COMMISSIONER OF SALES TAX Vs. BHARAT PULVERISING MILLS PVT LTD

JUDGEMENT

(1.) The question which has been submitted to us for our determination in this reference under Section 34(3) of the Bombay Sales Tax Act, 1953, made at the instance of the Commissioner of Sales Tax is : "Whether, on the facts and in the circumstances of the case and on the proper interpretation of section 18B(2) of the Bombay Sales Tax Act, 1953, enacted by Bombay Act No. 16 of 1957 and rule 11(1A) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, which came into force from 1st July, 1957, the Tribunal was justified in holding that one per cent should be calculated not on the entire sale price of the goods despatched by the respondent to its branches, but only on that part of the sale price of the goods sold outside the State, which is attributable to the locally purchased raw material on which the respondent was claiming set-off ?"

(2.) The respondents, who were at all material times registered as a dealer under the said Act, were assessed for the period 1st April, 1957, to 31st March, 1958. During this period the respondents manufactured pesticides which they sold in the former State of Bombay excluding the territories which were transferred to other States on the reorganisation of States, as also despatched the manufactured goods to their branches and agents outside the State, which goods were thereafter sold by such branches and agents. The respondents had purchased raw materials for the manufacture of the said goods as also had purchased containers and packing materials for the manufactured goods both from dealers registered under the said Act as also from unregistered dealers. In respect of the purchases made by them from registered dealers the vendors of such raw materials, containers and packing materials had collected from the respondents amounts which these vendors would have had to pay by way of sales tax and general sales tax in their assessment to tax. In respect of their purchases made from unregistered dealers the respondents paid to the Government the purchase tax payable under clause (a) of section 10 of the said Act. In their assessment for the said period the respondents claimed a set-off in respect of the amounts collected from them by registered dealers by way of tax and the amounts paid by them as purchase tax against the amount of sales tax payable by them in respect of the sales of manufactured goods made by them. The set-off claimed by the respondents was allowed by the Sales Tax Officer. The respondents filed an appeal to the Assistant Commissioner of Sales Tax against the said assessment order on certain points which are not material for our purpose. In appeal, the set off allowed by the Sales Tax Officer to the respondents was not disturbed. The total set-off allowed by the Sales Tax Officer to the respondents was in the sum of Rs. 11,642.24. On 1st November, 1966, the Deputy Commissioner of Sales Tax issued a notice to the respondents under section 31 of the Bombay Sales Tax Act, 1953, calling upon them to show cause why the said assessment order should not be revised so as to reduce the set-off allowed to the respondents by a sum of Rs. 2,044.12, being one per cent of the sale price of goods of the value of Rs. 2,04,412, despatched by the respondents to their branches and agents outside the State and sold by such branches. By his order dated 30th November, 1966, the Deputy Commissioner revised the said assessment order so as to reduce the set-off allowed to the respondents by the said sum of Rs. 2,044.12. The respondents went in appeal to the Tribunal against the said order of the Deputy Commissioner. The said appeal was heard along with revision applications and appeals of two other assessees in which the same points had been raised, and by its judgment dated 14th August, 1967, the Tribunal allowed all the said appeals and revision applications. Not only the references arising out of the said other appeals and revision applications but also references in other matters where the same question is concerned are pending in this High Court and, in view of the fact, that several assessees were interested in the determination of this question, we allowed counsel appearing for these assessees to supplement the argument of counsel for the respondents in this case.

(3.) The answer to the question submitted to us turns upon the correct interpretation to be placed upon section 18B of the said Act and sub-rule (1A) of rule 11 of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954. At the material time section 18B provided as follows :