ORAL JUDGMENT

(Per : HONOURABLE MR.JUSTICE K.M.MEHTA)

1. Commissioner of Sales Tax has made this Reference under Sec. 69 of the Gujarat Sales Tax Act, 1969 (hereafter to be referred to as “the Act”)and has referred the following question of law; before this Court for its determination.

“Whether on the facts and in the circumstances of the case, the Gujarat Sales Tax Tribunal was justified in law in allowing the second appeal and setting aside the order of the Assistant Commissioner of Sales Tax adopting the proportionate ratio method in respect of the consignment transfer of goods purchased from unregistered dealers?”

2. We have heard Mr. Siraj Gori, learned AGP for the State. Brief and relevant facts leading to the present Reference are as under on which he has invited our attention to the case.

2.1 The present opponent, M/s. Choksi Nagardas Chakubhai & Sons is a partnership firm, registered under the provisions of the Indian Partnership Act as well as the Gujarat Sales Tax Act, 1969. The opponent deals in gold and silver. The opponent makes purchases locally from registered dealers as also from unregistered dealers, of old ornaments of gold and silver. The opponent also purchases silver bullion. The opponent have been maintaining separate registers showing day to day purchases from registered dealers as also from unregistered dealers who sell the ornaments to the opponents. Out of the two precious metals, gold is subject to the Gold Control Order (at the relevant time) and, therefore, the old ornaments purchased from the registered dealers as well as from unregistered dealers cannot be melted by the opponent at Ahmedabad in any manner and, therefore, the opponent has to carry the same in person to Bombay Government Mint after obtaining requisite permission of the Customs Department. So far as silver purchases are concerned, the old silver ornaments of pure bullion sold by the unregistered dealers are consigned to Bombay or are sold locally. At the time of consigning the same to Bombay, permission of the Customs Department is required to be obtained by way of Transfer Voucher or transport permit wherein the details regarding the name of consignor; the name of commission agent at Bombay; the weight in Kilogram; number of articles and their approximate value as also touch are to be shown. If they are despatched through a carrier or an Angadiya then the name of that person is also required to be given and the document containing all the aforesaid details are required to be countersigned by an Officer of Customs Department. The Customs Officer would put on that document the time of consignment, as also the probable time when it would reach destination. After the bullion reaches Bombay it is sold there in the market and the Adatia who sells it sends Ankada or account or realisation of the price after deducting therefrom the local tax and incidental expenses. The amount would then be sent by means of bank-draft or by bank transfer.

2.3 The Sales Tax Officer assessed the opponent for the assessment for the Samvat year 2031 [i.e 14.11.74 to 3.11.75].

At the time of assessment, the opponent claimed deduction of sales on the ground that consignment transfer to the tune of Rs. 1,73,64,803/- (Rupees One Crore Seventy Three Lacs Sixty Four Thousand Eight Hundred Three) were made and they should be deducted from the turnover of taxable sales. The Sales Tax Officer held that the opponent was able to produce “F” Form in respect of consignment transfer to the tune of Rs.91,04,511/- only but for the balance amount no such forms were produced. As against this, the opponent contended that for establishing the fact of consignment transfer production of “F” form was not an absolute necessity but he was able to prove by means of other reliable documentary evidence from the Government record that the disputed transfers were consignments amounting to Rs. 82,60,292/- (Eighty Two Lacs Sixty Thousand Two Hundred Ninety Two). The Sales Tax Officer rejected c