Purposive construction of sales tax set-off rule treats tax actually recovered and paid as tax for set-off purposes.

Rule 42(B)(i)(a) of the Gujarat Sales Tax Rules was construed purposively within the Act's single-point taxation and set-off scheme. The Court held that the phrase "sales tax or general sales tax ... recovered separately under the Act" refers to tax actually recovered and paid, not merely the amount legally recoverable. It rejected a narrow reading of the definition of "tax" because the statutory context and refund-set-off provisions required a contextual meaning. The wider interpretation was adopted to avoid an unrealistic result and to preserve the object of the set-off provision; the assessee's set-off claim was therefore upheld.

---

---

Issues: Whether, under rule 42(B)(i)(a) of the Gujarat Sales Tax Rules, 1970, the expression "the amount of sales tax or of general sales tax or, as the case may be, of both recovered separately under the Act" refers to the tax actually recovered and paid, or only to the tax legally recoverable under the Act.

Analysis: The statutory scheme of drawback, set-off, and refund under the Gujarat Sales Tax Act, 1969 was read as part of the policy of single-point taxation, intended to relieve the incidence of tax on the purchaser. The definition of "tax" in section 2(32) of the Gujarat Sales Tax Act, 1969 was not treated as controlling in all contexts, because the opening words of the Act permit a contextual meaning where the scheme so requires. The Court relied on the nature of set-off as a statutory deduction and on related provisions dealing with refund and assessment to hold that an amount paid pursuant to assessment may be treated as tax for the purpose of the rule. The contrary interpretation was rejected as producing an unjust and commercially unrealistic result and as defeating the object of the set-off provision.

Conclusion: The expression in rule 42(B)(i)(a) means the amount of sales tax or general sales tax actually paid and recovered as tax, not merely the amount legally recoverable.

Final Conclusion: The reference was answered against the Revenue and in favour of the assessee, and the claim to set-off was upheld on the wider amount actually recovered and paid.

Ratio Decidendi: Where the statutory context so requires, a provision granting set-off or refund must be construed purposively so that the amount actually recovered and paid as tax is treated as tax for that purpose, even if it exceeds the amount strictly legally recoverable.

---