- (1.) Heard the learned counsel for the revisionist and Sri B.K. Pandey, learned standing counsel for the respondent.
(2.) The short and interesting issue involved in this revision is as to whether the tax which the assessee has paid on the purchase of raw material and packing material which is ultimately used in the manufacture and packing of goods is liable to be adjusted in full from the ultimate tax liability which a dealer may stand faced with or is it liable to be adjusted only to the extent of the taxable turnover.
(3.) The issue itself arises on account of the fact that the revisionist in this case had paid a tax of Rs.5,72,182/- on raw material which was admittedly used in the manufacture and packing of goods. The case of the revisionist was that he had effected sales approximating to Rs.2.05 crores on which he became liable to pay tax of Rs. 3.41 lacs in that year. Admittedly the revisionist had also effected sales of Rs.61,56,650/- to certain units which enjoyed exemption from payment of tax by virtue of the provisions of Section 3-B of the U.P. Trade Act 1948. What the assessing authority has proceeded to do however is that while setting off the tax which had been pre-paid by the assessee on the raw material, it has reduced the set off amount to Rs.4,21,406/- against what the assessee originally paid namely Rs.5,72,182/-. The reasoning adopted by the assessing authority was that on sales of Rs.61,56,650/-, the assessee had not levied or collected any tax. This because, these sales were made in favour of entities which were exempt from tax by virtue of section 3-B. He has accordingly proportionately reduced the benefit of the tax paid by the dealer on raw material and restricted its offset to the taxable turnover only. It is the correctness of this action of the assessing authority which falls for consideration.;