Refund for evaporation loss in motor spirit sales denied where tax had already been levied at the first sale stage.

Rule 15(3) of the Bombay Sales of Motor Spirit Taxation Rules, 1958 was examined for alleged inconsistency with the Act and the Constitution in relation to refund of sales tax on motor spirit lost by evaporation or leakage after purchase. The provision applied only to loss occurring while the motor spirit remained in the seller's storage installation, with refund available to the selling trader. Because the petitioners had already acquired ownership and were taxed only at the first sale stage, and their later sales were treated as resales not subject to tax, the loss after purchase did not attract further tax. The rule was therefore held non-discriminatory, and no refund was due.

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Issues: Whether rule 15(3) of the Bombay Sales of Motor Spirit Taxation Rules, 1958 was violative of the Act or the Constitution and whether the petitioners, as purchasing traders, were entitled to refund of sales tax on quantity of motor spirit lost by evaporation or leakage after purchase.

Analysis: Rule 15(3) applies only where motor spirit is stored in the seller's storage installation and the loss by leakage or evaporation occurs at that stage, with refund being allowed by the selling trader. On the facts, sales tax was levied only at the first stage of sale, when the petitioners purchased the motor spirit and became its owners, and their subsequent sales were treated as resales not liable to tax. The loss alleged by evaporation or leakage occurred after the property had passed to the petitioners, so no tax was being collected from them on any later sale of that lost quantity. In that setting, the rule created no hostile discrimination and did not offend the Act or the Constitution.

Conclusion: The challenge to rule 15(3) failed, and the petitioners were not entitled to any refund of sales tax.

Ratio Decidendi: A refund provision tied to loss occurring in the seller's storage, and dependent on refund by the seller, is not discriminatory where the purchaser has already acquired ownership and is not taxed on subsequent sales of the lost quantity.

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