Set-off on subsequent sale of iron and steel must reflect actual tax paid, not merely the tax collected component.

Under G.O. Ms. No. 763, Revenue (CT.II), dated 21 August 1990, the set-off on a subsequent sale of iron and steel was to operate on the tax already suffered in the State against the tax payable on the later sale. Restricting relief only to the tax collected component was impermissible, because the scheme contemplated set-off of actual tax paid. The view that the available set-off could not be confined to the collected portion was accepted.

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Issues: Whether, under G.O. Ms. No. 763, Revenue (CT.II), dated 21 August 1990, the set-off on subsequent sale of iron and steel was to be limited to the tax collected component or to the actual tax paid.

Analysis: The scheme of the Government Order was to grant set-off of the tax already suffered in the State against the tax payable on the subsequent sale. The bifurcation adopted by the Deputy Commissioner, by excluding only the tax collected and restricting relief to that figure, was held to be impermissible. The Appellate Tribunal's view that the expression contemplated set-off of tax paid against tax payable was accepted.

Conclusion: The set-off was correctly allowed on the basis of actual tax paid and not confined to the tax collected component.

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