Set-off for tax recovered by vendor not separately shown in invoice upheld under sales tax rules

Under the Bombay Sales Tax Rules, 1959, the expression "recovered" in rule 42 was construed broadly to include tax recovered by the vendor even where the invoice did not separately show the tax. Rule 45 was treated as setting out general conditions for claims, but sub-clause (c) was read as part of clause (B)(iii) rather than as an independent restriction. That construction preserved the substantive set-off relief and avoided defeating earlier provisions that granted relief where tax had been recovered but not separately disclosed. The claim for set-off was therefore allowable on the rules as construed.

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Issues: Whether, on a true construction of rule 42 read with rule 45 of the Bombay Sales Tax Rules, 1959, a licensed dealer is entitled to set-off of general sales tax recovered by the vendor even when the invoice does not separately show the amount of tax.

Analysis: The scheme of the relevant set-off and refund rules was examined as a whole. The expression used in rule 42 was held to be the general word "recovered", and the Court found no warrant for cutting it down to mean only tax separately shown in the invoice merely because some other rules expressly provide a lesser benefit where tax is not separately recovered. Rule 45 was construed as laying down general conditions for all claims under the rules, and sub-clause (c) was held to be part of clause (B)(iii), not an independent condition. That construction was supported by the placement of the proviso, the structure of the clause, and the fact that treating sub-clause (c) as independent would defeat the operation of earlier rules granting relief where tax was recovered but not separately shown.

Conclusion: The claim for set-off was allowable, and the absence of separate disclosure of tax in the invoice did not bar relief.

Final Conclusion: The reference was answered in favour of the applicants on the substantive question of set-off under the rules.

Ratio Decidendi: Where a taxing rule grants set-off of tax "recovered" by the vendor, that expression is not confined to tax separately shown in the invoice unless the rules expressly so provide, and a general conditions clause cannot be construed so as to nullify the substantive relief.

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