ordinary parlance and must  be given a meaning which people

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conversant with this commodity would  ascribe to it. Now it is obvious that  "bullion" in its popular sense cannot  include ornaments or other articles of  gold. "Bullion" according to its plain  ordinary meaning means gold or silver  in the mass. It connotes gold or silver  regarded as raw material and it may be  either in the form of raw gold or  silver or ingots or bars of gold or  silver. The Shorter Oxford Dictionary  gives the meaning of "bullion" as "gold  or silver in the lump; also applied to  coined or manufactured gold or silver  considered as raw material." So also in  Jowitt’s Dictionary of English Law and  Wharton’s Law Lexicon we find that the  following meaning is given for the word  "bullion": "uncoined gold and silver in  the mass. These metals are called so,  either when melted from the native ore  and not perfectly refined, or where  they are perfectly refined, but melted  down into bars or ingots, or into any  unwrought body, of any degree of  fineness". It would, therefore, be seen  that ornaments and other articles of  gold cannot be regarded as "bullion"  because, even if old and antiquated,  they are not raw or unwrought gold or  gold in the mass, but they represent  manufactured or finished products of  gold. Nor do they come within the  meaning of the expression "specie".   The word "specie" has a recognized  meaning and according to Webster’s New  World Dictionary, it means "coin, as  distinguished from paper money". The  Law Dictionaries also give the same  meaning. Wharton’s Law Lexicon and  Jowitt’s Dictionary of English Law  state the meaning of "specie" as  "metallic money" and in Black’s Law  Dictionary, it is described as "coin of  the precious metals, of a certain  weight and fineness, and bearing the  stamp of the Government, denoting its  value as currency" while "Words and  Phrases Permanent Edition-Vol. 39A"  also gives the same meaning. Therefore,  according to common parlance, the word  "specie" means any metallic coin which  is used as currency and if that be the  true meaning, it is obvious that  ornaments and other articles of gold  cannot be described as  "specie". ......" 14.     From the reading of the above judgment, it is clear  that ’bullion’ means gold or silver in mass, in bars,  plates etc., in uncoined form; whereas ’specie’ means  coined gold or silver or any other metal and also used as  currency. The distinction between the two expressions is  that the former refers to gold and silver when it is in  bulk form, either unshaped or shaped like bars, plates  etc., whereas later refers to the coined form of silver

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or gold.  15.     Entry 20 of the First Schedule refers to levy of the  tax at the point of first sale on bullion and specie.  Explanation I under the First Schedule provides the  meaning of the expression ’bullion’ as pure gold or  silver and includes gold or silver mixed with copper,  lead or any other kind of base metal.  While issuing  Notification No. 1092 dated 31.10.1994, the rate of tax  was reduced on the sale of bullion and specie (gold) from  2% to =% net.  The Legislature used the term ’gold’ in  bracket after expression ’bullion and specie’ thereby  making its intention clear that it wanted to restrict the  benefit of reduced rate of tax to gold bullion and specie  only. Had the intention been to extend the benefit of  reduced rate of tax to silver bullion and specie, then,  there was no need to put the word ’gold’ in brackets  after ’bullion and specie’. 16.     Contention that the word ’gold’ is referable to  specie only as it finds mention after the word ’specie’,  cannot be accepted. "Bullion and specie" is one single  phrase and the same cannot be bifurcated, as contended by  the counsel for the appellant.  The intention of the  Government in putting the word ’gold’ in the bracket  after the words ’bullion and specie’ clearly shows that  the intention of the Government was to extend the benefit  of reduced rate of tax to gold bullion and gold specie  only and not to silver.  The word ’gold’ was put in  brackets to indicate that the concessional rate of tax is  applicable only to the gold in either of the two forms  i.e. bullion or specie. 17.     Contention of the learned counsel for the appellant  that bracketed word ’gold’ contained in Clause (a) of  G.O.Ms No. 1092 dated 31.10.1994 and G.O.Ms No. 252 dated  19.05.1995 having been omitted by G.O.Ms No. 625 dated  31.07.1996 clearly shows that the intention of the  Legislature was that the concessional rate of tax is to  be applied to both gold and silver bullion species for  the period in question, cannot be accepted. G.O.Ms No.  625 dated 31.07.1996 has been made effective from  01.08.1996. The relevant period in the present appeals is  from 01.11.1994 to 31.03.1995. Hence, the appellant  cannot take any benefit of omission of the word ’gold’ in  brackets for the period in question as the G.O.Ms No. 625  dated 31.07.1996 is to take effect from 01.08.1996.  18.     It is well established principle that the exemption  notifications are to be construed strictly, reference may  be made to State of Jharkhand & Others V. Tata Cummins  Ltd., and another, 2006 (4) SCC 57 and Kartar Rolling  Mills V. Commissioner of Central Excise, New Delhi, 2006  (4) SCC 772. If the intention of the legislature is clear  and unambiguous, then it is not open to the courts to add  words in the exemption notification to extend the benefit  to other items which do not find mention in the  notification. In the present case, there is no ambiguity  in the expression used in the G.O.  The intention of the  State Government is clear that only gold bullion and  specie is entitled to the concessional rate of tax.    Under the circumstances, the same cannot be extended to  the silver as claimed by the assessee. 19.     For the reasons stated above, we do not find any  merit in these appeals and dismiss the same with costs.