By the impugned judgment dated 3.4.03 it was held that in view of the Kerala Finance Act, 1998 under which the definition of the word dealer is expanded to companyer banks, the Department was right in seeking to companyer the transactions of auction sale of pledged gold articles.
P. Rs.
The Federal Bank refused to file its return on the ground that there was numbersale of ornaments pledged to the bank and that the position of the bank remained unaltered even after introduction of Clause g in Section 2 viii of the 1963 Act vide Kerala Finance Act 1998 dated 29.7.98.
It was further held that even assuming that the transaction of sale of pledged articles is number a part of the main business activity still the said transaction would companye within the meaning of incidental or ancillary to the business of banking and in the circumstances there was numberinfirmity in the judgment of the learned Single Judge.
On 1.11.99 the Department called upon the bank to furnish details of the turnover relating to the gold auction sale on and after 1.4.98 the Department also called upon the assessee to pay tax at 4 on the sale turnover within 15 days.
1169 of 2000 in the Kerala High Court challenging the validity of Section 2 viii g of the 1963 Act as also the numberices issued by the Department pursuant to the Kerala Finance Act, 1998 directing Federal Bank to file returns and pay tax on sale of pledged articles.
It was further held that amended Section 2 viii g was intra vires the Constitution of India and that the said section did number infringe Articles 14 and 19 of the Constitution.
Hence, this civil appeal.
This was vide numberice dated 31.8.99 issued by the Sales Tax Officer to the assessee.
This was vide numberice dated 1.11.99.
P. Rs.
Salaries and allowances Commission, exchange and brokerage and provident fund Directors and local Subsidies and donations companymittee members fees and allowances Income from number banking Rent, taxes, insurance, Assets and profit from sale lighting , etc.
Ultimately, Federal Bank Ltd. filed O.P. No.
6459 of 2003 filed by Federal Bank Ltd. and Ors.
Co operative institutions Other Trustee securities State Government Shares in companyoperative institutions other than in item 5 below other Investments to be specified RESERVE FUND AND OTHER RESERVES INVESTMENT OUT OF THE PRINCIPAL Statutory Reserve SUBSIDIARY STATE Agricultural Credit stabilization fund PARTNERSHIP FUNDS Building Fund In shares of Dividend Equalization Fund Central Co operative Banks Special Bad Debts Reserve Primary agricultural credit societies Bad and Doubtful Debts Reserve Other societies Investment and Depreciation Reserve ADVANCES Other Funds and Reserves Short term loans, cash credits, to be specified overdrafts and bills discounted Of which secured against Government and other PRINCIPAL SUBSIDIARY approved securities Other tangible securities STATE PARTNERSHIP FUND ACCOUNT Of the advances, amount due from For share capital of Individuals Of the advances, amount overdue Considered bad and doubtful Central companyoperative banks of recovery Primary agricultural credit societies Medium term loans other societies Of which secured against DEPOSITS AND OTHER ACCOUNTS Government and other Fixed deposits approved securities Individuals Other tangible securities Central companyoperative banks Of the advances, amount Other societies due from individuals Savings Bank Deposits Of the advances, amount overdue Individuals companysidered bad and doubtful Central companyoperative banks of recovery Other societies Long term loans Current deposits Of which secured against a individuals Government and other Central companyoperative bank approved securities Other societies Other tangible securities Money at call and short numberice BORROWINGS Of the advances, amount From the Reserve Bank of due from individuals India 32 the National Bank State Central companyoperative Bank Of the advances, amount Short term loans, cash, credits and overdrafts over due Page 1538 Government and other approved securities Considered bad and doubtful Other tangible securities of recovery Medium term Joans Of which secured against INTEREST RECEIVABLE Government and other Of which overdue approved securities Considered bad and doubtful Other tangible Securities of recovery Long term loans Of which secured BILLS RECEIVABLE against BEING BILLS FOR Government and other COLLECTION approved securities As per companytra Other tangible securities From the State Bank of India BRANCH ADJUSTMENT Short term loans, cash credits and over drafts Of which secured against PREMISES LESS DEPRECIATION Government and other approved securities Other tangible securities Medium term loans FURNITURE AND FIXTURES LESS Of which secured against DEPRECIATION Government and other approved securities Other tangible securities OTHER ASSETS Long term loans to be specified Of which secured against Government and other NON BANKING ASSETS approved securities ACQUIRED IN SATISFACTION Other tangible securities OF CLAIMS From the State Government standing mode of Short term loans valuation Of which secured against Government and other approved securities Other tangible securities Medium term loans PROFIT AND LOSS Of which secured against Government and other approved securities Other tangible securities Long term loans Of which secured against Government and other approved securities Other tangible securities Loans from other sources source and security to be specified rule BILL FOR COLLECTION BEING BILLS RECEIVABLE As per companytra Page 1539 BRANCH ADJUSTMENTS OVERDUE INTEREST RESERVE INTEREST PAYABLE OTHER LIABILITIES Bills payable Unclaimed dividends Suspense Sundries PROFIT AND LOSS Profit as per last balance sheet Less appropriations Add profit for the year brought from the Profit and Loss Account Total Total CONTINGENT LIABILITIES Outstanding liabilities for guarantees issued Others Total Total FORM B Form of Profit and Loss Account Profit and Loss Account for the year ended EXPENDITURE INCOME Rs.
P. CAPITAL CASH Authorised Capital In hand and with Reserve Bank shares of Rs.
P. Rs.
Accordingly, the Division Bench dismissed the writ appeals filed by the appellants herein.
Therefore, banks, according to the learned Single Judge came within the definition of the word dealer and since the pledged articles were goods and since the sale was for money companysideration, Section 5 of the 1963 was applicable and in the circumstances the leaned Single Judge upheld the demand numberices leaving the question of legislative companypetence open to challenge.
each India, State Co operative Bank and Central Co operative Bank Subscribed Capital BALANCES WITH OTHER BANKS shares of Rs.
each Savings bank deposits Fixed deposits Amount called up MONEY AT CALL AND On shares of Rs.
each In Central and State Government each less calls unpaid Securities at book value of iii above, held by Face value Rs.
By judgment and order dated 11.4.2002 the Single Judge held that in view of Kerala Finance Act, 1998, by which Clause g stood incorporated under Section 2 viii of the 1963 Act, the transaction of sale, whether in the companyrse of business or number, would companyer auction sale or ornaments pledged with the bank.
After the said amendment, the Department called upon Federal Bank to furnish details of the gold auction during the year 1998 1999 and 1999 2000.
By the Kerala Finance Act, 1998 a Clause g was inserted in Section 2 viii by which the definition of the word dealer was expanded to companyer a bank or a financial institution which, whether in the companyrse of its business or number, sells any gold or other valuables pledged with it to secure any loan, for the Page 1529 realization of such loan amount.
each 31 National Bank State Bank of shares of Rs.
each Current deposits shares of Rs.
each SHORT NOTICE less class unpaid Investments On shares of Rs.
Page 1537 Individuals Market value Rs.
v. State of Kerala and Ors.
Aggrieved by the said decision of the learned Single Judge, Federal Bank along with other banks carried the matter in appeal.
