TMI Blog2015 (3) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings, the 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 of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as 'the Act'). Accordingly, purchase turn over attracts 2% tax under Entry-9, Part-P / Schedule-II of the Act. Aggrieved by the said order, the assessee preferred an appeal. The appellate authority allowed the appeal in respect of diamond and held as the said diamo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proceedings by passing Non Speaking Order and setting aside the Speaking Orders of the FAA in allowing the appeal and the orders passed by the 'I' RA in dropping the proceedings appreciating the correctness and completeness of the appellant? (ii) The FAA, is justified in allowing the appeal on merits on a correct position of law, by appreciating the grounds urged by the appellant? (iii) The 'I' RA - is justified in dropping the 'I' revisional proceedings on a correct position of law appreciating and accepting the correct objections filed? 5. Learned counsel for the assessee assailing the impugned order contended firstly, that the show cause notice issued is perfunctory to be in nature and therefore, any orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax under certain circumstances Subject to the provisions of sub-section (5) of section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under section 5 is leviable on the sale price of such goods and, (i) either consumes such goods in the manufacture of other goods for sale or otherwise 2 [or consumes otherwise,] or disposes of such goods in any manner other than by way of sale in the State, or (ii) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the issue of the what constitutes consumption of a commodity and observed as follows in page No.704 as under: It is conversion of a commodity into a different commercial commodity by subjecting it to some processing, is consumption within the meaning of the Explanation to Art. 286 no less than the final act of user when no distinct commodity is being brought into existence but what was brought into existence is being used up. At one stage of the argument what Mr. Pathak appeared to insist was that there must be destruction of the substance of the thing before the thing can be said to be consumed. That takes us nowhere, because we have still to find out what is meant by destruction of the substance. It may well be said that when a comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monds 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. In fact, he also has referred to various other judgments of the Supreme Court and other Courts and has observed the law laid down therein runs counter to the judgment of the constitution Bench and what binds the Courts is the judgment of constitution bench and therefore, was of the view that the first re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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