The central legal point established in the judgment is the interpretation of the scope of item No. 56 of the First Schedule to the Kerala General Sales Tax Act and its applicability to the purchase turnover of old gold ornaments.

BALAKRISHNA ERADI, C.J.

These three tax revision cases arise out of assessment to sales tax under the Kerala General Sales Tax Act (for short the Act), made against the same assessee for the years 1971-72 and 1972-73. The State is the revision petitioner in T.R.C. Nos. 161 and 162 of 1979 which relate respectively to the years 1971-72 and 1972-73. T.R.C. No. 175 of 1979 has been filed by the assessee and that relates to the year 1972-73.

2. The assessee is carrying on business in jewellery at Chengannur. It is said that he purchases old gold ornaments, melts them, manufactures new ornaments and sells them. The purchase turnover of the old gold ornaments was brought to tax under section 5A of the Act and assessed at the general rate for all the three years aforementioned by the assessing authority. The assessing authority found that the accounts of the assessee could not he relied upon for the reasons stated by him in the orders of assessment and accordingly he rejected those accounts and estimated the taxable turnover of the assessee for the three years to the best of his judgment. The process adopted by the assessing authority was to estimate the taxable turnover by taking it as three times the running stock for each concerned year. Appeals were filed by the assessee before the concerned Appellate Assistant Commissioner of Sales Tax. The Appellate Assistant Commissioner confirmed the rejection of the accounts but substantially modified the estimated taxable turnover determined by the assessing authority by fixing it at 1 1/2 times the running stock in respect of each year. The assessee had reiterated before the first appellate authority a contention which he had unsuccessfully put forward before the Sales Tax Officer that the turnover relating to the purchase of old gold ornaments was taxable only at 1 per cent since it came within the scope of item No. 50 of the First Schedule to the Act, namely, "bullion and specie". This contention was rejected by the Appellate Assistant Commissioner.

3. The assessee filed second appeals before the Sales Tax Appellate Tribunal (hereinafter called the Tribunal) contending firstly that the rejection of his accounts was not justified by the facts and circumstances of the case and that in any event the rate applicable was only 1 per cent since the purchase turnover of the old gold ornaments came within the scope of item No. 56 of the First Schedule to the Act. The Appellate Tribunal upheld both the contentions of the assessee in relation to the assessment year 1971-72. Following the decision of this Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. G. S. Pai & Company ([1978] 41 S.T.C. 440.), the Appellate Tribunal held that the purchase turnover of old gold ornaments could be taxed only at the rate of 1 per cent provided for bullion and specie (item No. 56 of the First Schedule). This conclusion was recorded by the Tribunal in respect of both the assessment years in question. As regards the plea of the assessee that the assessing authority was not justified in rejecting his books of account, the Tribunal held that there were material differences in the facts and circumstances brought out in the case in respect of the year 1971-72 and those pertaining to the year 1972-73. The Tribunal was of the opinion that there was no valid justification for rejecting the accounts of the assessee with respect to the year 1971-72. Accordingly the Tribunal held that the Sales Tax Officer acted illegally in adopting the procedure of making a best judgment assessment against the assessee in respect of the said year. In this view, the Tribunal set aside the assessment made by the assessing authority for the year 1971-72 and directed the assessment to be done afresh after applying the rate of 1 per cent to the purchase turnover relating to the purchase of old gold ornaments.

4. In regard to the year 1972-73 the Tribunal came to the conclusion that there was ample mat