The main legal point established in the judgment is that for a transaction to constitute a sale under the K.G.S.T. Act, the consideration must be money, and the exchange of goods with labour charges does not satisfy the definition of 'sale'.

K.S. Radhakrishnan, J.

The question that has come up for consideration before us is whether the Tribunal is justified in taking the view that the return of gold with labour charges in exchange of gold ornaments, would amount to sale within the meaning of S.2(xxi) of the K.G.S.T. Act When these two tax revision cases came up for consideration before a Division Bench of this Court, the Bench doubted the correctness of the decision in Radha Printers, Kollam v. State of Kerala, 90 STC 201 ((1992) KLJ (TC) 379), and referred the matter to a Full Bench. T.R.C. No. 65 of 1993 is filed by the assessee and T.R.C. No. 77 of 1993 is filed by the Revenue. This arise out of a common order passed by the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam, in T.A.No. 23 of 1991.

2. The assessee is a Jewellery borne on the file of the Assistant Commissioner (Assessment), Special Circle, Ernakulam. The assessment year in question is 1980-81. On verification of the accounts of the assessee, for the purpose of assessment under the K.G.S.T. Act, it was noticed that he had purchased 2293.480 gms. of gold ornaments from dealers outside the State giving in return equal quantity of gold with labour charges. The assessing authority took the view that the said transaction is interstate sale assessable under the C.S.T. Act It was therefore, proposed to assess the turnover under the said Act.

3. Assessee filed objections to the said proposal stating that the transaction in question was not a purchase or sale under the C.S.T. Act. Assessee contended that the gold supplied to dealers outside the State would not come within the definition of sale under the K.G.S.T. Act or C.S.T. Act. According to the assessee, the expression 'valuable consideration' under S.2(xxi)of the K.G.S.T. Act is intended to cover up only cheques, promissory notes and other negotiable instruments. Objections raised by the assessee were overruled holding that receipt of gold ornaments and entrustment of gold with labour charges subsequently are two independent transactions and have got the character of inter-state sale.

4. Aggrieved by the said order, assessee filed appeal before the Deputy Commissioner (Appeals), Ernakulam. Deputy Commissioner dismissed the appeal holding that the issue of gold to dealers outside the State is to be treated as a separate transaction, and there are no circumstances to hold that it was not consequent to a sale within the meaning of S.2(g) of the C.S.T. Act. Assessee preferred appeal before the Sales Tax Appellate Tribunal as T.A. No. 23 of 1991 against the order of the Deputy Commissioner (Appeals), Ernakulam. Tribunal mainly relied on the decision of the Madras High Court in V. P. Vadivel Achary v. Madras Sales Tax Appellate Tribunal, JI nd Addl. Bench, Madras, (1969) 23 STC 273, and took the view that there is an element of sale in the transaction of purchasing new readymade gold ornaments and in return giving gold of equal quantity with manufacturing charges. Tribunal therefore, found that the said transaction is a sale within the meaning of S.2(xxi) of the K.G.S.T.. Act. Tribunal, however, found that there was no inter-state sale so as to attract the C.S.T. Act, and therefore, the assessment made on the assessee under the C.S.T. Act was set aside. Aggrieved by the order of the Tribunal, assessee as well as the revenue have come up in revision before this Court.

5. The revision petitioner in T.R.C. No. 65 of 1993 has raised the following questions of law:

1. Whether on the facts and in the circumstances of the case the finding of the Tribunal that the supply of old gold by the petitioner to the non-resident persons in return for new ornaments received from them amounted to sale of old gold correct? Is me reasoning of Tribunal that the new ornaments received constituted valuable consideration for the sale of the old good within the meaning of the definition of sale in clause (xxi) of S.2 of the K.G.S.T. Act sustainable in law?

2,. Has not th