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2015 (3) TMI 1046 - HC - VAT and Sales TaxLevy of tax u/s 6 of the Karnataka Sales Tax Act, 1957 - assessee are dealing in diamond, gold jewelry studded with diamond, platinum jewelry studded with diamond besides sale of gold jewelry studded with diamond - assessing authority noticed the diamond, which was used in the manufacture of gold jewelry studded with diamond and platinum jewelry studded with diamond were purchased from a unregistered dealer. Therefore, the authority held as these diamonds lose their identity once they have been consumed in the manufacture of jewelry, articles studded with diamond, the said goods are liable to tax under Section 6 - Held that:- every dealer who in the course of his business purchases any taxable goods in the circumstances, in which no tax under Section 5 of the Act is leviable on the sale price of such goods and either consume such goods in manufacture of other goods or sale or consumes otherwise or disposes of such goods in any manner other than by way of sale in the state then he shall be liable to pay tax on the purchase price of such goods at the same rate it would have been leviable on the sale price of such goods under Section 5 of the Act. When the article purchased by the assessee are being used in bringing out a different commodity known as jewelry, article, there is a consumption of diamonds and bullions in the process of manufacture of a different commercial commodity i.e., diamond embedded jewelry article. It is not a case where the diamonds purchased by the assessee is sold as such to a buyer. When once the diamond is used in making the jewelry and it is embedded in the jewelry, it changes into another commercial commodity and therefore, such a commercial commodity has come into existence on absorption of the diamond and therefore, the test prescribed under Section 6 of the Act is attracted and the Commissioner was justified in holding that Section 6 of the Act attracts. - No merit in appeal - Decided against assessee.
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