Excise duty deduction limited to duty on goods actually sold, not on raw material used in manufacture.

Excise duty paid on raw tobacco was held not deductible from the gross turnover of chewing tobacco sold under rule 5(1)(i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The phrase "in respect of" was construed to apply only to duty paid on the same goods actually sold by the dealer, not on a different commodity used as manufacturing input. Raw tobacco and chewing tobacco were treated as distinct marketable products, so duty on the raw material could not be claimed as duty on the finished goods. The deduction was therefore confined to duty paid on the goods sold, and the construction favoured the revenue.

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Issues: Whether excise duty paid on raw tobacco was deductible from the assessee's gross turnover under rule 5(1)(i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, when the goods sold were chewing tobacco manufactured from the raw tobacco.

Analysis: The deduction under the rule was confined to excise duty paid by the dealer in respect of the goods sold by him. The expression "in respect of" was construed in its statutory context to mean duty paid on the same goods, not on a different commodity from which the sold goods were manufactured. Raw tobacco and chewing tobacco were treated as distinct marketable products, and a duty paid on the raw material could not be regarded as duty paid on the manufactured goods sold. The legislative practice referred to in the judgment also supported this construction.

Conclusion: Excise duty paid on raw tobacco was not deductible from the turnover of chewing tobacco sold by the assessee; the deduction was allowable only for duty paid on the goods actually sold, and the answer was against the assessee.

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