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<h1>Supreme Court upholds Rule 41 interpretation on one percent deduction for goods sold outside Maharashtra.</h1> <h3>Godrej & Boyce Mfg. Co. Pvt. Ltd. & Others Versus Commissioner of Sales Tax</h3> Godrej & Boyce Mfg. Co. Pvt. Ltd. & Others Versus Commissioner of Sales Tax - [1992] 87 STC 186 (SC), 1992 AIR 2078, 1992 (3) SCR 683, 1992 (3) SCC 624, ... Issues Involved:1. Interpretation of Rule 41 and Rule 41A of the Bombay Sales Tax Rules, 1959.2. Validity of the deduction of one percent of the sale price of goods despatched outside the State.3. Constitutionality of Rule 41 and Rule 41A.4. Applicability of the Supreme Court's decision in Commissioner of Sales Tax v. Bharat Petroleum Corporation Ltd. to the present case.Detailed Analysis:1. Interpretation of Rule 41 and Rule 41A of the Bombay Sales Tax Rules, 1959:The primary issue revolves around the interpretation of Rule 41 and Rule 41A, which provide for the set-off of purchase tax paid by a manufacturing dealer on raw materials against the sales tax payable on the sale of manufactured goods. The appellant argued that the deduction of one percent should be calculated only on the part of the sale price attributable to locally purchased raw materials. The High Court rejected this argument, stating that the rules clearly intend for the deduction to be based on the entire sale price of the goods despatched outside the State.2. Validity of the Deduction of One Percent of the Sale Price of Goods Despatched Outside the State:The appellant contended that the deduction of one percent of the sale price of goods despatched to branches outside Maharashtra was unjust and amounted to taxing raw materials purchased outside the State. The Court disagreed, noting that the rules are designed to provide relief to dealers and ultimately benefit consumers. The deduction was seen as a reasonable curtailment of the concession provided by the set-off rules. The Court emphasized that the rules are a concession and not a legal right, and the deduction does not amount to an impermissible tax.3. Constitutionality of Rule 41 and Rule 41A:The appellant argued that the deduction could render the rules unconstitutional by effectively taxing transactions outside the State's jurisdiction. The Court dismissed this argument, stating that the rules do not levy any new tax but merely regulate the set-off mechanism. The Court also noted that the State of Maharashtra would not demand or recover any tax not otherwise due, ensuring the rules' constitutionality.4. Applicability of the Supreme Court's Decision in Commissioner of Sales Tax v. Bharat Petroleum Corporation Ltd.:The appellant referenced a recent Supreme Court decision involving Rule 41 to support their case. However, the Court found that the issues in the Bharat Petroleum case were different from those in the present appeals. The Bharat Petroleum case dealt with the set-off of tax on sulphuric acid used in refining crude oil, which was not directly relevant to the current issue of deductions on goods despatched outside the State.Conclusion:The Supreme Court upheld the High Court's interpretation of Rule 41 and Rule 41A, affirming that the one percent deduction should be calculated on the entire sale price of goods despatched outside Maharashtra. The Court found no constitutional issues with the rules and clarified that the deduction is a permissible curtailment of the set-off concession. The appeals were dismissed with costs.