- (1.) These are appeals by the Revenue arising out of proceedings under the Bombay Sales Tax Act, 1959 (hereinafter -called 'the Act'). The respondents, Bharat Petroleum Corporation Ltd. (in C.A. 1031 of 1979) and Phulgaon Cotton Mills Ltd. (in the four other appeals) are assessees to sales tax. They claimed a setoff, against the sales tax payable by them for the years in question, of certain sums, invoking the provisions of Rr. 41 and 41 A framed under the Act, as they stood at the relevant time. As the wording of these rules, in so far as it is material for our present purposes, is identical and the basis of the claim was also common, it will be convenient to dispose of both seta of appeals by a common judgment and we proceed to do so.
(2.) The set off claimed by the assessee was in terms of S. 42 and Rr. 41 and 41 A, which may now be referred to: 1.Section 42 reads thus: "42. Draw-back, set off, refund etc. The State Government may provide by rules that- (a) in such circumstances and subject to such conditions as may be specified in the rules a draw-back, set off or refund of the whole or any part of the tax- (i) xx xx xx (ii) paid or levied or leviable in respect of any earlier sale or purchase of goods under this Act or any earlier law, be granted to the purchasing dealer; (b) xx xx xx The State Government has notified various rules from time to time in exercise of this power which are collected in Chapter VII of the Rules. Of these we are concerned with Rr. 41 and 41 A. (2) Rule 41 (omitted w.e.f. 24-6-81) was a very long rule containing several clauses. In so far as is relevant for our present purposes, it was in the following terms: "41. Drawback, set-off etc. of tax paid by a manufacturer - In assessing the amount of tax payable in respect o any per od by a Registered dealer. who manufactures taxable goods for sale (here in after in this rule referred to as the "Manufacturing dealer"), the Cornmissioner shall grant to him a draw-back, set-off or as the case may be a refund of the aggregate of the following sums, that is to say:- (a) xx xx xx (aa) xx xx xx (b) xx xx xx (bb) xx xx xx (c) xx xx xx (cc) xx xx xx (d) xx xx xx (e) a sum recovered from the manufacturing dealer by another registered dealer by way of sales tax or, general sales tax or as the case may be, on the purchase by him of goods from such registered dealer. being goods specified in schedule C to the Act other than in entries 1 to 1 1 (both inclusive) and 15 therein and in Schedule D other than in entries 1 to 4 (both inclusive) therein and in Schedule E other than in entries 1 and 2 therein, when the purchasing dealer did not hold a recognition or when the dealer held a recognition but effected the purchase otherwise than against a certificate under S. 12 of the Act provided that such goods are used by him in the manufacture of taxable goods for sale or in the packing of taxable goods manufactured by him for sale. Explanation: xx xx (Material portions underlined) (3) The relevant portion of R. 41 A, which has been invoked in the case of Phulgaon Cotton Mills Ltd., reads thus: "41 A. (1) Drawback, set-off etc. of tax paid by a manufacturer in respect of purchases made on or after the 15th July, 1962 : In assessing the amount of tax payable in respect of any period by a Registered dealer who manufactures taxable goods for sale or export* (hereinafter in this rule referred to as the "manufacturing dealer"), the Commissioner shall, in respect of the purchases made by such dealer on or after the 15th July, 1962 of any goods specified in Schedule B, C, D or E and used by him within the State in the manufacture of taxable goods**which have in fact been sold by him (and not given away as samples or otherwise) or which have been exported by him or used by him in the packing of goods so manufactured grant him a drawback, set-off or, as the case may be, a refund of the aggregate of the following sums, that is to say : * The words "or export" were inserted by a notification dated 31-8-70. ** The words "which have in fact. . . . . . so manufactured" were substituted by a notification dated 15-1-1976 for the words "for sale or export or in the packing of goods so manufactured for sale or export". (a) a sum recovered from the manufacturing dealer by other Registered Dealers by way of sales tax, or general sales tax, as the case may be, both, on the purchase by him from such registered dealers, when the manufacturing dealer did not hold a Recognition or when he held a recognition but effected the purchase otherwise than against a certificate under Section 11 of the Act; (b), (c) and (d) xx xx xx (Material portions underlined) (4) There was also a claim under Rule 43AB but we are not concerned with that in the present appeals.
(3.) Now to turn to the facts which give rise to these appeals. A. Burmah Shell;