1% Vat payable on Devotional images made of gold under MVAT Act, 2002

Pranda Jewelry Pvt. Ltd. Vs. State of Maharashtra (Maharashtra Sales Tax Tribunal)

Maharashtra Sales Tax Tribunal Mumbai holds devotional images made out of gold to be taxable at the rate of 1% under MVAT Act, 2002 by referring to HSN, commercial parlance test, laboratory reports and dictionary meaning to decide the meaning of the word fineness under Schedule Entry B-1 of the MVAT Act, 2002.

FULL TEXT OF THE ORDER OF MAHARASHTRA SALES TAX TRIBUNAL

1. The present appeals are preferred by the Appellant for the Period 2010-11 under the Maharashtra Value Added Tax Act, 2002 (MVAT Act) and the Central Sales Tax Act, 1956 (CST Act) against the Order passed by the Deputy Commissioner of Sales Tax, (Appeals- III), Mumbai who has dismissed the appeals by confirming the Assessment Order dated 30/10/2017.

Facts of the case  :

2. The Appellant is a registered dealer under the MVAT Act, 2002 and CST Act, 1956 is a reseller of gold articles, silver articles and jewelry. The Appellant has an overseas branch under the name Pranda Jewelry Public Company Limited, Thailand and also has a Joint Venture Partner in India known as M/s Gunjan Jewels Pvt. Ltd. During the year in concern, the Appellant has sold articles known as ‘Prima Art’ which is claimed to be 2d karat, 99.99% purity images covered and protected from dust and moisture using intricate frame, glass, stickers and stand for easy mounting and display. It is claimed that Prima Art gold articles are masterpiece artwork, devotional images of various deities, saints, forms and symbols which respects the sentiments of all religions. During the period under consideration, M/s Gunjan Jewels Pvt. Ltd. has imported Prima Art articles from Pranda Jewelry Public Company Limited, Thailand and had cleared the goods by filing bill of entry for home consumption. M/s Gunjan Jewels Pvt. Ltd. sold these imported Prima Art articles to M/s Pranda Jewelry Pvt. Ltd., the present Appellant.

3. An investigation proceeding was carried out followed by asessment proceedings where the Assessing Officer proposed to by tax on the turnover of sales of Prima Art under the ‘Schedule Entry E-1’ (residuary entry), subject to tax at the rate of 12.5%. The Appellant has claimed in its returns that Prima Art articles are subject to tax at the rate of 1% under ‘Schedule Entry B-1’. The Appellant was asked by the investigation authorities to pay the differential tax rate liabilities which was denied by the Appellant. Consequently, Assessment proceedings were initiated by issuing Notice in Form 315 dated 20/02/2017 u/s 23(5) of the MVAT Act, 2002. The assessment order for period 1/4/2010 to 31/3/2011 was passed on 24/3/2017. In the said assessment order, the Assessing Officer has determined total liability at Rs. 97,97,363/- which includes tax liability of Rs. 49,35,699/- and interest liability at Rs. 48,61,664/- under the MVAT Act, 2002. Similarly, under CST Act, 1956, total liability of Rs. 2,11,79,194/- which includes tax liability of Rs. 1,06,69,619/- and interest liability of Rs. 1,05,09,575/-.

4. Aggrieved by t:he assessment order passed by the Assessing Authority an appeal was filed before the Deputy Commissioner of Sales Tax (Appeals- Ill) with detailed grounds of appeal and prayer. After considering the submissions made by the Appellant and perusing the case records, t:he Deputy Commissioner of Sales Tax (Appeals- III) has confirmed the Assessment Order with detailed reasoning and passed Appeal Order dated 30/10/2017. Further, aggrieved by the said Appeal Order, the Appellant has filed the present Second Appeals before the Tribunal.

5. Shri Ratan Samal, the learned Advocate appeared on behalf of the Appellant and Shri D. B. Deshmukh, learned Deputy Commissioner of Sales Tax (Legal) appeared on behalf of the Respondent.

6. Shri Ratan Samal, the learned Advocate made detailed written submission along with grounds of appeal along with factual details and judicial precedents in support of its claims. During the course of physical hearing, Shri Samal, has raised two propositions in his argument which are as under:

a) Whether the Assessing Officer is justified in passing an Assessment Order u/s 23(6) of the MVAT Act, 2002, when the Assessment Order for quantum assessment is hit by limitation period and whether he is justified in passing the said Assessment Order even though the prescribed Notice does not contain any proposition under which such Assessment Order has been passed ?

b) Whether the Assessing Officer is justified in taxing the impugned product, i.e., Articles of gold known as ‘Prima Art articles’ under the ‘Schedule Entry E-1’ (residuary entry) even though the some is subjected to tax under ‘Schedule Entry B-1 ?

7. The learned Advocate has submitted in respect of the first proposition, that t:he Notice in Form 315 issued u/s 23(6) dated 20/02/2017 is in a cyclostyle format wherein no propositions have been stated. A copy of the Notice was enclosed in the original Appeal Memo at page 28 as Exhibit ‘A. He has contended that Notice is the backbone of assessment proceedings, and thus, it should transpire the findings so that the dealer can present its say. In the absence of any specific proposition, any order passed would tantamount to violation of principles of natural justice. Over and above, he has argued that when the original assessment proceedings u/s 23(2) of the MVAT Act is hit by limitation, the said assessment comes to an end and the position in the returns is required to be accepted. The Assessing Officer cannot invoke assessment proceedings under other sub- sections. The learned Advocate further contended that the period of assessment is 2010-11 and in any case the assessment u/s 23(2) of the MVAT Act is to be made on or before 31st March, 2015. Since the assessment was not completed, the Assessing Officer was barred from conducting assessment under other sub- sections.

8. For the first propositions submitted by the learned Advocate, he has relied upon the judgment of Hon’ble Supreme Court in Commissioner of Central Excise, Bengaluru Vs. Brindavan Beverages Pvt. Ltd., (2007) 213 ELT 487 (SC) and Hon’ble Bombay High Court’s judgment in Godrej Industries Ltd. Vs. B.S. Singh, Deputy Commissioner of Income Tax & Others, (2015) 377 ITR 1 (Bom). By relying on these judgments, the learned Advocate has contended that the Notice in Form 315 was cyclostyle in nature and no propositions were made in the said Notice for assessment. Hence, the Assessment Order passed on the basis of such Notice was null and void.

9. For the second proposition, the learned Advocate submitted that ‘Prima Art articles’ are 24 karat gold with 99.9% purity of devotional images of deities, saints, forms and symbols and are framed to protect the articles from dust and moisture. He further submitted that the price of the product roughly starts from 1NR 2,500/- and goes up to INR 2.5 lakhs. Such heavy price is charged mainly for the pure gold articles and such Prima Art articles are available only at jewelry shops, sold by the Appellant through Ills distributors. During the hearings the Advocate had furnished brochures and price catalogs of the product. He has also physically displayed few samples of Prima Art articles during the course of hearing. He further submitted that the products are sold with purity certificates with 75% buy- back guarantee. He has submitted that the Joint Venture company, M/s Gunjan Jewels Pvt. Ltd. has imported from the company at Thailand of the Appellant and he has brought on record import transaction details that include bills of entries during the period in concern, made by M/s Gunjan Jewels Pvt. Ltd. He has also brought on record purchase registers and tax invoices of the Appellant which reflect purchases from M/s Gunjan Jewels Pvt. Ltd.

10. Shri Samal, learned Advocate submitted that during import most of the Prima Art articles are cleared under Customs Tariff Entry 71141910. However, very few bills of entries have been cleared under Customs Tariff Entry 71141110. It was submitted that the Appellant seems to have overlooked the same while Customs clearance since the rates of Customs Duty under Tariff Entry 71141910 as well as 71141110 are the same. But it was also submitted that almost 99% of clearances were made under Tariff Entry 71141910.

11. Shri Samal, learned Advocate submitted that,-

‘Schedule Entry B-1’ appended to the MVAT Act, 2002 reads as,-

“Articles made of precious metals of fineness not less than 50% whether or not containing precious stones, semi- precious stones, diamonds or pearls whether real or cultured and to which entry 105 in Schedule C does not apply”.

He also submitted that the Schedule Entry C-105 contains the following items’.,-

“jari and embroidery materials of gold, silver and glided metals, badla and kasab”.

It was further contended that the term “precious metals” and “fineness” is not defined under the MVAT Act, 2002 and thus, reliance had to be placed on external materials and expert opinions where such words are defined.

12. The learned Advocate stated that as per the Bureau of Indian Standards (BIS), fineness stands for the ratio between the mass of gold contents and the total mass expressed in parts per thousand. Fine gold means, it is gold having fineness of 999 parts per thousand and above without any negative tolerance. He further stated that the World Gold Council defines fineness as, another way of expressing the precious metal contents of gold, jewelry and represents the purity part per thousand. It was also submitted that as per Concise Oxford Dictionary, Tenth Edition, ‘fine’ means “of very high quality, satisfactory (of gold or silver) containing a specific high proportion of pure metal”. As per the Money Control website, “fineness” is the purity of precious metals measured in thousand parts of an alloy. For instance, a gold bar, of point 995 fineness means 995 parts of gold and 5 parts of another, metal. Shri Samal has also brought on record various laboratory’s report on Prima Art articles such as ELCA Laboratories’ test report (page 90 of Appeal Petition), Hem Assaying & Hallmarking Center Gold & Silver’s test report (page 92 of Appeal Petition), Omkar Lab Testing & Manufacturing’s test report (page 94 of Appeal Petition), Varsha Buillion & Elemental Analab’s test report (page 96 of Appeal Petition) and Vitthal Assaying & Hallmarking Centre’s test report (page 98 of Appeal Petition). Shri Samal contended that all these laboratories have tested the Prima Art. articles and had reported that the purity of such gold articles are between 99.93% to 99.98%. By showing such laboratory reports, it was contended that fineness is nothing but purity contents of the gold articles.

13. The learned Advocate submitted that the Legislature, keeping in mind the purity, inserted ‘Schedule Entry B-1’ wherein they have intended to put the articles made of precious metals should contain fineness not less than 50%. Legislature has never intended to place the weight of the gold articles or precious metal articles. He further contended that both the learned Assessing Officer and Appellate Authority has misconstrued the term fineness in Schedule Entry B-1. Shri Samal has shown us page 3 of the Assessment Order wherein the Assessing Officer has observed as under:

“The Frames which are sold by M/s. Pranda Jewelry Pvt. Ltd. dre not the articles of gold as covered by the schedule entry B-1. The reasons for this understanding as under:

A) Gold plated Images- by electro forming of idols process making the figure hallow from inside a very thin layer of gold is put on the same having 200 ml of Pure gold per square inch. Fineness of gold should be expected; for compact effect of the product, In said case whatever dealer describing it as article of gold is not proper, here quantity part for fineness of gold is relatively very small part of the total product and not about whole product.

B) The schedule entry B-1, speaks of article of gold and silver and it intends to cover finished products of gold like ornaments, jewelry etc. To fall in the entry the article should be made of precious metal, a content of 10% to 20% of gold would not be qualify the impugned product to be called and article of gold.

C) The Prima Art is not article of Gold, it is article made of precious metals. In the present case, it is seen that many materials go into the making of the finished products and quantum of gold used cannot be said to be such that it is an article of Gold.

D) ) Brief note on Central Excise Tariff Code 7114 1910

7114- Article of Goldsmiths or Silversmiths Wares and Part Thereof, of Precious Metal or Metal Clad with Precious Metal

7114 19- of other precious metal, whether or not plated or clad with precious metal

7114 1910- Articles of gold.

For the purpose of headings 7114, the expression ‘article of goldsmith or silversmith wares’ includes such articles as ornaments, table ware, smokers requisites and other article of house hold, office or religious use. As per section XIV (chapter 71) 2A, Headings 7113, 7114 and 7112.5 do not cover articles in which precious metal or metal clad with precious metal is present as minor constituents only,  such as  minor fittings or minor ornamentation (for example-monograms, ferrules and rims)

It can be seen from above that even central excise does not consider minor constituents as being said to be article of precious metal, the entry does not make any reference to the classification under excise Hence, the excise classification should not be parameter to interpret the words ‘Article of precious metals’

E) The products would not be eligible to fall in the entry B-1, In absence of a specific entry, the residuary entry, would come into’ picture.

F) Gold is part of product and the product is not an article of gold

D) It is sold as gift article and not as gold articles.

E) The entry makes use of the words

Though the golden image contained in the frame has fineness of more than 50% but the image is tiny part of the whole product. By weight or by value the cost of gold used is, in most of the cases, in less than 1% of the total cost of the product sold. The Chart shown below “shows the clarification of cost of frames of different sizes /types in said products.

The. said Prima Art Gold articles are classified by under Schedule Entry B-1 which says that articles made of precious metals of fineness not less than 50%. As mentioned aforesaid, that the in said Prima Art, part of article have fineness of 99.90% Gold i.e. 24 Karat, but fineness of gold contains at small area only and not fulfilled the definitions of article of gold.

24 Karat Gold meaning

Karat is a measure referred to purity of Gold in parts thereof. 24 Karat Gold is highest purity of Gold. The highest purity of gold is 99.99 percent pure Gold. In Indian standards the accepted form of 24 karat Gold is 99.50% purity, also called as Standard Gold in India there is also acceptability and availability of 24 karat Gold with 99.90% purity called as Fine Gold.

Therefore, as per INV officer (D-007) view, whole product (frames) should not be treated as Articles of Gold, it should not come in schedule entry B But should be treated in schedule entry E-1, and should taxed at @12.5%. In said products (frames) fine gold contains is very minor by volume, by weight, and by value, Specimen chart of comparing the weight and value of actual gold used in said frames are as below-

				Weight Details			Value  Details
Sr. No.	Product Code	Image	Size	Actual Used Gold Weight	Fretwork Sheet Weight (Semi Finished)	Total Finished Product Frame Weight	MRP in Rs	Actual Used Gold Value in Rs
1	CGS- 0349-02	Ganesha	A-8	0.03	0.54	290 grm	4953	93
2	CGS-0361-02	Laxmi	A-7	0.04	0.66	350 grm	5961	132
3	CGS- 0362-02	Balaji	A-7	0.05	0.66	340 grm	5961	159
4	CGS- 0572-0	Astavinayak	A-6	0.16	1.47	920 grm	28371	474
5	CGS-0180-02	Ganesha	A-5	0.11	1.77	1..60 kg	27165	315
6	CGS- 0363-01	Balaji	A-4	0.37	3.24	1.780 kg	47307	1107
7	CGS- 0532-02	Padmavati Balaji	A-3	0.63	9.18	4.9.10 grm	71850	1890
8	CGS- 021.0-01	Ganesha	A-2	0.84	1.91	6.350 kg	10:3791	2520
9	CGS- 0211-01	Ganesha	A-1	1.68	17.37	8.250 Kg	202197	5040

In view of Mc above, it is concluded that, the product. prima art, would not be eligible to fall in the entry B-1, and in absence of a specific entry, the residuary entry would come into picture, E-1.

Accordingly levied .12.5% tax on sales of PRIMA ART, products.”

14. After showing us the observations in the Assessment Order, Shri. Samal contended that the Assessing Officer has considered the weight of the entire frame instead of taking into consideration the center product, i.e., Prima Art. He submitted that these products are solely available at gold and jewelry shops. It is not available anywhere and everywhere. A person who intends to buy goes with an intention to buy the gold image or gold deities which is having a buyback value.

15. Shri. Samal, learned Advocate further submitted that the Assessing Officer has considered very negligible weight of the gold and accordingly calculated the value of gold on presumption only. In fact, the assessing officer is required to consider the weight of pure gold with fretwork. In fact, it is artwork on gold which is in the form of a gold sheet. Therefore, the value consists not only the value of gold but also the skilled used in preparing that idol.

16. Shri Samal submitted that in the assessment order, instead of considering the gold weight at 0.54 gms. it is considered as 0.03 gms in first transaction. Accordingly, he has explained the facts about the 9 transactions which are mentioned by the assessing officer by way of a table in the assessment order. The assessing officer has not considered the actual weight of gold and the related value of such gold of this 9 transaction which represents the nature of sale transactions of the appellant.

Sr. No.	Product Code	Image	Size	Wrong Gold weight considered by the Assessing Officer	Actual Gold weight required to be considered by Assessing Officer	Wrong consideration of actual gold value (Rs.)	Actual value of gold require d to be considered (Rs.)	Actual MRP during concerned period (Rs.)	Wrong MRP Considered in AO
1	CGS- 0349-02	Ganesha	A-8	0.03	0.54 gms	93	1674	3963	4953
2	CGS-0361-02	Laxmi	A-7	0.04	0.66 gms	132	2046	4791	5961
3	CGS- 0362-02	Balaji – –	A-7	0.05	0.66 gms	159	2046	4791	5961
4	CGS- 0572-01	Astavinayak	A-6	0.16	1.47 gms	474	4557	21783	28371
5	CGS-0180-02	Ganesha	A-5	0.11	1.77 gms gms	315	5487	20793	27165
6	CGS- 0363-01	Balaji	A-4	0.37	3.24	1107	10044	36390	47307
7	CGS- 0532-02	Padmavati Balaji	A-3	0.63	9.18gms	1890	28458	55290	71850
8	CGS- 021.0-01	Ganesha	A-2	0.84	1.91 gms	2520	40021	76800	103791
9	CGS- 0211-01	Ganesha	A-1	1.68	17.37 gms	5040	53847	149700	202197

17. The Assessing Officer has considered the wrong MRP as per the MRP chart for the year 2016-17 for the product which were sold in year 2010-11. The actual  weight of the gold and the actual value of such gold and the used actual MRP of the articles are given in table above. At that time the prevailing rate of gold was INR 3,100/-to INR 3,500/- per grams. Even if INR 3,100/- is taken as value of gold then the value of the fret sheet will be INR 1,674/- plus the skill of the craftsman. So,- it will roughly be the value of 75% of the product value. Hence, the Appellant while selling the same article of precious metals certifies the buy- back value of 75%. In fact, out of the 9 products shown by the Assessing Officer in his Assessment Order, there are four products returned back for which buy-back value was given at, 75%. The details of the invoice, buy-back order form, buy- back value certificate and list: of distributors were submitted by the Appellant in his submissions. Shri. Samal has strongly contended that the buy-back value is nothing but the value of the gold involved in the entire product.

18. Shri. Samal, further contended that those customers who are interested to buy a simple idol of Gods and Goddesses can go to shops where ordinary frames are available. But specifically, if the customers choose to buy a gold article of idol, then in such circumstances they have to go to a specific shop where it is available, i.e. in gold and jewelry article shops. Hence, it was submitted by Mr. Samal that it was wrong of the Assessing Officer to assume that these were not articles of gold and precious metals.

19. The learned. Advocate further submitted that from the inception of business the Appellant is selling the product as articles of precious metals falling under Schedule Entry B-1 appended to the MVAT Act, 2002. When the Legislature has intended to use the term fineness which is connected with a particular industry, then the meaning given by that industry has to be adopted rather than providing an artificial meaning which the Legislature never intended to do so. The Assessing Authority has on assumption and presumption basis, taken into consideration the weight of the products, taken into account on the date of investigation, i.e., 06/10/2016. In fact, ’tile ‘Assessing Authority has ignored the plain language used in the Schedule Entry B-1. In fact, the Assessing Officer has rewritten what is not at all there in the language, i.e., he has adopted the weight though the Entry speaks about fineness. In this context, the Appellant has relied on the judgment passed by Hon/1)1e Supreme Court of India in Sri Devi v. Prasanna & Another, (2010) 5 SC 622.

20. Shri. Samal, the learned Advocate contended that if the term fineness is considered, not towards the weight but in respect of the gold articles, then fineness is nothing but purity of the articles. When we talk about the purity of articles then purity of the fretwork which consists of the center idol is needed to be considered so in the entire frame, the heart is the center idol made of gold. The frame is protected from dust and moisture and undoubtedly, this is not an ordinary frame when a precious metal is covered with a frame then a premium frame is needed. Keeping that in mind, the idol is protected in a premium frame. The Assessing Officer and the Appellate Authority misconstrued the same and has interpreted that the Appellant is selling a valuable frame. In fact, the Appellant is selling gold idol articles which are protected by a premium frame. Therefore, keeping in mind the gold idol articles, the value of buy­back is 75% and the buy- back value is calculated on the center gold

21. Shri Samal, learned Advocate contended that one of its distributors, M/s Shivam Gold & Diamonds situated at Bengaluru had made an application for clarifications under Section 59(4) of the Karnataka Value ,Added Tax Act before the Commissioner of Commercial Tax (Karnataka) at Bengaluru. The clarification sought under Section 59(4) was about the applicability of rate of tax on the gold and silver articles like Ganesha, Saraswati, Sai Baba, Holy Cross of Jesus, etc. The Commissioner, while providing the ruling had considered the Schedule Entry appended to the Karnataka Value Added Tax Act which reads as,-

“jewelry and articles of gold, silver and other noble metals whether or not studded with precious or semi-precious stones”.

The said distributor, M/s. Shivam Gold & Diamonds had produced the purchase bills of M/s. Pranda Jewelry Pvt. Ltd., Mumbai. The commissioner referring to Central Excise Tariff Heading 71.0.19.10 held that,-

“gold Sheet art Work of images like Ganesha, SarasWati, Radha Krishna, Sai Baba, Holy Cross of Jesus which are framed under glass in a photo frame falls within the ambit of description of goods, jewelry and articles of gold, silver and other noble metals whether or not studded with precious or semi- precious stones and they are liable to tax at 1% during 2005 to 2011 and 2% from 2011 to 2012 and 1% from 2012 onwards.”

The Appellant had submitted the present Ruling before the Assessing Officer who has ignored it:. in fact:, the entries are similar under the Value Added Tax Act of the other States, even though it is not binding, but has persuasive value. However, the Assessing Officer has confirmed that the product should be classified under Schedule Entry E-1 of the Maharashtra Value Added Tax Act, 2002 and subject to tax at 12.5%.

22. Being aggrieved with the Assessment Order, the Appellant has filed appeal before the Deputy Commissioner of Sales Tax (Appeals-III), Mumbai. Before the Appellate Authority, the Appellant has contended that the impugned product should be classified under Schedule Entry B-1 since all the characteristics of the said entry fulfills the impugned ^–product sold by the Appellant. Even the Advance Ruling on the very same product though under the Karnataka Value Added Tax Act, confirms the view of the Appellant. It was further submitted before the Appellate Authority that in the absence of any guidelines under the MVAT Act, a reference can be made to the HSN ‘entries which is a safe guide for the purpose of interpretation of Schedule Entries. Tariff Entry 71141910 meets the requirements and hence prayed that by adopting HSN’s meaning, the view of the Appellant may be confirmed and the view taken by the Assessing Officer should be set aside. Since the product is also cleared by M/s Gunjan Jewels Pvt. Ltd. who in turn, sells to the Appellant under the said Tariff Heading from the Customs authority, the meaning adopted by HSN, may be considered.

23. The learned advocate further submitted that before the First Appellate Authority, the decision taken by Hon’ble Gujarat High Court in State of Gujarat v. Titan Industries Ltd., (2017) 103 VST 270 (Guj.) was relied upon. The First Appellate Authority has half-heartedly considered the submissions made by the Appellant and again he has leaned towards the weight of the frame instead of the product which the buyer intends to buy.

24. Shri Samal submitted that the First Appellate Authority while confirming the Assessment Order has observed in the appeal order under:

“Main dispute in this case is article comes under schedule entry B-1′ or E-1.

i) B-1 Entry covers the articles of which fineness is 50%. Fineness is relative term in relation to weight.

Article of 100 weight, if it contains gold of more than’ 50 gams then it is article of gold covered by Entry B-1.

ii) Here the article are frames of different God, Goddess, etc. Weight of Gold content in total weight of frame is less than 0.1% and hence these articles are not covered by entry B-1.

iii) Dealer relies upon HSN classification as articles of Gold. When our entry i.e. B-1 is clear no need to go to HSN Code.

iv) Dealer relies upon Commissioner of Central Excise Vs. Sharma Chemical Works (2003) 132 STC 251 (SC) says Burden to  prove that product falls within particular item is on revenue’. It is true. Here assessing authority given chart in assessment order that .proves beyond doubt that product is not of finene!SSH’50%. Hence disputed commodity i.e. Frames are not covered by Schedule Entry B-1.

v) Dealer relied upon the judgment of Hon. Gujarat High Court in tax appeal no. 46 of 2017 dated 03/02/2017. In the said judgment in para 5.0 Entry  13(ii) of schedule of that Act is given. Which reads as:

“Articles of jewelry made of gold or silver or both or of other’ precious metals (studded or not studded with precious stones or pearls whether real, “artificial or cultured).”

‘In above entry fineness of 50% is not given hence Hon. Court relied upon 85 to 90% value content. But in Our case fineness above 50% is required to qualify ‘B-1’ entry. Thus, Gujarat High Court judgment in case of State of Gujarat Vs. Titan Industries Ltd is distinguished and not applicable.

vi) Plain reading Of ‘B-1’ entry do not support the value theory but implies weight theory hence contentions of the dealer cannot be accepted.

Considering the above discussion, I came to the conclusion that assessment order is liable to be confirmed. ‘The order is confirmed.”

25. The learned Advocate has further submitted that even the commercial parlance test supports the view of the Appellant. He submitted that commercially, the impugned product is an article of precious metal such as gold, article and is available only in jewellery shops where normally gold articles and precious metal articles are sold. Therefore, when an ambiguity is created in classifying a particular commodity, one of the tests, i.e., commercial parlance test can be adopted. Even in the jewelry exhibitions carried out in various places, the impugned product is displayed as articles of precious metals or gold. In Support of the present propositions, the Appellant has relied on the following judgments:

(i) Godrej Sara Lee Ltd. v. Assistant Commissioner, CT Hyderabad, 106 VST 97 (T&AP);

(ii) Cipla Ltd. v. Commissioner of Central Excise, Bengaluru, (2010) 5 SCC 534 (SC);

(iii) Deputy Commissioner Law, Board of Revenue Taxes v. MRF Ltd., 121 STC 274 (SC).

26. Shri Samal, learned Advocate has argued that in the case of confusion to understand a particular entry then the best way is HSN guidelines. HSN is an international convention which is called as Brussels Convention on the Harmonized Commodity Description and Coding System. He submits that Hon’ble Supreme Court in Commissioner of’ customs & Central Excise v. Phil Corporation Ltd., Appeal No. 2215 of 2002 dated 07th February 2008 held that “in a number’ of cases this Court has enunciated that HSN is a safe guide for the purpose of deciding issues of classification.”

27. Shri. Samal, learned Advocate had also addressed another set of arguments pointing out that under tax laws wherever there is a confusion to adopt commercial parlance or trade parlance, then if the entry is referring ^–to a scientific or technical terms then, expert’s opinion on such technical terms are required to be used as an aid to interpreting that partiquI4r entry. For the purpose, he has relied upon the judgment of Hon’ble Supreme Court of India in Parle Agro Pvt. Ltd. v. Commissioner of Commercial Tax, (2017) 7 SCC 540 wherein it was held that

“in a taxing statute the words used are to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the words in tariff entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the tariff entry and any other entry in the tariff schedule.”

Referring to the above judgment, Advocate for the Appellant has shown to us the various meanings given in respect of fineness by different experts such as Elca Laboratories Test Report, HEM Assaying & Hallmarking Centre’s Test Report, Precious Metal Testing Laboratories’ Test Report,’ Varsha Bullion & Elemental Analab’s Test Report, etc. He submitted that these are laboratories established by the Bureau of Indian Standards (BIS) in connivance with Government of India to test the purity of the gold and to provide opinion in respect of gold, bullion and precious metals. For the said purpose, he has stuck to the list of assaying and hallmarking centers under WRO, Western Region wherein all these expert laboratories list is published. Hence, the^–Advocate contended that the lower authorities had made grave error in overlooking such test reports and expert opinions wherein it was opined that the impugned product is nothing but articles of precious metals, i.e. gold.

28. The learned Advocate Shri. Samal, heavily relied upon the judgment of Hon’ble Gujarat High Court in State of Gujarat v. Titan Industries Ltd., (2017) 103 VST 270 (Guj) wherein the issue involved in the present matter was the classification of jewellery watches (nebula brand). Such watches are made out of gold, silver, diamonds and semi-precious stones. Such watches are manufactured by the Assessee in that matter with precision craftsmanship by the designers and artisans like goldsmiths. The Assessee’s contention in that matter was that they are much more a jewelry than a watch. Hence, paid tax under Entry No. 13(2) of Schedule II of Gujarat Value Added Tax Act which reads as, “articles or jewelry made of gold or silver or both or of other precious metals studded or not studded with precious stones, pearls whether real or artificial or cultured.” In the said judgment, all the authorities below the Tribunal have held the product as watches to be taxed under residuary entry no. 87 since there was no specific entry for watches whereas Hon’ble Tribunal held nebula watches/ nebula jewelry watches fall under: Entry No. 13(2) of Schedule II of the GVAT Act. On an appeal, Hon’ble Gujarat High Court held as under:

“It is required to be noted that NEBULA watch is made out of 18 karat of gold. In manufacturing the NEBULA watch, precious metals/ precious stones/ diamonds are used. The value of gold or precious stone remains 90 per cent to 95 per cent. Thus, the NEBULA watch is made of gold and/ or silver and/ or precious metal and/ or , precious stones, which are manufactured within the factory, of the assessee with precision craftsmanship by the designers ‘and artisans like goldsmith. NEBULA watches are sold by and large at jewellery shops and they are’ not sold in normal ordinary watch shops. Thus, the jewellery watches are normally marketed by the jewellers in their showrooms. From the certificate of authentic person’, production in- charge of the factory, it appears that in making NEBULA watch huge labour/making ‘charges is spent ranging upto Rs. 18,000 to Rs. 65,000. From the, certificate produced on record, it appears that NEBULA watches are manually polished and individually inspected, cleaned and manually assembled. All the diamond settings are done manually. Around 30% in terms of value addition involves labour work and the polishing stone settings etc. are of manual artisan work and not by machine. As observed hereinabove, the content of gold and/ or silver and/ or precious metal and/ or precious stone is predominant and the value of gold remains at almost 90% to 95% whereas the value of watch, is hardly more than 2% to 5%. Thus, when it is manufactured as a jewellery watch rather than simple watch, the value of watch is approximately Rs. 3 lakh per piece. Though the jewellery watch is not defined under the Act, however, as per Entry No. 13(u) of Schedule II of the Act, articles or jewelry made of gold and silver or both or of other precious metals (studded or not, studded with precious stones or pearls whether real, artificial or cultured), shall fall under Entry No. 13(ii) of Schedule II of the Act. In the present case, NEBULA Watch’, Which is predominantly a jewellery, is made of gold, Precious metals and/ or precious stones/ diamonds and is made of 18 Karat gold. Under the circumstances; the same can be said to be an Article of Jewellery falling within Entry No. 13(ii) of Schedule II of the Act.’^;;

29. The matterfOrth6r”wd.s Carried to the Supreme Court by the Department. Hon’ble Supreme Court in SLP (C) Diary No. 40456 of 2017 dated 03 rd February 2017 held that the Special Leave Petition is dismissed on the ground of delay as well as merits. The Appellant has heavily relied upon the judgment: of Hon’ble Gujarat High Court since the  facts quite similar.

30. The learned Advocate further stated that the Assessing Officer has classified the impugned product under the residuary entry E-1 and the First Appellate Authority has also confirmed the same. In the view of the Appellant, resorting to the residuary entry should be the last resort. If the meaning under commercial parlance test or trade parlance test or the scientific meaning given by an expert or the product in question is not at all classifiable in any of the entries or in the HSN classification only then resort to residuary entry comes into picture. In support of the present proposition, the Advocate for the Appellant relied on the judgment of Hon’ble Supreme Court of India in Bharat Forge v. CCE, Gujarat, 84 STC 414 (SC) wherein it was held that,

“the residuary entry ought not to be lightly resorted to, only such goods as cannot be brought under the various specific entries should be attempted to be brought under the residuary entry”.

Further, he also relied upon Hon’ble Supreme Court of India’s judgment in Indian Metals & Ferro Alloys Ltd. v. CCE,’ (1991)’ 51 ELT 165 (SC) wherein it was held that,-

^„It is settled principle that unless the Department can establish that the goods in question can be no conveyable process of reasoning be brought under any of the specific items mentioned in the tariff, resort cannot be had to be residuary entry”.

Further, he also relied upon judgement by Hon’ble Supreme Court of India in Mayuri Yeast India Pvt. Ltd. v. State of  U.P. & Anr., (2008) 14 VST 259 (SC) wherein it was held a5 under:

“We therefore fact of the opinion that if there is a conflict between two entries, one leading to an opinion that it come$,*thin the purview of the tariff entry and another the residuary entry, the former should be preferred…

The meaning of the words ‘of’ used in an item in a physical statute must be considered having regard to the intention of the maker thereof. The court shall for the said purpose put itself in the chair of the Legislature. It would presume the legislation to be reasonable.

It is now a well settled principle of law that when two views are possible, one which favors the Assessee should be adapted.”

31. Shri. Samal after referring to the above judgments, contended that right from inception of the business of the Appellant, the Appellant treats the impugned product as articles of precious metals having fineness of more than 50%. Hence, the Appellant has collected tax at the rate of  1% applicable for the impugned product classifying it under Schedule B-1. Even the assessments were carried out for the earlier years confirms the view of the Appellant. Merely on the basis of change of opinion subsequently, the impugned product should not be treated as the product falling under residuary entry. He further contends that, the impugned product, ‘Prima Art’ made out of precious metals such as gold is tested in various laboratories and shows as 99.99% purity of gold. The impugned product has been imported from the parent company Thailand and the Customs Authority have cleared the goods under Tariff Heading 71141110. Prima Art gold articles of gold with 24 karat purity images are covered and protected from dust and moisture using intricate frames, glass and stickers and stand for easy mounting and display. Whether the entire frame is falling within the HSN Tariff Heading 71.1.41110 or not? For this the Advocate has referred to HSN Tariff Entry 71.14 which reads as,-

“articles of goldsmith or silversmith, wares and parts thereof of precious metal or of metal clads with precious Metals”. The Note appended to the said Tariff mainly Note no. (e) reads as, “other articles for domestic or similar use, for example, busts, statuettes and other figures for interior decoration, jewel cases, table center pieces, vases, jardinieres, picture frames, lamps, candelabra, candlesticks, chandeliers, metal piece ornaments, decorative dishes and plates, medals and medallions (other than for personal adornment), sporting trophies, perfume burners, etc.”

32. The learned Advocate further submitted that since the impugned products are imported by the Appellant, Customs Authorities has cleared the goods under the present Chapter 71.14 referring to the notes. The Note clearly provides, even by way of example that picture frames and figures for interior decoration will all under the Tariff Entry 71.14 as precious metal articles.

33. The learned Advocate has referred to the meaning of precious metals provided under HSN’ Notes in the General Notes of Chapter 71. General Note No. 4 of Chapter 71 deals with the expression ‘precious metals’ which means silver, gold and platinum. Advocate for the Appellant referred to sub- note (b) of the General Notes to the Chapter. Precious metals as gold if contains 2% or more by weight of gold, then will be treated as precious metal of gold articles. Referring to the above, the Advocate has carried out to the Assessment Order where the impugned product list is provided in tabular form by the Assessing Officer. All such products even if entire frame is considered, the base product, i.e., fretwork sheet is consisting of weight much more 1.11,in 2%, i.e., 10%, 13%, 18%, 29%, 35% and 65%. he has argued that the impugned products is squarely covered under the Schedule Entry B-1 as articles made of precious metals of fineness not less than 50% and hence, he claimed that the tax charged and shown in the returns at the rate of 1% is proper and the Assessing Officer has considered the same under residuary entry and the First Appellate Authority confirming the same is incorrect:.

ARGUMENTS ON BEHALF OF THE REVENUE

34. Shri D.B. Deshmukh, the learned Deputy Commissioner of State Tax (legal) appeared on behalf of the Revenue. He has brought on record a detailed written submissions as well as had made oral arguments. In his submissions, he has countered the submissions of the Appellant in respect of the jurisdictional issue. He submitted that the Assessing Officer has properly invoked jurisdiction of Section 23 (6) of the MVAT Act, 2002 issuing Notice in Form 315 on 20th February 2017. The Appellant has participated in the assessment proceedings and hence, he should not challenge the jurisdiction that the proceeding itself is invalid. For this purpose, he has referred to Section 62(2) of the MVAT Act, 2002 which reads as,-

“62. (2) The service of any notice, order shall not be called in question if the said notice, order, communication has already been acted upon by the dealer^.“.

35. Shri Deshmukh, learned Deputy Commissioner further submitted that since the proposition mentioned in the Notice in 315 that the assessee has paid tax at the rate of 1% instead of 12.5%, hence the Notice is dot cyclostyle format and hence, he submitted that the Appellant is wrong in arguing that the Assessing Officer has no jurisdiction.

36. Shri Deshmukh has submitted that in respect of the classification of product, viz., ‘Prima Art.’, in some of the bill of entries the impugned product is clear under Chapter Heading 71141910 and some of the products are cleared under Chapter Heading 71141110. The impugned product contains gold as a very minor constituent only and the quantity of the gold present in the impugned product is less than 1% of the total weight:. The Assessing Officer in the Assessment Order has mentioned the percentage of gold used in this product. Hence, he argued that Note No. 2(a) of Chapter Heading 71141910 is very much clear which says that if the weight of the product is less than 1%, then the impugned article will not be covered under the said Chapter. Shri Deshmukh has further argued that the provisions. under Excise Act (such as meaning of articles of goldsmiths, silversmiths, wares) are not available under the MVAT Act, 2002. These are the terms used under the Central Excise Act and and not relevant for the purposes of MVAT Act, 2002. For that purpose, he has referred to the judgment of Hon’ble Supreme Court of India in Hindustan Lever Ltd. v. State of Karnataka, Civil Appeal No. 4003 of 2007 dated 02nd September 2016 and has relied on the following paragraphs of the judgment:

“Equally, the argument based on Section 5A of the Karnataka Sales Tax Act is fallacious in that it is only for the purpose industrial inputs’ that packing materials are included, .and forms a separate scheme of taxation under the Sales Tax statute. We cannot accede to the argument that de hors the context of the Entry Tax Act, we should accept that industrial inputs include packing materials and therefore, by parity of reasoning, ‘inputs’ under the Entry Tax Act should also include packing material. This argument has therefore correctly been turned down by the. High Court of Karnataka in the Nestle

We are therefore, of the view that the High Court was correct in following its own earlier Division Bench judgment, in the Nestle case, This appeal is, accordingly, dismissed.

37. By referring to the above two judgments, Departmental Representative has submitted that by no stretch of imagination can the impugned items be called as an article made of gold. The item is basically a gift article (frame) where an idol of God or Goddess is incorporated in well designed frame. The frame is also not an ordinary frame and is tastefully designed and made very attractive. The gold idol and beautifully designed frame constitutes a gifting solution as a whole. The product voucher also claims that it is a gifting solution. It is not merely an article of gold. Though the extent of gold involved in the idol is substantial on value basis, the fact remains that very thin gold layer supported by thin polymer sheet as a carrier. The finished ‘image is put/ glued on the velvet sheet supported with wood at the back. Its four sides are covered with plastic frames and on the front side, glass is framed. These frames are inscribed in enclosure by using packing materials to protect the product from vacuum and moisture. Thus, the appearance of the product comes from various articles and not only gold sheets, beautifully crafted’ with :wooden frames, colored in golden color. Thus, the product ‘as a whole is a gifting solution and not an article of gold which ca be classified under Schedule Entry B-1.

38. Shri D.B. Deshmukh has heavily relied upon three judgments which are Neelam Plastics v. State^–of Maharashtra, Appeal No. 100 of 2001 dated 21st March 2005 (Larger Bench), Kunwar Silver v. State of Maharashtra, (2002) 25 MTJ 851 and Vasanthan Foundry v. Union of India, (1995) AIR 2400 (SC).

39. In Neelam Plastics (supra) the relevant portions relied upon by Shri D.B. Deshmukh are as under`.

“Now it is a well settled rule of construction in sales tax statutes that words used by the legislature in entries in various schedules to describe different kinds of goods for prescribing different rate of tax must be constructed not in any technical or scientific sense but as understood in common parlance. Applying the principles as laid down by the Hon’ble Bombay, High Court as above, we come to the conclusion that a T. V. set cannot be sold without the front and back cover fitted on it. A customer when asks for a IV. does not ask merely for mechanism. He asks for a T.V. Set. Hence the Front and back cover of TV and radio set and without them a TV or radio set cannot’ be sold. Having arrived at this conclusion, we therefore, hold that the TV and radio cabinets knobs etc. would be covered by Entry C-II­-70, C-II-91 and as the case may be and not by the Entry C-I1=5A. In that the view of the matter, we further hold that the appellant will not be entitled to set’ ‘Off under ‘ rule 41F. The Adm. Deputy Commissioner was, therefore, justified in revisiting the case and withdrawing the set off under rule 41F. We further hold the appellant will be entitled to set off under Which has been correctly granted by the Adm. Deputy Commissioner.”

40. In M/s Vasanthan Foundry (supra) the portions relied upon by Shri D.B. Deshmukh are as under:

“The Supreme Court in the case of Bengal Iron Corporation •(90 ST(‘– 47) has held that cast iron castings do not come under the definition of cast iron mentioned in^. item (iv)(i) of Section 14 of CST Act, as they are manufactured from cast iron and sold. The Supreme Court has observed that cast iron used in item (iv)(i) of Section 14 of CST Act is the material out of which the products like man- hole covers, bends, cast iron pipes are commercial parlance, different and distinct goods from cast iron. The apex Court has gone into the clarifications issued by the Government of India at various points of time: and has come to this conclusion. As a result of the judgment Of Supreme Court cast iron castings (whether machined or unmachined) have to be treated’ as distinct and different from cast iron. Therefore, cast^–iron castings which are parts of machinery/ automobiles, etc. are to be classified under the respective main items of the first schedule.”

41. Shri D.B. Deshmukh  has  relied on the judgment of this Hon’ble Tribunal in M/s Kunwal silver (supra) and has made the following arguments in his written Submissions:

“MSTT Ruling in the case of M/s Kunwar Silver. Appeal, No. 135 of 1996 dt. 16/03/2002 is exactly applicable to the present case. The relevant schedule entry for the present case of M/s Kunwar Silver is as under:

“C-II-97:- Articles made of gold and silver or both of finehess not less than fifty percent, not containing precious stones, diamonds, synthetic or artificial precious stones or pearls whether real, artificial or cultured, of value exceeding one- tenth of the value of each article”

The relevant schedule entry for the present case of M/s Pranda Jewelry Pvt. Ltd.-

“Schedule Entry B-1: Articles made out of precious metal of fineness not less than fifty percent, whether or not l containing precious stones, semi- precious stones,’ diamonds or pearls whether real or cultured and to which entry 105 in Schedule ‘C’ does not apply”.

[01/02/2008 to 31/03/2013]

[Schedule Entry C-105:- Zari and embroidery materials of gold, silver and gilded metal, badla and kasab- 4%],

Thus, the schedule_. entry C-II-97 for consideration before the Hon. MSTT the case ‘of M/s Kunwar Silver is exactly similar to schedule entry B-1 which the appellant claims as applicable to their case.

Now what is observed by the Hon. Tribunal in para 7 of the judgment is exactly application to the present case also.

Para-: 7:-

“Now the question is; whether, despite the impugned item being” not a Silver Article as conventionally understood in common parlance, it will still be covered by the said Schedule Entry C-II-97, on the basis of the: plain reading thereof. It would be worthwhile to reproduce here the relevant Schedule Entry C-II-97 as it stood at the relevant time.

The plan reading the said Schedule Entry suggested that the article should be basically made of gold and silver or both of fineness not less than 50%. It would ‘be worthwhile to refer here to some other entries of similar nature. Schedule Entry C-II-24 refers to ‘House- hold Utensils made of stainless steel or iron’. These entries do contemplate that the articles to be covered by these entries should basically be made of non- ferrous metal or stainless steel. Mere coating of such metals on say, a plastic utensils will not Make it a non- ferrous metal utensil or a stainless steel utensil. The Schedule Entry C-II-97 also, which is presently under consideration, contemplates that the article for being covered by it should be basically of gold and silver or both of fineness not less than 50%. We agree with the Revenue that the Gold/ Silver Article to be covered by the said Schedule Entry C-II-97 should not be accompanied by any other material like plastic etc. of any value 0 by  diamonds, precious stones etc. of value exceeding 10%. If it is so accompanied then it will (certainly not be covered by the said Schedule Entry^–C-II-97. The argument of Mr. Bagri that the item which  is 91% silver composition befalls the said Schedule Entry C-II-57 would perhaps been acceptable if the said entry had contained the word ‘primarily”‘ (made of gold^. and silver or both) as it exists’ in Schedule Entry C-II-93 pertaining to Plastic or in the; Schedule Entry C-II-91 pertaining to Rubber goods. However; the word ‘primarily’ is conspicuously absent made exclusively of Gold and Silver or both of fineness of minimum 50% which can be accompanied only by diamonds etc. of not exceeding 10% value. In that view of the matter, value wise the  composition of plastic involved in the impugned product is absolutely irrelevant for deciding this issue. It is therefore our considered view that the impugned item is not a Silver Article covered by Schedule Entry C-II-93, since it is not made primarily of plastic. It is true that the impugned item is not specified in any of the Schedule entries, and hence it would befall the Residuary Entry C-II-152 liable to tax @13%.”

42. Shri Deshmukh, after relying on the aforesaid judgments, has shown an invoice copy of Nebula wrist watches dated 23/06/2017 wherein 13.5% tax was charged under VAT Act. He submitted accordingly that in’ Maharashtra, Nebula wrist watches are charged under residuary entry by the distributors of Titan Company Ltd. Therefore, he submitted that the judgment of Hon’ble Gujarat High Court in Titan Industries (supra) is not applicable in the State of Maharashtra.

43. In view of the above submissions advanced, Shri Deshmukh, learned deputy Commissioner has contended that both Assessing Officer and First Appellate, Authority is right in holding the impugned product, ‘Prima Art” is subjected  to fax at 12.5% and will fall under ‘Schedule Entry E-1’.

CONSIDERATION AND. OBSERVATIONS

44. We have carefully considered the rival submissions. We have also perused the Written Submissions and evidence submitted by both the parties and the judgments cited by both the parties. Considering the submissions  by both the parties and the issue involved in this , matter the following points arises for our consideration and further determination.

Points arose for Consideration and Determination :-

1) Whether the Assessing Officer is justified in passing an Assessment. Order u/s 23(6) of the MVAT Act, ,even though the prescribed Notice does not contain’ any proposition under which such Assessment Order has been passed and whether the said assessment order is passed within the prescribed time limitation

2)Whether the Assessing Officer is justified in classifying and taxing the impugned product known as ‘Prima Art ‘articles’ under the ‘Schedule Entry E-1’ (residuary entry) for levy of tax ©12.5% ?

45. In order to deal with the above points we should first see the relevant Provisi6n of section and the schedule entries under the MVAT Act which are applicable to this case.

A) Section 23(6) of the MVAT Act, 2002.

“(68) If, during the course of any proceedings under Section 49, in case of any dealer or person, the Commissioner, on the basis of evidence available to him, is of the opinion that tax is sought to be evaded in respect of any period by not recording or recording in an incorrect Manner, any transaction of sale or transaction of purchase , or that any deduction has been incorrectly claimed on any transaction, then, notwithstanding-“that any notice for assessment has been issued under other provisions of this section, the Commissioner may, after giving the dealer or the person, a reasonable opportunity of being heard, proceed to assess, without prejudice to any assessment which may be made in respect of the said period under other provisions of this section, to the best of his Judgment, the amount of tax, if any, due from him^. on such transaction.

Provided that tax on such transaction and penalty and interest, if any, consequent upon such tax, will not be levied or demanded when the dealer or person is assessed to tax under the other provisions of this section in respect of the same period.”

B) Entry B-1 of the Schedule to the MVAT Act, 2002.

“Articles made of precious metals of fineness not less than 50%, whether or not containing precious stones, semi- precious stones, diamonds or pearls whether real or cultured and to Which entry 105 In schedule C, does not apply”

C) Entry E-1 of the Schedule to the MVAT Act, 2002.

“All’ goods not covered in any of the other Schedules.”

Point No. 1

46. t is the contention of the Appellant that assessment is carried out u/s 23(6) of the MVAT Act, 2002 for which a cyclostyle proposal notice under Form No. 315 was issued where no specific propositions were made and although assessment can be made within the time limit prescribed u/s 23(2), the Assessing Officer has chosen to go under Section 23(6) and hence, the same is bad in law. The learned Departmental Representative has pointed out that, a proposal is made that the Appellant has charged  lesser rate of tax although applicable at 12.5% as residuary entry and hence, the proposal in Form 315 is correct.

47. We have examined the provisions of Section 23(6) of the MVAT Act. It is a special provision made in the statute and can be invoked under special circumstances and if the special circumstances are pointed out then invocation of the jurisdiction as per the provision of law is correct. Considering the facts in the present case, it is seen that the Notice in Form 315 was issued after the investigation proceeding to the dealer and it was clearly pointed out to him that the tax paid by this dealer at lower rate. Therefore, challenging the notice and the jurisdiction on these counts seems to be incorrect. accordingly, we are of the view that the Assessing Officer has correctly invoked jurisdiction.

Point No.2 :-

­48. The second point which is for our consideration is whether the impugned product ‘Prima Art’ is an article of precious metal and will be covered under will fall under the scope of Residuary Entry ‘E-1’ or will be covered Under Entry ‘B-1′ of the MVAT Act, 2002. In order to understand the nature’ and characteristics of the product, we have perused the vouchers, bill of entries, catalogues and as well as minutely looked into the simple of products brought before us by the Appellant. The ‘product vouchers and certificates describes that, the Prima Art products are gold articles of gold sheet artwork laminated and glued containing 24 karat, 99.9% pure gold. An assurance was given in the brochure as well as a certificate was accompanied with the product and this shows a commitment that each Prima Art product is a pure gold containing 24 karat, 99.9% exact designs superior craftsmanship, manufacturing guarantee free of defects, 75% of value buy- back guarantee. The product contents in the catalogue as well as physically brought before us are various deities, saints and symbols representing sentiments of all religions which is called as Prima Art. The product is covered with fine plastic frames and on the front side, farmes with glass. It appears from the documents brought before us that M/s Gunjan Jewels Pvt. Ltd. who is also another Appellant before us, is importing the impugned products from Thailand and selling it to the present Appellant. In the course of hearing, we have directed the Appellant to furnish all the bill of entries during the present year to verify as to under which Tariff Entry are the impugned products cleared from the Customs Authorities since the Revenue’s representative has contended that some of the bill of entries appears to have been cleared under Chapter Heading 71141110 and some of the bill of entries are cleared under Chapter Heading 71141910.

49. The Appellant has submitted the details of import purchases made by M/s Gunjan Jewels Pvt. Ltd. from Pranda Jewelry Thailand during the F.Y. 2010-11. Details of bill of entries for all the purchases effected during the year in concern and the purchase invoices effected by the Appellant from M/s Gunjan Jewels Pvt. Ltd. are brought on record before us. It appears that there are 33,430 pieces imported by M/s Gunjan Jewels Pvt. Ltd. Out of the same, there are 22 bill of entries filed 13 by  M/s Gurijan Jewels Pvt. Ltd. under Chapter Heading 71141910 ‘consisting ‘of 32,442 pieces whereas one bill of entry is filed under Chapter Heading 71141110 consisting of 1,202 pieces.

50. In this regards Shri. Samal has submitted that during the relevant period, out of 2.3 transactions, 22 transactions are cleared and Chapter Heading 7141910 whereas one clearance is made under Chapter Heading 71141110.  He contended that the rate of duty under both the Tariff Entries are same and hence, the Appellant has not deeply verified about the clearance of the product under different sub- entry of the same chapter. This is a bonafide mistake on the part of the Appellant where the clerical error was unnoticed. However, Shri. Samal argued that substantially, the products are cleared under Chapter Heading 71141910.

51. The language of the entry prevailing during the relevant disputed period, 2010-11 reads as, “articles made of precious metal of fineness not less than 50%.” We have enquired with the Revenue as to whether precious metal is defined under the MVAT Act, 2002 or does it have any placement in any of the provisions of the Act or Rules? Similarly, we have also enquired about the term ‘fineness’ used in Schedule Entry B-1. The learned Departmental Representative fairly agreed that both the terms are not defined under Act MVAT Act or Rules. Therefore, we agree with the Appellant’s submission that a reference is needed to be made to a proper statute or standard, dictionary meaning or the opinion of experts in order to understand the exact meaning of the terms ‘precious metal’ and ‘fineness’  used in the Schedule Entry ‘B-1’.

52. In order to Understand the meaning of ‘precious metal’ we have looked into the Concise Oxford Dictionary, 10th Edition which defines ‘precious metals’ as “gold, silver and platinum” and precious is defined as, “adj. having great value, greatly loved or treasured by someone”. To make it more clear, the Appellant has brought before us the Explanatory ‘Notes’ appended to the Harmonized Commodity Description and Coding System, Volume No. 4, 6th Edition, 2017. In general notes appended to Chapter 71, clause 4- (A) reads as, “The expression, precious metal means silver, gold and platinum”. Then, we have perused the term ‘fine’ defined in the Concise Oxford Dictionary, 10th Edition Which defines the term ‘fine’ as, “adj. of very high quality, satisfactory (of-gold or silver) containing a specified high proportion Of Derivative- fineness n.”

53. We have further perused the Indian Standard, Gold & Gold Alloys, Jewelry/ Art Effects- Fineness and Marking Specifications, 3rd Revision of Bureau of Indian Standards, Manak Bhavan, New Delhi which defines ‘fineness’ under clause 3.3 as the “ratio between the mass of gold contents and the total mass expressed in parts per thousand (%)”. ‘Fine gold’ has been defined under clause 3.4, “it is a gold having fineness 999 parts per thousand (%) and above without any negative tolerance”.

54. On having gone through the aforesaid meaning provided, we are of the opinion^–that precious metal means nothing but gold, silver or platinum whereas fineness means the purity contents of such old, silver or platinum in a particular product. Now coming to the impugned product, whether it is precious metal having fineness of 50% or more? We have carefully looked into the opinion and certificate given by various. experts which was brought before us by the Appellant. Fewpf the test reports such as Elca Laboratories, Hem Assaying & Hallmarking Centre, Omkar Lab, The Precious Metal Testing Laboratory, Varsha Bullion & Elemental Analab, Vitthal Assaying & Hallmarking ,Centre are authorized centers for testing precious metals. The approved list of assaying and hallmark centers under WRO, Western Region Maharashtra, Gujarat, Goa, Daman & Diu, Dadra & Nagar Haveli have been brought before us. We found these testing centers are falling within the said approved list. Hence, we are treating them] as experts. Elca Laboratories’ test report of gold sheets shows 1″,b.,$: 99.98% of ‘purity, Omkar Lab Testing & Manufacturing’s report shows 0.99% mass of gold whereas copper 0.01% mass. The Precious Metal Testing Laboratory’s report shows AU (gold) 99.93%. Similarly, Varsha Bullion & Elemental Analab’s report shows 23.99 karat AU gold, and 99.93% purity of gold and CU Copper at 0.07%.

55. After minutely observing the test reports, we have carefully looked into the products physically before us. The frame is consisting of various deities and decorative images carved out on a gold sheet, covered and protected from dust and moisture by intricate frames, glass, stickers and a facility for mounting and display. The masterpiece in central artwork is a devotional image of various deities which is called as ‘Prima Art’ in the market as per details and documents brought before us. We have seen the product in the center of the frame which is made of pure gold. Shri. Deshmukh has fairly admitted that the same is of gold. The Appellant has been used suitable frames with velvet cloth, etc. to make the article more attractive. After careful perusal of the schedule entry B-1, it is seen that the said entry is very clear and no reference is needed to understand it. The term ‘fineness’ or ‘precious metal’ though not defined under the MVAT Act or Rules but an inference can be drawn that articles of precious metal are nothing but gold and silver jewelry and articles made up from gold and silver. Since we found that there is no meaning assigned in respect of the term used precious metal and fineness, we have no Other option but to refer to the Dictionary meaning and the expert’s opinion as referred to above.

56. We agree with Shri. Samal that the term ‘fineness’ used in the entry is with respect to articles of precious metal. Here, the product physically verified by us is an idol which is made out of fret sheet work with skilled craftsmanship.’ and: the fineness is to be seen in respect of the said product. Fineness cannot be looked into the entire frame since the frame is to protect and cover the precious product, i.e. gold articles from’ dust and moisture. We have minutely looked into the chart shown in the Assessment Order as well as the submissions and details submitted in respect of such nine products during the course of arguments. There is buy-back made of certain products whose value consists of 75% of the sales price. We agree with Mr. Samal that the fretwork sheet value along with its craftsmanship is the value of the product which is taken as buy-back. Hence, the value of the gold and the skill of art used by the goldsmith is considered as 75% of the total MRP value. After buy-back what: is intended is the value of the center product, i.e. gold idol. In fact, the frame is of no use and hence, the view of the Assessing Officer seems to be incorrect in its Assessment Order.

57. In respect of the impugned product, ‘Prima Art’, the original source is from Thailand and M/s Gunjan Jewels has imported the same and had cleared substantially under Chapter Heading 71141910. The First Schedule to the Customs Tariff Act, 1975 is `.aligned with the Harmonized Commodity Description and Coding system common as the Harmonized System of Nomenclature (HSN) and since the impugned product is imported and cleared under the Custom Act, 1962, we have laid our hand on the Explanatory Notes to HSN in order to understand whether the impugned product is having their place in any chapter. We have perused Chapter Heading 7114 of Harmonized Commodity Description and Coding System, Volume 4 of World Customs Organization which ‘reads as, articles of goldsmiths or silversmiths, wares and parts thereof, of precious metal or of metal clad with precious metals”. Furthermore, Chapter Heading 711419 reads as, “Of other precious metals, whether or not plated or clad with precious metal”. Immediately below ‘the Tariff 7114, it speaks that “this heading covers articles of goldsmith or silversmith, wares as defined in Note 10 to this Chapter wholly or partly of precious metal or metal clad with precious metals.” In general, these goods are larger than articles of jewelry of00ading 7113. They include:

“(A)  Articles of tableware such as table knives, carving set, spoons, forks…………

(B)   Toilet Articles such .as hand mirrors, bottles and powder boxes…..

(C)  Office or desk equipment such as inkpots, ink stands, paper weights…

(D)  Smokers requisities such as cigar, cigarette boxes, tobacco jars

(E) Other articles for domestic or similar use, for example busts, statuttes and other figures for interior decorations, jewel cases, table center pieces, vases, jardinieres, picture frames, lamps

58. The specific Explanatory Notes appended to the said tariff of HSN 7114 provides: the items of various uses including figures for interior decorations ‘and– picture frames. Hence, we have no hesitation in holding that the impugned product, ‘Prima Art’ is an article of goldsmith although in the form of picture frame which are used for either interior decoration or as a showcase.

59. The learned Departmental Representative has submitted that referring to tariff entry under Central Excise or Customs Act is unwarranted being Schedule Entry ‘B-1’ is never referring to the Excise tariff entries ,or Customs tariff entries. Wherever it is needed to be referred, the Schedule Entitles under the MVAT Act are referring the same and under such circumstances only, the meaning assigned under those Acts can be considered. In one hand, the learned Departmental Representative contends that referring to Tariff Entries under Central Excise and Customs Act is unwarranted on the other hand, he fairly admits that the terms used in the Schedule Entry B-1 is not free from doubt as` the term ‘fineness’ and ‘precious metal’ is not defined nor any, meaning is assigned anywhere under the Act or Rules. Therefore, we agree with Shri. Samal, Advocate that in such circumstances, external aid is needed in order to understand the Legislature’s intention and meaning in classifying the product in the said Schedule Entry. Therefore, we have considered various opinions provided by the experts and the explanation provided in HSN of World Customs Organization. Further, we have carefully read the judgment of Hon’ble Supreme Court of India cited by Mr. Samal in Phil Corporation (supra) wherein it was held as under:

“29. In a number of cases, this court has clearly enunciated that the HSN is a safe guide for the purpose of deciding issues of classification. In the present case, the HSN explanatory notes to Chapter 20 categorically state that^.‘ the’ products in question are so included in Chapter 20. The HSN explanatory notes to Chapter 20 also categorically state that its products are excluded from Chapter 8_.as they fall in Chapter 20. In this view of the matter the classification of the products in question have to^.be made under Chapter 20.”

60. Even in the judgment of Parle Agro Pvt. Ltd., (2017) 7 SCC 540 (supra) cited by the Appellant which is reported in decided in the same length and line. the said matter it was held that:

“The High Court while interpreting the entries under Section 6(1)(a)’and Entry 71 of Notification SRO No. 119 of 2008 had applied common parlance test. The High Court, has also relied on Rules of Interpretation as contained in the Appendix to the Schedule to the 2003 Act.

Strictly ‘speaking the Rules of Interpretation which are given in the Appendix to the 2003 Act, are the Rules of Interpretation of Schedules, that is, Schedules I, II and III for interpretation of any item in Schedule, Rules Of Interpretation as given in the Appendix are applicable. The items which falls for consideration in the present case is Item 6(1)(a) as well as Entry 71 of SRO No. 119 of 2008 issued in exercise of power under Section 6(1)(d), which are the entries which are not mentioned in the Schedule. One more provision which is relevant to notice is the Explanation to Section 6(1)(a). The Explanation to Section 6(1)(a) provides as follows:

Explanation: The Rules of Interpretation of the schedules appended to the Schedules of this Act shall apply to the interpretation of the HSN Codes mentioned in this clause.

Although the above ‘Explanation applies the Rules of Interpretation” of ,the Schedules to the interpretation of the HSN Code Mentioned in Section 6(1)(a) but  Explanation does not say anything about the items where HSN code is not there. The Rules of Interpretation of the Schedules; thus, ;directly are not attracted with regard to the interpretation of the entry which does not mention with HSN code in Section 61(1)(a) although principle contained in such Rules of Interpretation may apply. Had” the legislation intended the Rules of Interpretation of the Schedules should be made applicable both to the interpretation of the Schedules or those commodities which are not given with HSN Code, the Rules of Interpretation of Schedules should have been in toto made applicable for interpretation of Section 61(1)(a). Thus, common parlance test or commercial test which are to be applied on the commodities in the Schedules which are not given with HSN Code is directly not applicable under Item 61(1)(a), hence, applicability of other Rules of Interpretation which were required to be applied is not ruled out. Hence, in the appropriate case apart from common parlance test or commercial test any Other’ test can be applied for interpretation of the commodities included in Section 61(1)(a) apart from those which are given HSN Code”.

61. We have considered ‘the Advance Ruling of the Karnataka Authority on they impugned product of the Appellant’s distributors who has raised a question as to whether ‘Prima Art’ will fall under the tax bracket of 1% in serial no. 2 of the Second Schedule which deals with jewelry ‘and articles of gold; silver and other noble metals whether or not studded with precious’ or semi- precious stones. While deciding the matter, the Advance ‘Ruling Authority of Bengaluru under the Karnataka Value Added Tax Act has referred to the Central Excise Tariff Entry 71141910 and had held that gold sheets, artwork, images like Ganesha, Saraswati, Sai Baba, Holy Cross of Jesus, Radha Krishna, etc. framed under glass in a photo frame falls within the ambit of description jewelry and articles of gold and subjected to tax at the respective rate. Although Advance Ruling of Karnataka Authority is not binding on us, but the same can have persuasive value because the same_. impugned product was subject matter for classification for rate of tax purpose.

62. It is contended by the learned Advocate that Appellant sells these products to distributors who deals with gold, silver and jewelry articles. It is further Contended by the Appellant that it never sells the product to general consumers. Those customers who intend to buy the impugned product have to go to jewelry shops and buy the said ‘Prima Art’ product. Shri. Samal, learned Advocate stated that one of the test needed to be looked into is the ‘commercial parlance test’ for classification of any product when the entry is not free from doubt. The ‘commercial parlance test’ or the ‘trade parlance test’ is a test to be adapted as per the general understanding of the product in the market or with the person who deals with such product. He brought on record that these products are not only sold in the gold and jewelry shops, but also it is displayed in jewelry exhibitions. It is exhibited and promoted in various gold and jewelry exhibitions across India since the inception of the Appellant’s business. For the present proposition, Shri. Samal has relied on few judgments of Hon’ble Supreme Court of India and Hon’ble High Courts which are as under:

(i) Godrej Sara Lee Ltd. v. Assistant Commissioner (CT) Hyderabad, 106 VST 97 (T&AP);

(ii) Commissioner of Central Excise Bengaluru,’ (2010) 5 SCC 534;

(iii) Deputy Commissioner, Law Board of Revenue (Taxes) v. MRF Ltd., 121 STC 274 (SC).

63. We have put glance on these judgments. To understand the entries in a taxation statute, important tests which are needed to be looked into are ‘common parlance test’, ‘trade or commercial parlance tests’, etc. But wherever, a scientific or technical meaning is needed, the product is also needed to be looked into from that angle and for that purpose, expert institution reports and opinion are required to be looked into. Here the question in dispute, Appellant has rightly brought on record, not only the product sold to the market where it is demanded as well as the expert opinions those who are dealing with gold and jewelry are also brought on record. Scientifically or technically, it appears to be correct.

64. The Appellant has heavily relied on the judgment of Hon’ble Gujarat High Court in State of Gujarat v. Titan Industries Ltd., 103 VST 270 (Guj.). The facts in the said matter were that the company deals in jewelry watches made out of gold, silver and diamond and other precious stones. The said watches known as Nebula watches manufactured with precision craftsmanship by the designer and artisans’ such as goldsmith and the value of gold or precious stones are remains almost 90% to 95% whereas the value of the watches watches more than Rs. 1,400 to Rs. 2,000. The buyer interested, buys looking into its ornamental value and status it carries in the society. It was the submission of the Appellant in that matter that one who wants to buy a watch only would buy a simple watch but who wants to buy something more than a simple watch having a unique item in jewelry with ‘additional facilities like that of watch and jewelry would go for Such jewelry watches. It is marketed substantially in the jewelry showroom. Hence, Appellant in that matter had claimed that it should fall in the Schedule Entry of an article of gold and jewelry. Hon’ble Gujarat High Court dismissing the petition of the Revenue held that’ nebula watches were made of 18 karat gold in manufacturing it, precious metal, precious stones and diamonds were’ used. The value of gold or precious stones was 90% to 95% and thus, the word article or jewelry used in Entry 13(2) of the Schedule II of the Act are required to be given the widest meaning and are not ^–required to be ‘,read in a narrow or restricted sense and the fullest meaning is required to be given to the words used in the entry in’ the taxing statute.

65. On further Special Leave Petition to the Supreme Court, the Special Leave Petition was dismissed on the ground of delay as well as on merits by Hon’ble Supreme Court of India vide their Order dated 03^rd February 2017 in SLP No. 40456 of 2017. Shri. Deshmukh, learned Deputy Commissioner of State Tax has submitted that the, judgments of other High Courts are not binding on the State of Maharashtra and therefore, the decisions cited by the Appellant may be ignored. But in present matter in the absence of any direct decision from Hon’ble Bombay High Court or Hon’ble ,Supreme Court on the issue in question, we have no hesitation to adapt the meaning or the meaning provided by other High Courts on similar issues on similar provisions of any taxing statutes as it has of persuasive value. For the submissions, he has relied on the judgments in the matter of Godrej Sara Lee Ltd. (supra) wherein it was held that,’ “the decision of High Court will have the force of a binding precedent only in the State or territory over which the Court has jurisdiction. In other states or outside the territorial jurisdiction of that High Court, it may be at best, have persuasive effect”.

66. We have also carefully considered the judgments relied by the Revenue in the matter^– of Ricoh India Ltd. v. State of Maharashtra & Anr. dated, 20th December 2018, Hindustan Lever Ltd. v. State of Karnataka, Civil Appeal No. 4003 of 2007 dated 02^nd September 2016, judgement of Hon’ble Supreme Court of India in Xerox, India Ltd; (2010) 5 GSTR 564, Hon’ble Supreme Court of India in Vasanthan Foundry v. Union of India, (1995) AIR 2400_;(SC) and judgements  of this Hon’ble Tribunal, M/s Neelam Plasiic (supra) and Kunwar Silvers (supra).

67. In the judgement of Hindustan Lever (supra) the issue was about the packing materials whether can be termed as raw materials, component pas or inputs used in the manufacturing of finished goods in the context of Entry Tax and chargeable to tax at the rate of 1%. High Court has dismissed the petition filed by the Assessee. The judgment given by Apex Court on the Entry Tax issue referring to the Notifications hence held that the decision related to Central Excise Act does, not help to the Assessee. The judgment relied by the Revenue in Hindustan Lever (supra) does not help the Revenue since ‘the facts of the cited judgement and the facts of the present case are different.

68. The judgment in Ricoh India (supra) while dealing with information technology products, a separate notification was brought under the VAT Act: The ‘notification’ not only refers to the Central Excise Tariff for same sub-entries but it has brought some fresh entries although the same entry is ‘qualified in a different chapter under the Central Excise law. The question which came up before the Hon’ble High Court was that if any entry in the Excise tariff is not adapted in the Notification, the judgments on the issue relating to such tariff entries under the Central Excise whether useful or not. Keeping in mind this aspect, Hon’ble Bombay High Court has observed that for interpreting an entry in the taxing statute, the language used in that entry is needed to be seen. When the entry does not directly rely, a tariff finder the Central Excise and a fresh term and meaning is given in the entry of the parent statute, then the entry is needed to be looked into and no reference is required to be made to the Central Excise Tariff entry. Therefore, this judgment also does not help Much to the Revenue.

69. The Revenue has relied On the judgment of Neelam Plastic (supra) in order to say that technical or scientific meaning adapted is needed to be ,ignored and the test of common parlance is to be adapted. We have carefully, considered the decision in Neelam Plastic (supra). The issue involved in the said cited judgement is tax rate on sale of TV, it’s cabinets, knobs, radio set sold along with TV. The TV set can not be sold without. them. In view of this fact it is held that the TV and Radio cabinet knobs are not covered under schedule Entry C-II-58. The issue in present case is about precious metals. The cited judgement is on different issue and on different facts than in present Case. The issue in present case is about the precious metal and fineness of articles in question. Both these terms are not defined and not free from ambiguity. Hence, laboratory report, scientific meaning and the product known in the particular trade are the tests needed to be considered. Considering this, the judgment in matter of ,’Neelam Plastic (supra) does not help the Revenue in the present facts.

70. Shri. Deshmukh then relied :heavily on the judgment of Kunwar Silvers, Appeal No. 135 of 1996 dated 16th March 2002 (supra). The facts in ‘the said matter were that, the Appellant Kunwar Silver was a manufacturer of silver articles and silver coated articles On the Plastic based items which is known as Dabba, a silver’ sheet are pressed through spinning machines to bring into a desired shape by dyes and power press. Then a polishing engraved silver sheets are fitted on the plastic dabba are made. Then a silver coated plastic based dabba is made. The value wise, plastic portion is 9% and Silver is high as 91%. Appellant has claimed that these products are ‘silver articles since value wise it is much more and sold as silver dabba. The in question under the Bombay Sales Tax Act reads as under:

“C-II-97. articles made of gold and silver or both of fineness not less than 50%, not containing precious stones, diamonds, synthetics or artificial precious stones or pearls whether real, or artificial, or cultured of ,value exceeding 1/10th of the value of each articles.”

The Tribunal while interpreting the entries and held the product under residuary entry as under,-

“we agree” with the Revenue that the gold or silver’ article to’ be covered by the Schedule Entry should^–not be accompanied by any other material like plastics, etc. of any value or by diamonds, precious stones, etc. of the value exceeding 10%. If it is so accompanied, then it will not certainly be covered by the said Schedule Entry It is also not a plastic product covered by C-II-93. It is  not Made primarily of plastics. would be fall under the residuary entry C-11-152 at 13%.

The Tribunal has held this product is not classified neither of these two entries. Hence, residuary entry C-II-152 is the last resort. The entry prevailing at the time of C-II-97 not only deals with articles of gold and silver of fineness of 50% but also it speaks about the value of the other stones and articles should not exceed 1/10th value of each article. Hence, pure silver material articles are to be treated as falling under the said as held by the Hon’ble Tribunal. The impugned product herein ‘is about the pure articles of gold idols are in question which is covered with specific frames in order to avoid dust and moisture. But primarily the product is sold as gold prima articles having precious value and the scientific laboratories have tested the product and submitted the report.

The Schedule entries in the judgement in the case of Kunwar silver and in the sent case are not similar to each other, hence this judgement is not applicable to this case.

71. When the schedule entry is not free from doubt and can be classified under two parallel entries then the benefit should go to the Appellant. For the purpose, shri. Samal has relied on the decision of Hon’ble Supreme Court in Mayuri Yeast (supra). Hon’ble Supreme Court in the said matter while relying on the judgment in the matter of Bihar State Electricity Board v. Usha Martin Industries, (1997) 5 SCC 289 held that it is now well settled principle of law that when two views are possible, ^–one which favors the Assessee should be adapted. (para 56). In short, the residuary entry is the last resort. We have perused the various judgments including the judgment of Mayuri Yeast (supra) wherein held that, “only such goods as cannot e brought be under the various specific entries in the tariff should be attempted to be brought under the residuary entry.”

72. In Indian Metal Forge Alloys (supra) held that, “it is settled principle unless the Department can establish that the goods in question can be no conveyable process or reasoning be brought under any of the specific items mentioned in the tariff, resort cannot be had to the residuary items.”

Likewise in, the judgement of Bharat Forge (supra) it is also held that, “only such goods that cannot be brought under the various specific entries :in the tariff should be attempted to be brought under the residuary entry

73. After considering the submissions made from both the parties and considering the facts and the judgement cited, references to Explanatory Notes, of HSN and expert opinion in the form of various laboratory reports, we hold that the product in question, i.e., ‘Prima Art’ gold and precious metal, article in the form of 24 karat gold images covered and protected dust and moisture using intricate frame, glass, stickers and stand for easy mounting and display masterpiece artwork, devotional images of various deities, saints, forms and symbols will squarely fall within the ambit of Schedule Entry B-1 appended to the MVAT Act, 2002 and subjected to tax at the rate of 1% during the relevant period. Any pre-deposits made in the Appellate stages is directed to be refunded to the Appellant in accordance with the provisions of the MVAT Act and Rules.

74. During the course of arguments, Mr. Samal, Advocate for the Appellant has raised a ‘vital alternative argument that the Assessing officer has made grave error in not granting input tax credit although tax was levied in the hands of the supplier, M/s Gunjan Jewels Pvt. Ltd. at the rate of 12.5%. M/s Gunjan Jewels being an importer and reseller has charged tax at.  the rate of 12.5%. When the present Appellant purchased the impugned product from M/s Gunjan Jewels Pvt. Ltd., the Assessing Officer ought to have granted input tax credit but it seems that he has failed to do so. We have inquired with Shri D.B. Deshmukh, Ld. Departmental Representative in respect of the claim of the Appellant. He has fairly accepted that the Assessing Officer had had not granted input tax credit although it was charged by M/s Gunjan Jewels Pvt. Ltd. However; since we have taken the view that the impugned product is subjected to tax at the rate of 1% under Schedule Entry B-1 On the impugned supply as well as the purchases effected we feel that the alternate arguments and propositions raised by the Appellant are not proper.

UNDER THE CENTRAL SALES TAX  ACT, 1956

75. The Appellant has contended that in the inter- state sales transactions, the Appellant has also charged 1% tax in respect of the impugned product. Since the rate of tax is l% only there is no need to collect declarations in Form C. Hence, he has not collected declarations in C Forms. Since the rate of tax was treated as 12.5% by the Assessing Officer, the differential dues and further levy of interest is the result of the Orders. Thereby, a demand of Rs. 2,11,79,194/- which includes interest liability of 1,05,09,575/- is the result of the Assessment Order. The Appellant Authority has also confirmed the same.

76. Shri. Samal contended that in such circumstances, at least for production of C Forms, opportunity should have been granted. But, both the lower authorities have failed to do so This argument was placed in lieu of the substantial argument advanced in respect of the rate of tax. However, further he has argued, once the rate of tax is treated at 1%, then no Forms declarations are required. The same line of argument was advanced by the Appellant as argued under the MVAT Act, 2002. Therefore, no repetition was made under the Central Sales Tax proceedings.

77. Needless to say, as we have already considered the rate of tax applicable as 1% under Schedule Entry B-1 of the MVAT Act, 2002 the same rate be applicable `under the Central Sales Tax Act, 1956 as well, therefore, accordingly we hold the same. Any pre-deposit or part patents made in appeal made under the Central Sales Tax Act is needed to be founded. Accordingly, the Assessing Officer (Nodal Officer) should give effect to the present Order.

In view of this, we ‘pass the following order :-

ORDER

1. Second Appeal Nos.1055 d 1056 of 2017 are allowed. ,

2. The appeal orders dt. 30/10/2017 under the MVAT Act, 2002 and under the CST AU, 1956 passed by the First Appellate Authority are hereby set aside.

3. The assessment orders dt.24/03/2017 passed u/s.23(6) of the MVAT Act and u/s.9(2) of the CST Act r/w.sec.23(6) of the MVAT Act passed by the Assessing Officer are also hereby set aside.

4. With this the present Second Appeals are disposed of with no order as to costs.